B-128670, MAY 29, 1961

B-128670, MAY 29, 1961

TO WILLIAM FREUNDEL, ESQUIRE:

REFERENCE IS MADE TO YOUR LETTERS DATED APRIL 14 AND MAY 10, 1961, AND PREVIOUS CORRESPONDENCE, RELATING TO CERTAIN CLAIMS BEING ASSERTED AGAINST THE UNITED STATES BY SAYERS ELECTRIC EQUIPMENT, INC., 223 EAST FIFTH STREET, NEW YORK, NEW YORK, ON ACCOUNT OF THE TAKING OF 42 MAGNETRONS FROM THE CLAIMANT BY THE DEPARTMENT OF THE ARMY ON OCTOBER 29, 1953.

IN VIEW OF THE NATURE OF THE CLAIMS PRESENTED AND OF OUR CONCLUSIONS WITH RESPECT THERETO, AS HEREINAFTER SET FORTH, WE CONSIDER IT ADVISABLE TO REVIEW CERTAIN OF THE FACTS OF RECORD. UNDER DATE OF FEBRUARY 2, 1955, THE DEPARTMENT OF THE ARMY FORWARDED TO OUR CLAIMS DIVISION FOR DIRECT SETTLEMENT A CLAIM BY SAYERS ELECTRIC EQUIPMENT, INC., FOR THE SUM OF $14,050, REPRESENTING THE ALLEGED VALUE OF 42 MAGNETRONS REPOSSESSED FROM THE CLAIMANT BY THE DEPARTMENT OF THE ARMY ON OCTOBER 29, 1953, AS CLASSIFIED MATERIAL. THE RECORD INDICATES THAT THESE MAGNETRONS CAME INTO THE POSSESSION OF THE CLAIMANT UNDER THE FOLLOWING CIRCUMSTANCES. UNDER INVITATION FOR BIDS NO. 36-018-S-53-3, ISSUED FEBRUARY 25, 1953, AND PUBLICLY OPENED ON MARCH 19, 1953, THE SALVAGE OFFICER, INDIANTOWN GAP MILITARY RESERVATION, OFFERED FOR SALE 50 MAGNETRONS, AS MORE PARTICULARLY DESCRIBED THEREIN. THE INVITATION CARRIED A CERTIFICATION TO THE EFFECT THAT THE MAGNETRONS HAD BEEN EXAMINED BY A TECHNICALLY QUALIFIED INSPECTOR AND HAD BEEN CLASSIFIED AS UNECONOMICALLY REPARABLE AND AS HAVING NO FURTHER VALUE TO THE GOVERNMENT EXCEPT AS SALVAGE.

THE FIFTY MAGNETRONS COVERED BY THE INVITATION WERE SOLD TO THE HIGHEST BIDDER, ONE MICHAEL VITAL, 911 MAIN STREET, WILKES BARRE, PENNSYLVANIA, FOR A TOTAL CONSIDERATION OF $144.88, DELIVERY BEING MADE TO MR. VITAL ON APRIL 1, 1953. THEREAFTER, THE MAGNETRONS WERE SOLD TO GEORGE V. BARY AND COMPANY FOR A REPORTED PRICE OF $450, DELIVERY BEING MADE ON MAY 2, 1953. UNDER DATE OF SEPTEMBER 28, 1953, BARY AND COMPANY SOLD A PART OF THE PROPERTY--- CONSISTING OF 42 MAGNETRONS--- TO SAYERS ELECTRIC EQUIPMENT FOR THE REPORTED PRICE OF $1,850, DELIVERY BEING MADE ON OCTOBER 20, 1953.

THE BASIS FOR THE CLAIM AS ORIGINALLY SUBMITTED BY SAYERS ELECTRIC EQUIPMENT WAS THAT THE CLAIMANT HAD SOLD THE PROPERTY PRIOR TO THE TIME IT WAS REPOSSESSED BY THE DEPARTMENT OF THE ARMY. IT WAS ALLEGED THAT UNDER DATE OF OCTOBER 1, 1953, A PURCHASE ORDER WAS RECEIVED FROM THE WESTERN INTERNATIONAL COMPANY FOR 20 MAGNETRONS NO. 5780 AT $225 EACH, AND 20 MAGNETRONS NO. 5795 AT $425 EACH, AND THAT UNDER DATE OF OCTOBER 22, 1953, A PURCHASE ORDER WAS RECEIVED FROM THE A.M. RADIO SALES COMPANY FOR TWO MAGNETRONS NO. 5780 AT $200 EACH, AND FOR TWO MAGNETRONS NO. 5795 AT $450 EACH. SPECIFICALLY, THE CLAIM ASSERTED BY SAYERS WAS FOR PAYMENT FOR 19 MAGNETRONS NO. 5780 AT $225 EACH, OR FOR A TOTAL OF $4,275, AND FOR 23 MAGNETRONS NO. 5795 AT $425 EACH, OR FOR A TOTAL OF $9,775. WITH THE CLAIM THERE WERE ENCLOSED COPIES OF THE SO-CALLED "PURCHASE ORDERS.' EXAMINATION OF THESE "PURCHASE ORDERS" SHOWS THAT WHILE THE PARTIES INDICATED AN INTEREST IN PURCHASING THE MAGNETRONS AT THE INDICATED PRICES, THEY DID NOT, IN FACT, CONTAIN ANY SPECIFIC OFFERS TO BUY THE PROPERTY.

THE CLAIM WAS ROUTED THROUGH ADMINISTRATIVE CHANNELS AND BY AN ENDORSEMENT DATED JANUARY 17, 1955, THE OFFICE OF THE CHIEF OF FINANCE AT INDIANAPOLIS, INDIANA, RECOMMENDED ALLOWANCE OF THE CLAIM IN THE AMOUNT OF $1,850. BY SETTLEMENT DATED APRIL 27, 1956, OUR CLAIMS DIVISION DISALLOWED THE CLAIM, A COPY OF THE SETTLEMENT BEING TRANSMITTED TO THE CLAIMANT. THEREAFTER, THERE WAS RECEIVED YOUR LETTER OF FEBRUARY 29, 1960, REQUESTING RECONSIDERATION OF THE SETTLEMENT ACTION TAKEN, AND UNDER DATE OF MAY 19, 1960, WE ADDRESSED A LETTER TO THE DEPARTMENT OF THE ARMY REQUESTING THE VIEWS OF THAT DEPARTMENT AS TO THE FAIR MARKET VALUE OF THE MAGNETRONS AT THE TIME THEY WERE TAKEN FROM YOUR CLIENT. THERE WAS RECEIVED FROM THE OFFICE OF THE CHIEF OF FINANCE A LETTER DATED AUGUST 2, 1960, TRANSMITTING A REPORT AND RECOMMENDATION THAT SAYERS ELECTRIC EQUIPMENT, INC., BE ALLOWED NO MORE THAN $1,850. UNDER DATE OF SEPTEMBER 16, 1960, OUR CLAIMS DIVISION CERTIFIED THE SUM OF $1,850 FOR PAYMENT TO THE CLAIMANT.

IN YOUR LETTER OF JANUARY 16, 1961, YOU POINTED OUT THAT IN CERTIFYING THE AMOUNT OF $1,850 FOR PAYMENT TO SAYERS ELECTRIC EQUIPMENT, INC., WE MADE NO ALLOWANCE FOR INTEREST. YOU THEN CITED CERTAIN CASES IN SUPPORT OF SUCH AN ALLOWANCE AND YOU REQUESTED TO BE ADVISED AS TO WHETHER OUR OFFICE WOULD ALLOW INTEREST FROM APRIL 1, 1953--- "THE DATE OF SEIZURE"--- AND, IF SO, THAT PAYMENT BE MADE AT THE APPLICABLE RATE. BEFORE THE CLAIM FOR INTEREST COULD BE DISPOSED OF, THERE WAS RECEIVED YOUR LETTER OF FEBRUARY 9, 1961, REFERRING FURTHER TO THE ORIGINAL CLAIM OF SAYERS ELECTRIC EQUIPMENT, INC., AND SUBMITTING IN SUPPORT THEREOF AFFIDAVITS EXECUTED BY MR. ROBERT B. SAYERS AND MR. GEORGE V. BARY TO THE EFFECT THAT THE MAGNETRONS WERE IN A NEW AND SERVICEABLE CONDITION.

UNDER DATE OF FEBRUARY 27, 1961, WE TRANSMITTED TO THE DEPARTMENT OF THE ARMY COPIES OF YOUR LETTER OF FEBRUARY 9, 1961, AND THE ENCLOSURES THERETO, INVITING ATTENTION TO THE STATEMENTS BY MESSRS. SAYERS AND BARY TO THE EFFECT THAT THE MAGNETRONS WERE IN THE "ORIGINAL FACTORY PACKING.' SINCE THE CLAIM SET FORTH IN YOUR LETTER APPEARED TO BE ASSERTED ON THE BASIS THAT THE MAGNETRONS WERE SERVICEABLE AND SALABLE IN A COMMERCIAL SENSE, THAT IS, AS HAVING A COMMERCIAL FAIR MARKET VALUE, WE REQUESTED THE DEPARTMENT OF THE ARMY TO FURNISH OUR OFFICE ANY AVAILABLE INFORMATION RESPECTING THE COMMERCIAL VALUE OF NEW AND UNUSED MAGNETRONS OF THE KIND HERE INVOLVED, TOGETHER WITH ANY OTHER INFORMATION THAT WOULD BE HELPFUL IN DISPOSING OF THIS MATTER.

THE OFFICE OF THE CHIEF OF FINANCE REPLIED BY LETTER DATED APRIL 14, 1961, TRANSMITTING A STATEMENT BY THE CONTRACTING OFFICER TO THE EFFECT THAT THESE MAGNETRONS WERE SPECIALLY MANUFACTURED BY THE WESTERN ELECTRIC COMPANY FOR MILITARY PURPOSES ONLY AND THAT THEY WERE NOT SOLD COMMERCIALLY; ALSO, REFERENCE WAS AGAIN MADE TO THE FACT THAT THESE MAGNETRONS WERE SOLD BY THE GOVERNMENT AS UNSERVICEABLE MATERIAL. THE CONTRACTING OFFICER EXPRESSED THE VIEW THAT THE AMOUNT OF $1,850, ALREADY PAID TO THE CLAIMANT, REPRESENTS A LIBERAL ALLOWANCE FOR THE MAGNETS AND SCRAP VALUE FOR THE BALANCE OF THE MATERIAL.

ASIDE FROM A DECISION OF THE COURT OF CLAIMS TO WHICH REFERENCE WILL HEREINAFTER BE MADE AND WHICH WE BELIEVE TO BE DECISIVE OF THE INSTANT CLAIM, IT IS OUR VIEW THAT YOU HAVE NOT ESTABLISHED LEGAL BASIS FOR THE ALLOWANCE OF THE INSTANT CLAIM. THE ASSERTION THAT THE MAGNETRONS WERE IN THE "ORIGINAL FACTORY PACKING," EVEN IF TRUE, DOES NOT OF ITSELF ESTABLISH A VALUE. THE STATEMENTS CONTAINED IN YOUR LETTER OF JUNE 15, 1960, RELATING TO THE REPORTED PRICES FOR THESE MAGNETRONS IN THE SUMMER OF 1960, OR THE INCLUSION OF SUCH ITEMS IN THE ELECTRONIC ADVERTISER FOR OCTOBER 1957, MAY NOT, OF COURSE, BE ACCEPTED AS EVIDENCE OF THE VALUE OF THE MAGNETRONS IN OCTOBER 1953. IT MAY BE SAID THAT IF THERE WAS A READY MARKET FOR THE MAGNETRONS AT THE PRICES INDICATED, AS APPEARS TO BE CONTENDED, IT IS NOT UNDERSTOOD WHY MR. VITAL AND BARY AND COMPANY SOLD THE PROPERTY FOR THE RATHER NOMINAL SUMS RECEIVED BY THEM, ASSUMING, OF COURSE, THAT THEY WERE AWARE OF THE ALLEGED PREVAILING MARKET PRICE OF THE MAGNETRONS.

WE ARE ENCLOSING FOR YOUR INFORMATION A COPY OF THE OPINION RENDERED MAY 3, 1961, BY THE COURT OF CLAIMS IN THE CASE OF MORRIS DUBIN V. UNITED STATES, CT.CL. NO. 68-55, AND ON THE BASIS OF THE HOLDING THEREIN, COVERING, AS IT DOES, A FACTUAL SITUATION SIMILAR TO THAT INVOLVED HEREIN, WE CONCLUDE THAT THE CLAIMS OF SAYERS ELECTRIC EQUIPMENT, BOTH FOR INTEREST AND FOR THE ALLEGED VALUE OF THE MAGNETRONS, MUST BE DENIED. WILL BE NOTED THAT THE PLAINTIFF THEREIN PURCHASED CERTAIN SURPLUS PROPERTY FROM THE GOVERNMENT AS WELL AS ADDITIONAL PROPERTY FROM PRIVATE SOURCES. A LEGAL OFFICER OF THE DEPARTMENT OF THE NAVY SUBSEQUENTLY ADVISED THE PLAINTIFF THAT THE "PROPERTY IN QUESTION" WAS CLASSIFIED AND THAT THE PLAINTIFF'S POSSESSION THEREOF WAS IN VIOLATION OF THE ESPIONAGE ACT. IN THAT CASE, AS IN THIS, THE GOVERNMENT REPOSSESSED THE PROPERTY AND THE PLAINTIFF FILED HIS CLAIM FOR ITS ALLEGED VALUE.

IN THE CITED CASE THE COURT TOOK THE POSITION THAT UNDER THE PROVISIONS OF SECTION 793 OF THE ESPIONAGE ACT, 63 STAT. 736, 737, ANY PERSON HAVING IN HIS POSSESSION CLASSIFIED PROPERTY, THAT IS PROPERTY RELATING TO THE NATIONAL DEFENSE, AND WHO FAILS TO DELIVER IT TO AN OFFICER OF THE UNITED STATES ENTITLED TO RECEIVE IT, IS SUBJECT TO A FINE OR IMPRISONMENT. THE COURT STATED THAT AN OFFICIAL DEMAND THAT CLASSIFIED PROPERTY BE SURRENDERED DESTROYS ALL RIGHT AND TITLE THE HOLDER OF SUCH PROPERTY MAY HAVE. THE OPINION IS SELF-EXPLANATORY AND FURTHER COMMENT THEREON BY OUR OFFICE APPEARS TO BE UNNECESSARY EXCEPT WE WISH TO POINT OUT THAT THE COURT STRONGLY IMPLIES THAT UNDER SUCH CIRCUMSTANCES THE HOLDERS OF CLASSIFIED PROPERTY ARE NOT LEGALLY ENTITLED TO ANY PAYMENT THEREFOR WHEN REPOSSESSED, SINCE THEY COULD NOT HAVE ACQUIRED TITLE THERETO. ON PAGE 6 OF THE OPINION THE COURT MADE THE FOLLOWING STATEMENT:

"IF THE POSSESSOR WHO HAS NO RIGHT TO KEEP POSSESSION OF THE PROPERTY HAS COME INTO ITS POSSESSION AS A RESULT OF A MISTAKE BY GOVERNMENT OFFICIALS IN SELLING THE PROPERTY TO HIM, HE HAS AN URGENT EQUITY IN THE DIRECTION OF GETTING A REFUND OF HIS DIRECT OUT-OF POCKET EXPENDITURES IN THE ABORTIVE TRANSACTION. * * * WE ASSUME THAT THE GOVERNMENT IS WILLING TO DO WHAT GOVERNMENT COUNSEL IN THEIR BRIEF SAY IS "THE MOST THAT PLAINTIFF WOULD BE ENTITLED TO.'"

FOR THE REASONS SET FORTH ABOVE, PARTICULARLY THE HOLDING IN THE CITED COURT OF CLAIMS OPINION, WE CONCLUDE THAT THERE IS NO LEGAL BASIS FOR THE ALLOWANCE OF THE CLAIMS SUBMITTED BY SAYERS ELECTRIC EQUIPMENT AND THE SAME ARE HEREBY DENIED.