B-56572, ETC., JUNE 19, 1946, 25 COMP. GEN. 890

B-56572: Jun 19, 1946

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CONTRACTS - DISCOUNTS - DISCOUNT PROVISION ON INVOICES BUT NOT IN CONTRACTS WHERE SUPPLIES WERE FURNISHED THE GOVERNMENT UNDER CONTRACTS PROVIDING FOR NET PRICES. THE CONTRACTOR'S CONTENTION THAT SUCH OFFERS OF DISCOUNT WERE TYPED OR STAMPED IN ERROR MAY NOT BE REGARDED AS A LEGAL BASIS FOR REFUND OF DISCOUNT TAKEN BY THE GOVERNMENT IN MAKING PAYMENT WITHIN THE DISCOUNT PERIODS STIPULATED IN THE INVOICES. 5 COMP. 1946: REFERENCE IS MADE TO YOUR LETTER OF MARCH 18. REPRESENTING DISCOUNT ALLEGED TO HAVE BEEN ERRONEOUSLY DEDUCTED IN MAKING PAYMENT FOR VARIOUS QUANTITIES OF RUBBER AND FRICTION TAPE FURNISHED TO THE WAR DEPARTMENT. IT APPEARS THAT THE DISCOUNT INVOLVED WAS DEDUCTED IN ACCORDANCE WITH THE TERMS OF YOUR INVOICES COVERING THE VARIOUS SHIPMENTS OF TAPE.

B-56572, ETC., JUNE 19, 1946, 25 COMP. GEN. 890

CONTRACTS - DISCOUNTS - DISCOUNT PROVISION ON INVOICES BUT NOT IN CONTRACTS WHERE SUPPLIES WERE FURNISHED THE GOVERNMENT UNDER CONTRACTS PROVIDING FOR NET PRICES, WITHOUT PROMPT PAYMENT DISCOUNT, BUT INVOICES SUBMITTED OVER A CONSIDERABLE PERIOD OF TIME CONTAINED OFFERS OF DISCOUNT TYPED OR STAMPED THEREON, THE CONTRACTOR'S CONTENTION THAT SUCH OFFERS OF DISCOUNT WERE TYPED OR STAMPED IN ERROR MAY NOT BE REGARDED AS A LEGAL BASIS FOR REFUND OF DISCOUNT TAKEN BY THE GOVERNMENT IN MAKING PAYMENT WITHIN THE DISCOUNT PERIODS STIPULATED IN THE INVOICES. 5 COMP. GEN. 739, DISTINGUISHED.

COMPTROLLER GENERAL WARREN TO THE PLYMOUTH RUBBER CO., INC., JUNE 19, 1946:

REFERENCE IS MADE TO YOUR LETTER OF MARCH 18, 1946, REQUESTING REVIEW OF SETTLEMENT DATED MARCH 14, 1945, AND OF TWO SETTLEMENTS DATED JANUARY 30, 1946, WHICH DISALLOWED YOUR CLAIMS IN THE RESPECTIVE AMOUNTS OF $24,242.09, $390 AND $99.96, REPRESENTING DISCOUNT ALLEGED TO HAVE BEEN ERRONEOUSLY DEDUCTED IN MAKING PAYMENT FOR VARIOUS QUANTITIES OF RUBBER AND FRICTION TAPE FURNISHED TO THE WAR DEPARTMENT, THE NAVY DEPARTMENT, THE UNITED STATES MARINE CORPS AND THE UNITED STATES COAST GUARD UNDER VARIOUS CONTRACTS AND PURCHASE ORDERS DURING THE YEARS 1942, 1943 AND 1944.

IT APPEARS THAT THE DISCOUNT INVOLVED WAS DEDUCTED IN ACCORDANCE WITH THE TERMS OF YOUR INVOICES COVERING THE VARIOUS SHIPMENTS OF TAPE, WHICH INVOICES OFFERED 2 PERCENT DISCOUNT FOR PAYMENT WITHIN THE DISCOUNT PERIODS STIPULATED THEREIN. IN FILING THE PRESENT CLAIMS, YOU CONTENDED THAT THE OFFERS OF DISCOUNT APPEARING ON YOUR INVOICES HAD BEEN STAMPED OR TYPED THEREON IN ERROR BY YOUR BOOKKEEPING DEPARTMENT; THAT YOUR BIDS FOR FURNISHING THE TAPE HAD BEEN BASED ON NET PRICES; THAT THE CONTRACTS INVOLVED CONTAINED NO PROVISION FOR DISCOUNT FOR PROMPT PAYMENT; AND THAT, THEREFORE, DEDUCTION OF THE DISCOUNT WAS UNAUTHORIZED.

YOUR CLAIMS WERE DISALLOWED IN THE AFORESAID SETTLEMENTS FOR THE REASONS STATED THEREIN. IN YOUR LETTER OF MARCH 18, 1946, REQUESTING REVIEW OF THE SETTLEMENTS YOU ADMIT THAT $3,039.72 OF THE LARGER SUM CLAIMED BY YOU WAS PROPERLY DISALLOWED IN THE SETTLEMENT OF MARCH 14, 1945, AS REPRESENTING DISCOUNT TAKEN IN INSTANCES WHERE THE CONTRACTS PROVIDED THEREFOR, BUT YOU REITERATE YOUR PREVIOUS CONTENTIONS WITH RESPECT TO THE BALANCE OF THE AMOUNTS CLAIMED. RELATIVE TO THE ERROR WHICH ALLEGEDLY OCCURRED IN CONNECTION WITH THE PREPARATION OF YOUR INVOICES, YOU STATE:

IT IS APPRECIATED THAT THIS ERROR CONTINUED OVER A LONG PERIOD OF TIME, AND THAT, UNEXPLAINED, IT WOULD BE NATURAL TO CONCLUDE THAT THE DISCOUNT TERMS TYPED ON THE INVOICES WERE KNOWINGLY AUTHORIZED BY THE COMPANY. THE FACT IS, HOWEVER, THAT THE DISCOUNT TERMS WERE TYPED BY CLERICAL HELP WHO ASSUMED THAT DISCOUNT WAS AUTHORIZED. THE ERROR HERE COMMITTED WENT UNNOTICED AND UNDETECTED FOR THE REASON THAT THE OFFICIALS OF THE COMPANY WHO CERTIFIED THE VOUCHERS RELIED UPON THE CLERKS IN THE ORDER DEPARTMENT TO TYPE UP THE ORDER-INVOICES IN ACCORDANCE WITH THE TRUE TERMS OF THE CONTRACTS OR PURCHASE ORDERS. SINCE PAYMENTS RECEIVED WERE IN ACCORDANCE WITH THE TERMS OF THE ORDER INVOICES, IT WAS ASSUMED THAT THE PAYMENTS WERE LIKEWISE CORRECT. IN THIS CONNECTION, YOU CITE 5 COMP. GEN. 739, AS AUTHORITY FOR THE PROPOSITION THAT, WHERE NEITHER THE BID NOR THE CONTRACT PROVIDES FOR DISCOUNT FOR PROMPT PAYMENT, A CONTRACTOR WHO HAS OFFERED A DISCOUNT ON HIS INVOICES THROUGH MISTAKE IS ENTITLED TO RECOVER THE DISCOUNT DEDUCTED. ALSO, YOU DIRECT ATTENTION TO BALTIMORE AND OHIO RAILROAD COMPANY V. UNITED STATES, 59 C. CLS. 545, AND LOUISVILLE AND NASHVILLE RAILROAD COMPANY V. UNITED STATES, 59 C. CLS. 678, AND STATE:

* * * IN THESE CASES THE COURT HELD THAT THE FACT THAT THE CLAIMANTS HAD ACCEPTED A SMALLER SUM DID NOT PRECLUDE THE RECOVERY OF THE DIFFERENCE BETWEEN WHAT THEY HAD ACCEPTED AND WHAT THEY PROPERLY SHOULD HAVE ASKED HAD THEY NOT MADE AN ERROR IN PREPARING THEIR BILLS.

THE QUESTION OF WHETHER THE CLAIMANT IS BARRED FROM RECOVERY BY REASON OF HIS ACQUIESCENCE IN THE DEDUCTION OF THE DISCOUNTS MADE BY THE GOVERNMENT IS GOVERNED BY THE CASE OF ST. LOUIS, BROWNSVILLE AND MEXICO RAILROAD COMPANY V. UNITED STATES, 268 U.S. 169 (1925). THE RULE AS STATED BY MR. JUSTICE BRANDEIS IS THAT:

"ACQUIESCENCE BY THE CLAIMANT IN THE PAYMENT BY THE GOVERNMENT OF A SMALLER AMOUNT THAN IS DUE WILL ORDINARILY AFFECT THE DISCHARGE. ACQUIESCENCE CAN BE ESTABLISHED BY SHOWING CONDUCT BEFORE THE PAYMENT WHICH MIGHT HAVE LED THE GOVERNMENT TO BELIEVE THAT THE AMOUNT ALLOWED WAS ALL THAT WAS CLAIMED, OR THAT SUCH AMOUNT, IF PAID, WOULD BE RECEIVED IN FULL SATISFACTION OF THE CLAIM. ACQUIESCENCE CAN ALSO BE ESTABLISHED BY SHOWING CONDUCT AFTER THE PAYMENT WHICH MIGHT HAVE LED THE GOVERNMENT TO BELIEVE THAT THE AMOUNT ACTUALLY RECEIVED WAS ACCEPTED IN FULL SATISFACTION OF THE ORIGINAL CLAIM. BUT TO CONSTITUTE ACQUIESCENCE, WITHIN THE MEANING OF THIS RULE, SOMETHING MORE THAN ACCEPTANCE OF THE SMALLER SUM WITHOUT PROTEST MUST BE SHOWN. THERE MUST HAVE BEEN SOME CONDUCT ON THE PART OF THE CREDITOR AKIN TO ABANDONMENT OR WAIVER OR FROM WHICH AN ESTOPPEL MIGHT ARISE.'

THAT A DISTINCTION IS RECOGNIZED BETWEEN ACQUIESCENCE FOUNDED UPON ABANDONMENT, WAIVER OR ESTOPPEL, AND AN ERRONEOUS STATEMENT OF A CLAIM IS EVIDENCED BY AN OPINION OF THE COURT IN LOUISVILLE AND NASHVILLE RAILROAD COMPANY V. UNITED STATES, SUPRA. * * *

A MUTUAL MISTAKE OF FACT CANNOT BE THE BASIS OF AN ESTOPPEL, PARTICULARLY WHERE NO INEQUITY WOULD RESULT FROM PRECLUDING ESTOPPEL AS A DEFENSE. ROEDEL V. UNITED STATES, 82 CT. OF CLAIMS 655 (1936); ROCKWOOD V. UNITED STATES, 39 FED. 2D 984 ( CT. OF CLAIMS 1930).

WHILE IN 5 COMP. GEN. 739, INVOLVING A CASE WHERE SUPPLIES WERE FURNISHED THE NAVY DEPARTMENT UNDER A CONTRACT PROVIDING FOR NET PRICES AND MAKING NO REFERENCE TO AN ALLOWANCE OF DISCOUNT FOR PROMPT PAYMENT, IT WAS HELD THAT THE CONTRACTOR WAS ENTITLED TO THE REMISSION OF THE DISCOUNT DEDUCTED IN MAKING PAYMENT ON THE TWO INVOICES THERE INVOLVED ON THE GROUND THAT THE OFFER OF DISCOUNT HAD BEEN TYPED ON THE INVOICES IN ERROR, THE CONTRACTOR IN THAT CASE BROUGHT THE MATTER TO THE ATTENTION OF THE ADMINISTRATIVE OFFICE CONCERNED IMMEDIATELY UPON RECEIVING PAYMENT ON THE INVOICES AND THE RECORD SHOWED THAT THE EARLIER INVOICES COVERING THE REMAINDER OF THE MATERIALS DELIVERED UNDER THE CONTRACT HAD NOT CONTAINED OFFERS OF DISCOUNT. HENCE, THE FACTS IN THAT CASE ARE READILY DISTINGUISHABLE FROM THOSE CONTAINED IN THE INSTANT CASE. HERE THE ERRORS WHICH ARE ALLEGED TO HAVE OCCURRED WERE REPEATED IN COUNTLESS INSTANCES OVER A THREE-YEAR PERIOD AND WERE NOT BROUGHT TO THE ATTENTION OF THE ADMINISTRATIVE AGENCIES CONCERNED BEFORE THE END OF SUCH PERIOD.

MOREOVER, THE FACTUAL SITUATIONS IN BALTIMORE AND OHIO RAILROAD COMPANY V. UNITED STATES, AND LOUISVILLE AND NASHVILLE RAILROAD COMPANY V. UNITED STATES, SUPRA, WERE ENTIRELY DIFFERENT FROM THE FACTUAL SITUATION IN THIS CASE. IN THE FIRST INSTANCE, THE COURT HELD THAT THE ERROR OF MULTIPLICATION APPEARING ON THE PLAINTIFF'S BILL WAS AN OBVIOUS ONE, SINCE THE UNIT CARRYING CHARGE AND WEIGHT OF THE MERCHANDISE AS SHOWN THEREON WERE CORRECT, AND THAT "THE AUDITOR, IN EXAMINING THE ACCOUNT AND PASSING IT IN THAT SHAPE MUST HAVE PARTICIPATED IN THE MISTAKE KNOWINGLY PASSED AN ACCOUNT WITH SUCH A MISTAKE IN IT, TO THE DETRIMENT OF THE PLAINTIFF.' THE SECOND INSTANCE, A TERMINAL CARRIER WAS ALLOWED TO RECOVER THE DIFFERENCE IN FREIGHT CHARGES ARISING OUT OF THE USE OF AN INCORRECT TARIFF, ON THE GROUND THAT THE PARTIES--- WHO THOUGHT THAT THE CORRECT TARIFF HAD BEEN USED--- HAD MADE A MUTUAL MISTAKE, IT BEING POINTED OUT BY THE COURT THAT, AS BETWEEN THE TERMINAL CARRIER AND THE INTERMEDIATE CARRIERS, IT WAS THE FORMER'S STATUTORY DUTY TO COLLECT THE PROPER TARIFF. CONTRARY TO YOUR CONTENTION, THERE WAS NO MUTUAL MISTAKE INVOLVED IN THE PRESENT CASE. SUCH MISTAKE AS OCCURRED WAS MADE BY YOU, IN SUPPOSING THAT THE APPLICABLE CONTRACTS PROVIDED FOR THE DISCOUNT WHICH YOU OFFERED. IT FOLLOWS THAT THE SAID MISTAKE WAS A UNILATERAL ONE ATTRIBUTABLE SOLELY TO YOUR OWN NEGLIGENCE. IN VIEW THEREOF AND, SINCE AN AGREEMENT TO ACCEPT DISCOUNT FOR PROMPT PAYMENT OF A DEBT MAY BE BINDING IRRESPECTIVE OF WHETHER THE CREDITOR PREVIOUSLY WAS UNDER ANY OBLIGATION TO OFFER DISCOUNT (SEE ANNOTATION APPEARING IN 24 A.L.R. 1474), THE GOVERNMENT OFFICIALS RESPONSIBLE FOR MAKING THE PAYMENTS HERE INVOLVED WERE FULLY JUSTIFIED IN TAKING ADVANTAGE OF YOUR OFFERS OF DISCOUNT.

WITH RESPECT TO YOUR CONTENTION THAT, UNDER THE CIRCUMSTANCES, YOUR ACCEPTANCE OF PAYMENTS WITH THE DISCOUNT DEDUCTED DOES NOT ESTABLISH AN ACQUIESCENCE THEREIN SO AS TO BAR YOU FROM RECOVERY OF THE FULL AMOUNTS UNDER THE RULES ENUNCIATED BY THE COURT IN ST. LOUIS, BROWNSVILLE AND MEXICO RAILWAY COMPANY V. UNITED STATES, SUPRA, YOUR ATTENTION IS INVITED TO SOUTHERN PACIFIC CO. V. UNITED STATES, 268 U.S. 263, WHEREIN THE SUPREME COURT OF THE UNITED STATES, IN APPLYING SAID RULES HELD THAT THE PLAINTIFF WAS PRECLUDED FROM RECOVERING THE DIFFERENCE BETWEEN AMOUNTS PAID BY THE GOVERNMENT FOR TRANSPORTATION AT LAND-GRANT RATES AND THE LARGER AMOUNTS WHICH IT WOULD HAVE BEEN LAWFULLY ENTITLED TO CHARGE UNDER ITS TARIFF BY REASON OF CIRCUMSTANCES SIMILAR TO THOSE HERE INVOLVED.

FURTHERMORE, IT MAY NOT BE CONTENDED SUCCESSFULLY THAT, SINCE THE GOVERNMENT WOULD NOT BE PAYING ANY MORE FOR THE TAPE THAN IT HAD AGREED TO PAY UNDER THE TERMS OF THE CONTRACTS AND PURCHASE ORDERS INVOLVED, IT WOULD NOT BE INEQUITABLE TO REQUIRE THE GOVERNMENT TO PAY THE AMOUNTS CLAIMED. THE PRESUMPTION IS THAT THE GOVERNMENT EXPEDITED THE PAYMENTS IN QUESTION IN ORDER TO TAKE ADVANTAGE OF THE DISCOUNT WHICH YOU OFFERED AND THAT, IN DOING SO, IT WAS INCONVENIENCED IN A MANNER THAT IT WOULD NOT HAVE BEEN HAD SUCH PAYMENTS BEEN MADE IN THE REGULAR COURSE OF BUSINESS. HENCE, IF THE GOVERNMENT NOW WERE REQUIRED TO REFUND THE DISCOUNT, IT WOULD BE PLACED IN THE POSITION OF HAVING PERFORMED SPECIAL SERVICES WITHOUT RECEIVING ANY CONSIDERATION THEREFOR, WHICH WOULD BE CLEARLY INEQUITABLE.

ACCORDINGLY, THERE IS PERCEIVED NO PROPER BASIS FOR THE ALLOWANCE OF YOUR CLAIMS, AND THE SETTLEMENTS IN QUESTION ARE SUSTAINED.