B-5530, SEPTEMBER 2, 1939, 19 COMP. GEN. 313

B-5530: Sep 2, 1939

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WORDS AND PHRASES - "EXCHANGE" - ORDNANCE MACHINES AND TOOLS THE WORD "EXCHANGE" WHEN USED IN A STATUTE IS TO BE REGARDED AS CONTEMPLATING THE GIVING OR TAKING OF ONE ARTICLE OTHER THAN MONEY FOR ANOTHER ARTICLE OTHER THAN MONEY WHICH IS REGARDED AS THE EQUIVALENT WITHOUT REFERENCE TO MONEY VALUE. UNLESS THERE IS MANIFESTED A LEGISLATIVE INTENTION THAT THE TERM SHALL HAVE A DIFFERENT AND MORE COMPREHENSIVE MEANING. THAT IS. THE OBJECT IN OBTAINING THIS LEGISLATION WAS TO ENABLE THE VARIOUS MANUFACTURING ESTABLISHMENTS OF THE WAR DEPARTMENT TO EXCHANGE UNSERVICEABLE MACHINES AND TOOLS AND PARTS THEREOF FOR EQUIPMENT OF THE SAME GENERAL CHARACTER AND THUS MODERNIZE THE MANUFACTURING ESTABLISHMENTS WITH THE LEAST POSSIBLE CHARGE AGAINST APPROPRIATED FUNDS.

B-5530, SEPTEMBER 2, 1939, 19 COMP. GEN. 313

WORDS AND PHRASES - "EXCHANGE" - ORDNANCE MACHINES AND TOOLS THE WORD "EXCHANGE" WHEN USED IN A STATUTE IS TO BE REGARDED AS CONTEMPLATING THE GIVING OR TAKING OF ONE ARTICLE OTHER THAN MONEY FOR ANOTHER ARTICLE OTHER THAN MONEY WHICH IS REGARDED AS THE EQUIVALENT WITHOUT REFERENCE TO MONEY VALUE, UNLESS THERE IS MANIFESTED A LEGISLATIVE INTENTION THAT THE TERM SHALL HAVE A DIFFERENT AND MORE COMPREHENSIVE MEANING. THE AUTHORIZATION GIVEN BY THE ACT OF MAY 11, 1939, PUBLIC, NO. 70, 53 STAT. 739, FOR THE EXCHANGE OF OBSOLETE, ETC., MACHINES AND TOOLS PERTAINING TO THE MANUFACTURE OR REPAIR OF ORDNANCE MATERIAL FOR NEW MACHINES AND TOOLS, CONTEMPLATED "EXCHANGE" OTHER THAN IN THE RESTRICTED AND NARROW SENSE OF ARTICLE FOR ARTICLE WITHOUT REFERENCE TO MONEY VALUE, AND MUST BE CONSIDERED AS HAVING INTENDED THE ESTABLISHED PROCEDURE WITH REGARD TO "EXCHANGE" STATUTES GENERALLY, THAT IS, THE EXCHANGING OF OLD EQUIPMENT IN PART PAYMENT FOR NEW EQUIPMENT ON A CASH BID, AS WELL AS EXCHANGE ALLOWANCE FOR THE OLD EQUIPMENT, BASIS, WITH DEPOSIT OF THE PROCEEDS AS MISCELLANEOUS RECEIPTS WHERE CASH BIDS EXCEED EXCHANGE ALLOWANCE OFFERS.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE SECRETARY OF WAR, SEPTEMBER 2, 1939:

THERE HAS BEEN CONSIDERED YOUR LETTER OF AUGUST 8, 1939, AS FOLLOWS:

PUBLIC, NO. 70, OF THE 76TH CONGRESS, APPROVED MAY 11, 1939, AUTHORIZES THE SECRETARY OF WAR TO EXCHANGE OBSOLETE, UNSUITABLE, AND UNSERVICEABLE MACHINES AND TOOLS PERTAINING TO THE MANUFACTURE OR REPAIR OF ORDNANCE MATERIAL FOR NEW MACHINES AND TOOLS.

THE OBJECT IN OBTAINING THIS LEGISLATION WAS TO ENABLE THE VARIOUS MANUFACTURING ESTABLISHMENTS OF THE WAR DEPARTMENT TO EXCHANGE UNSERVICEABLE MACHINES AND TOOLS AND PARTS THEREOF FOR EQUIPMENT OF THE SAME GENERAL CHARACTER AND THUS MODERNIZE THE MANUFACTURING ESTABLISHMENTS WITH THE LEAST POSSIBLE CHARGE AGAINST APPROPRIATED FUNDS. IN AN EFFORT TO OBTAIN NEW MACHINES AND TOOLS EXPERIENCE HAS INDICATED THAT MANUFACTURERS PREFER TO TAKE IN THE OLD MACHINES AND TOOLS IN EXCHANGE RATHER THAN HAVE THESE OLD MACHINES AND TOOLS PLACED ON THE MARKET FOR PUBLIC SALE. HOWEVER, THE ADVERTISING FOR THE NEW EQUIPMENT WILL INCLUDE A REQUEST FOR BOTH EXCHANGE AND CASH BIDS ON THE USED EQUIPMENT.

IN OPERATING UNDER THIS LAW, IT IS CONTEMPLATED TO PROCURE THE NEW EQUIPMENT IN THE FOLLOWING MANNER:

INVITE BIDS ON BOTH AN EXCHANGE AND CASH BASIS FOR A PARTICULAR TYPE OR TYPES OF MACHINES OR TOOLS, STATING THAT MACHINES OR TOOLS WILL BE EXCHANGED AS WHOLE OR PART PAYMENT, AND MAKE AWARD TO THE VENDOR WHO SUBMITS BIDS MOST ADVANTAGEOUS TO THE GOVERNMENT. FOR EXAMPLE, IF SEVERAL NEW MACHINES WERE DESIRED AND A GROUP OF OLD MACHINES WERE OFFERED ON A CASH OR EXCHANGE BASIS, AND THE MOST ADVANTAGEOUS BID INDICATED THAT ONE VENDOR WOULD FURNISH THE NEW MACHINES IN EXCHANGE FOR THE OLD MACHINES FOR AN ADDITIONAL CONSIDERATION OF, SAY, $100, AWARD WOULD THEN BE MADE TO THAT VENDOR PROVIDED THE EXCHANGE VALUE SET FORTH FOR THE OLD MACHINES EXCEEDED THE BIDS RECEIVED FOR THE OLD MACHINES ON A CASH-SALE BASIS. THE OTHER HAND, IF THE MOST ADVANTAGEOUS BID UNDER THE ABOVE EXAMPLE SHOULD INDICATE THAT ONE VENDOR WILL FURNISH THE NEW MACHINES IN EXCHANGE FOR THE OLD MACHINES AND IN ADDITION WILL PAY THE GOVERNMENT, SAY $100 IN CASH, THEN AWARD WOULD BE MADE TO THAT VENDOR AND THE CASH RECEIVED FROM HIM WOULD BE DEPOSITED TO THE CREDIT OF MISCELLANEOUS RECEIPTS, PROVIDED, OF COURSE, THAT THE EXCHANGE VALUES OFFERED EXCEEDED THE BIDS RECEIVED FOR THE OLD MACHINES ON A CASH-SALE BASIS.

IT CAN READILY BE SEEN THAT IT WOULD BE IMPRACTICABLE TO PREPARE A LIST OF OLD MACHINES AND TOOLS AND HAVE IT BALANCE EXACTLY WITH THE VALUE OF THE NEW MACHINES TO BE PROCURED.

APPROVAL OF PROCEDURE UNDER THIS ACT AS OUTLINED IN PRECEDING PARAGRAPHS IS REQUESTED.

THE AUTHORITY GRANTED TO THE SECRETARY OF WAR BY THE ACT IN QUESTION RELATES EXCLUSIVELY TO THE ,EXCHANGE" OF CERTAIN MACHINES, ETC., FOR NEW ONES OF THE SAME OR EQUIVALENT GENERAL CHARACTER. IN OPERATING UNDER THIS LAW YOUR DEPARTMENT PROPOSES TO TRANSFER THE OLD EQUIPMENT AS WHOLE OR PARTIAL PAYMENT FOR NEW EQUIPMENT, OR, IF MORE ADVANTAGEOUS TO THE UNITED STATES, TO SELL THE OLD MACHINES, ETC., OUTRIGHT AND PURCHASE NEW ONES ON THE SAME BASIS. SUCH PROCEDURE IS NOT GENERALLY UNDERSTOOD TO BE CONTEMPLATED BY A LEGISLATIVE ENACTMENT WHICH MERELY PROVIDES FOR AN "EXCHANGE" OF PROPERTY. AS STATED BY THE COURT IN UNITED STATES V. RODENBOUGH, 21 F./2D) 781, 782:

THERE IS NO DIFFICULTY ABOUT THE LEGAL MEANING OF THE WORD "EXCHANGE.' IT IS A WORD OF PRECISE IMPORT AND SHARPLY DISTINGUISHED FROM A SALE. "EXCHANGE" MEANS THE GIVING OF ONE THING FOR ANOTHER. IT EXCLUDES THE IDEA OF FIRST MEASURING THE RESPECTIVE THINGS IN MONEY VALUE AND THEN SETTLING OR PAYING AND DIFFERENCE.' CHICAGO, G.W.R. CO. V. POSTAL TEL. CABLE CO. ( C.C.A.) 249 F. 664 "A "SALE" MEANS FOR MONEY. AN "EXCHANGE OF PROPERTY" IS A MERE BARTER OR TRADE. * * *" ANY TRANSACTION INTO WHICH MONEY ENTERS, EITHER AS THE CONSIDERATION FURNISHED BY ONE PARTY OR AS A BASIS FOR MEASURING THE VALUE OF THE THINGS TRANSFERRED, IS EXCLUDED. CONSTITUTE AN EXCHANGE IN THE LEGAL SENSE, THE MUTUAL TRANSFERS MUST BE IN KIND. * * *

IT IS NOT TO BE UNDERSTOOD, HOWEVER, THAT THIS IS THE ONLY DEFINITIVE CONCEPT WHICH MAY ATTACH TO THE WORD. AS STATED IN 23 CORPUS JURIS AT PAGE 186:

* * * IT HAS ALSO BEEN HELD THAT THE MERE FACT THAT ONE OF THE PARTIES IS TO PAY A SUM OF MONEY IN ADDITION TO THE PROPERTY TO BE TRANSFERRED BY HIM, OR THAT PROVISION IS MADE FOR AN ADJUSTMENT OF THE DIFFERENCE IN THE VALUES OF THE RESPECTIVE PROPERTIES, DOES NOT NECESSARILY PREVENT THE TRANSACTION FROM BEING A CONTRACT FOR THE EXCHANGE OF * * * PROPERTY * *

SEE, IN ADDITION TO CASES THERE CITED, CARY V. UNITED STATES, 22 FED. (2D) 298, 299. IT HAS EVEN BEEN STATED THAT "1THE DISTINCTION BETWEEN A SALE AND EXCHANGE OF PROPERTY IS RATHER ONE OF SHADOW THAN OF SUBSTANCE.' COMMONWEALTH V. CLARK, 14 GRAY ( MASS.) 367, 372. SEE, ALSO, HUFF V. HALL, 23 N.W. 88; BARTON V. JONES, 267, S.W. 214.

THE TRUE RULE APPEARS TO BE THAT THE WORD "EXCHANGE" WHEN USED IN A STATUTE WILL BE REGARDED AS CONTEMPLATING "THE GIVING OR TAKING OF ONE ARTICLE OTHER THAN MONEY FOR ANOTHER ARTICLE OTHER THAN MONEY WHICH IS REGARDED AS THE EQUIVALENT WITHOUT REFERENCE TO MONEY VALUE" ( WORDS AND PHRASES, THIRD SERIES, VOL. 3, P. 397, CITING BALTIMORE AND O.R. CO. V. WESTERN UNION TELEGRAPH CO., 241 FED. 162, 169) UNLESS THERE IS MANIFESTED A LEGISLATIVE INTENTION THAT THE TERM SHALL HAVE A DIFFERENT AND MORE COMPREHENSIVE MEANING.

THE INTENTION OF CONGRESS WITH RESPECT TO THE STATUTE HERE UNDER CONSIDERATION WOULD APPEAR TO BE INDICATED BY THE FOLLOWING STATEMENT FROM THE HOUSE REPORT ON THE BILL AS INTRODUCED:

PRECEDENCE NOW EXISTS FOR THIS SAME TYPE OF AUTHORIZATION--- NOTABLY, STATUTES PERMITTING THE EXCHANGE OF AMMUNITION COMPONENTS, EXCHANGE OF MACHINERY USED IN THE MANUFACTURE OF CLOTHING AND EQUIPAGE, EXCHANGE OF TRUCKS AND PASSENGER-CARRYING VEHICLES, EXCHANGE OF TYPEWRITERS AND ADDING MACHINES, EXCHANGE OF REFRIGERATORS, AND THE EXCHANGE OF CERTAIN AIR CORPS MATERIEL.

IT APPEARS FROM THIS STATEMENT THAT IT WAS CONTEMPLATED THE STATUTE WOULD PROVIDE AUTHORITY FOR DISPOSING OF OBSOLETE, UNSUITABLE, AND UNSERVICEABLE MACHINES AND TOOLS PERTAINING TO THE MANUFACTURE OR REPAIR OF ORDNANCE ON A BASIS SIMILAR TO THAT PROVIDED BY STATUTE WITH RESPECT TO THESE OTHER ARTICLES ENUMERATED IN THE REPORT. A SURVEY OF THE CITED ENACTMENTS DISCLOSES THAT THE TERM "EXCHANGE" WAS NOT USED IN THEM IN A RESTRICTED AND NARROW SENSE. FOR INSTANCE, THE STATUTE REFERRED TO IN THE REPORT AS PERMITTING THE EXCHANGE OF MACHINERY USED IN THE MANUFACTURE OF CLOTHING AND EQUIPAGE, READS:

* * * SEWING MACHINES AND OTHER LABOR-SAVING MACHINERY USED IN THE MANUFACTURE OF CLOTHING AND EQUIPAGE, MOTOR TRUCKS AND PASSENGER CARRYING VEHICLES, AND BAND INSTRUMENTS, MAY BE EXCHANGED IN PART PAYMENT FOR NEW MACHINES, VEHICLES, AND INSTRUMENTS USED FOR THE SAME PURPOSE AS THOSE PROPOSED TO BE EXCHANGED. ( ITALICS SUPPLIED.) ( AUG. 29, 1916, C. 418, SEC. 1, 39 STAT. 635.)

IT IS THE ESTABLISHED PROCEDURE UNDER STATUTES AUTHORIZING THE EXCHANGE OF EQUIPMENT, ETC., EVEN WHERE THE STATUTE DOES NOT USE THE PHRASE "IN PART PAYMENT," TO EXCHANGE THE OLD EQUIPMENT IN PART PAYMENT FOR NEW EQUIPMENT AND TO SOLICIT CASH BIDS AS WELL AS EXCHANGE ALLOWANCES FOR OLD EQUIPMENT, AND IF SUCH CASH BIDS EXCEED THE EXCHANGE ALLOWANCES OFFERED THEN AN OUTRIGHT SALE IS MADE AND THE PROCEEDS DEPOSITED AND COVERED INTO THE TREASURY AS MISCELLANEOUS RECEIPTS. SEE 28 COMP. GEN. 227.

I HAVE TO ADVISE THAT THE CONTEMPLATED PROCEDURE AS OUTLINED IN YOUR LETTER APPEARS TO BE IN ACCORD WITH THE PURPOSE SOUGHT TO BE ACCOMPLISHED BY THE LEGISLATION INVOLVED, AND THEREFORE, THIS OFFICE IS NOT REQUIRED TO OBJECT THERETO.