B-131802, JUN. 27, 1957

B-131802, JUN. 27, 1957

TO MR. MATHIAS NAPHTALI, COUNSELOR AT LAW:

REFERENCE IS MADE TO YOUR LETTER OF MAY 29, 1957, IN EFFECT, REQUESTING RECONSIDERATION OF OUR DECISION OF MAY 27, 1957, WHEREIN, FOR THE REASONS THEREIN STATED, WE REFUSED TO ACCORD RECOGNITION TO YOUR CLIENT, THE HAMBURG MACHINERY COMPANY, 401 BROADWAY, NEW YORK, NEW YORK, AS THE ASSIGNEE OF THE SPERRY AUTO SALES, TAVARES, FLORIDA, UNDER CONTRACT OF SALE NO. N207E-14580, AWARDED THE LATTER FIRM ON SEPTEMBER 25, 1956, BY THE DISPOSAL OFFICER AT THE U.S. NAVAL AIR STATION, JACKSONVILLE, FLORIDA.

APPARENTLY, IT IS YOUR POSITION THAT THE ACTION OF THE GOVERNMENT CONTRACTING OFFICIALS IN HAVING ACCEPTED PARTIAL PAYMENT FOR THE SUPPLIES FROM YOUR CLIENT, AND ALSO THEIR CONDUCT IN HAVING DELIVERED THE CONTRACT ITEMS TO THE HAMBURG MACHINERY COMPANY SUBSTANTIALLY AMOUNTED TO A RATIFICATION OF THE PROPOSED ASSIGNMENT OF SEPTEMBER 24, 1956, AND A RECOGNITION OF THE LATTER FIRM AS THE ASSIGNEE OF THE ORIGINAL PURCHASER-- - SPERRY AUTO SALES.

IN YOUR LETTER OF MAY 29, YOU CITE CERTAIN JUDICIAL PRECEDENTS, PARTICULARLY DULANEY V. SOUDDER, 94 F. 6; CHEMICALS RECOVERY COMPANY V. UNITED STATES, 103 F.SUPP. 1012, AND OTHERS, TO SUPPORT THE PROPOSITION THAT THE GOVERNMENT MAY, AT ITS OPTION, RECOGNIZE THE ASSIGNMENT OF A CONTRACT DESPITE THE PROHIBITORY PROVISIONS OF SECTION 3737, REVISED STATUTES, 41 U.S.C. 15.

HERE, THE RECORD UNEQUIVOCALLY DISCLOSES THAT THE GOVERNMENT, ACTING THROUGH ITS CONTRACTING OFFICER, VERBALLY, AND ALSO FORMALLY, ADVISED THE SPERRY AUTO SALES THAT ITS REQUEST TO HAVE THE AWARD TRANSFERRED OR ASSIGNED TO THE HAMBURG MACHINERY COMPANY COULD NOT BE GRANTED, AND THAT SPERRY WOULD BE HELD INDIVIDUALLY RESPONSIBLE FOR COMPLETE PERFORMANCE UNDER ITS CONTRACT IN ACCORDANCE WITH THE EXACT TERMS THEREOF. SUMMARIZATION OF THE GOVERNMENT'S POSITION IN THIS MATTER IS CONTAINED IN A LETTER DATED NOVEMBER 5, 1956, FROM THE GOVERNMENT CONTRACTING OFFICER, WHEREIN YOU SPECIFICALLY WERE ADVISED:

"IN THIS CONNECTION, THE CONTRACT IS A BINDING AGREEMENT BETWEEN SPERRY AUTO SALES AND THE GOVERNMENT, AND THE ASSIGNMENT THEREOF BY SPERRY AUTO SALES TO ANY OTHER INDIVIDUAL OR FIRM IS NEITHER PERMITTED BY THE TERMS OF THE CONTRACT NOR WAS SUCH ACCOMPLISHED. THE MATERIAL WAS RELEASED TO THE HAMBURG MACHINERY COMPANY ON INSTRUCTIONS OF SPERRY AUTO SALES, AND THE POSITION OF YOUR CLIENT WAS ONLY AS AN AGENT OF THE CONTRACTOR. * * *"

THUS, THE RECORD CLEARLY SHOWS THAT SPERRY'S PURPORTED ASSIGNMENT TO THE HAMBURG MACHINERY COMPANY WAS NEVER RECOGNIZED BY THE GOVERNMENT CONTRACTING OFFICIALS IN THIS INSTANCE SINCE THE FORMER CONCERN WAS AT ALL TIMES REGARDED AS THE PARTY PRIMARILY RESPONSIBLE FOR COMPLETE PERFORMANCE STRICTLY IN ACCORDANCE WITH THE CONTRACT TERMS. CF. 32 COMP. GEN. 227.

ASIDE FROM THE QUESTION REGARDING ASSIGNMENT, THE CLAIM FOR ADJUSTMENT OF THE CONTRACT PRICE BECAUSE OF ALLEGED MISREPRESENTATION OF THE PROPERTY IS WITHOUT MERIT. UNDER THE EXPLICIT TERMS OF ARTICLE 2 OF THE CONTRACT GENERAL SALE TERMS AND CONDITIONS, THE INVOLVED PROPERTY WAS OFFERED BY THE GOVERNMENT ON AN "AS IS," "WHERE IS" BASIS. THAT ARTICLE CONTAINS A COMPLETE DISCLAIMER BY THE GOVERNMENT OF ALL WARRANTIES,"EXPRESSED OR IMPLIED," AS TO "KIND, CHARACTER, QUALITY * * * OR DESCRIPTION" OF ANY OF THE PROPERTY, AND IT FURTHER NOTIFIED THE BIDDERS THAT "NO CLAIM WILL BE CONSIDERED FOR ALLOWANCE OR ADJUSTMENT * * * UPON FAILURE OF THE PROPERTY TO CORRESPOND WITH THE CONSUMMATED UPON SUCH TERMS, THE COURTS UNIFORMALLY HAVE HELD THAT THE LEGAL DOCTRINE OF CAVEAT EMPTOR IS FOR APPLICATION, MEANING, OF COURSE, THAT THE PURCHASER BUYS ENTIRELY AT HIS OWN RISK. SEE, TRIAD CORPORATION V. UNITED STATES, 63 C.CLS. 151; SAMUEL AND SONS V. UNITED STATES, 61 ID. 373, 380; LIPSHITZ AND COHEN V. UNITED STATES, 269 U.S. 90, 92; W. E. HEDGER COMPANY V. UNITED STATES, 52 F.2D 31, CERTIORARI DENIED, 204 U.S. 676. THERE IS NO SHOWING OF BAD FAITH ON THE PART OF THE GOVERNMENT DISPOSAL OFFICER IN DESCRIBING THE PROPERTY OFFERED FOR SALE SO AS TO OBLIGATE THE GOVERNMENT TO REFUND ANY OR ALL OF THE PURCHASE PRICE.

THEREFORE, YOU ARE ADVISED THAT, ALTHOUGH WE ARE FULLY APPRECIATE OF YOUR CLIENT'S POSITION IN THIS MATTER, WE HAVE NO OTHER ALTERNATIVE BUT TO DENY RECOGNITION OF THE PURPORTED ASSIGNMENT OF THE INSTANT CONTRACT FROM SPERRY AUTO SALES TO THE HAMBURG MACHINERY COMPANY, AND TO OTHERWISE HOLD THAT NO LEGAL OR VALID CLAIM LIES AGAINST THE UNITED STATES BECAUSE OF ALLEGED MISDESCRIPTION OF THE CONTRACT ITEMS.