B-53611, JANUARY 22, 1946, 25 COMP. GEN. 539

B-53611, JANUARY 22, 1946, 25 COMP. GEN. 539

PROPERTY - PRIVATE - LOANED EQUIPMENT - GOVERNMENT-BAILEE LIABILITY IN THE ABSENCE OF A SPECIAL UNDERTAKING ENLARGING THE CONTRACTUAL OR LEGAL RESPONSIBILITY OF THE GOVERNMENT AS BAILEE FOR NEGLIGENCE IN THE USE AND CARE OF PRIVATE PROPERTY ENTRUSTED TO IT, THE GOVERNMENT DOES NOT BECOME AN INSURER OF THE PROPERTY AND IS NOT RESPONSIBLE FOR DAMAGE OR LOSS RESULTING FROM AN UNAVOIDABLE ACCIDENT OR UNDER CIRCUMSTANCES WHICH MIGHT NOT REASONABLY HAVE BEEN FORESEEN AND PROVIDED AGAINST. WHERE PRIVATE EQUIPMENT IS LOANED TO THE GOVERNMENT FREE OF CHARGE, A GRATUITOUS BAILMENT IS CREATED, UNDER WHICH THE GOVERNMENT UNDERTAKES TO EXERCISE GREAT CARE AND TO BECOME LIABLE FOR SLIGHT NEGLIGENCE IN THE USE OF THE EQUIPMENT, AND, IN SUCH CASES, COMPENSATION IS ALLOWABLE FOR DAMAGE OR LOSS IF THE EVIDENCE CLEARLY SHOWS THAT SUCH DAMAGE OR LOSS WAS PROXIMATELY CAUSED BY NEGLIGENCE ON THE PART OF THE GOVERNMENT IN FAILING TO EXERCISE THE HIGH DEGREE OF CARE REQUIRED. THE PROVISIONS OF A CONTRACT FOR THE GRATUITOUS LOAN OF PRIVATE EQUIPMENT, UNDER WHICH THE GOVERNMENT ASSUMED RESPONSIBILITY "FOR THE SAFE -KEEPING OF SAID EQUIPMENT" AND ITS RETURN "IN THE SAME CONDITION IN WHICH IT WAS LOANED EXCEPTING REASONABLE WEAR AND TEAR," MAY NOT BE REGARDED, IN THE ABSENCE OF A CONTRARY INTENT, AS A SPECIAL COVENANT TO INSURE THE EQUIPMENT FROM DAMAGES OR LOSS DUE TO CAUSES BEYOND THE CONTROL OF THE GOVERNMENT, AND, THEREFORE, WHERE A SAFE LOANED UNDER SUCH A CONTRACT WAS DAMAGED THROUGH BURGLARY WITHOUT NEGLIGENCE ON THE PART OF THE GOVERNMENT, THE GOVERNMENT IS NOT LIABLE THEREFOR. WHERE PRIVATE EQUIPMENT IS LOANED GRATUITOUSLY TO THE GOVERNMENT PURSUANT TO A WRITTEN CONTRACT HAVING NO PROVISION AS TO THE CONDITION IN WHICH THE EQUIPMENT IS TO BE RETURNED, THE LIABILITY OF THE GOVERNMENT AS GRATUITOUS BAILEE IS PREDICATED BY LAW UPON AN IMPLIED COVENANT TO EXERCISE GREAT CARE IN THE POSSESSION AND USE OF THE EQUIPMENT AND TO RETURN IT IN AS GOOD CONDITION AS WHEN RECEIVED, ORDINARY WEAR AND TEAR EXCEPTED, AND THE GOVERNMENT IS NOT LIABLE FOR LOSS OR DAMAGE UNLESS IT IS THE RESULT OF NEGLIGENCE IN FAILING TO EXERCISE SUCH CARE. WHERE PRIVATE EQUIPMENT IS LOANED GRATUITOUSLY TO THE GOVERNMENT UNDER A VERBAL AGREEMENT MERELY TO RETURN IT IN AS GOOD CONDITION AS WHEN RECEIVED, THE GOVERNMENT, UPON DAMAGE OR LOSS OF THE EQUIPMENT, IS REQUIRED TO BEAR THE EXPENSE OF RESTORATION TO ITS ORIGINAL CONDITION ONLY WHEN IT IS CLEAR THAT THE AGREEMENT IS ONE OF INSURANCE PROVIDING FOR A RETURN OF THE EQUIPMENT IN GOOD CONDITION IN ALL EVENTS, OR WHEN THE DAMAGE OR LOSS IS THE RESULT OF NEGLIGENCE ON THE PART OF THE GOVERNMENT IN FAILING TO EXERCISE GREAT CARE. WHERE PRIVATE EQUIPMENT IS LOANED GRATUITOUSLY TO THE GOVERNMENT UNDER CONDITIONS SUCH AS WOULD CONTEMPLATE ITS REDELIVERY TO THE OWNER, THERE IS NO OBJECTION TO PAYMENT OF THE NECESSARY EXPENSES TO RETURN THE EQUIPMENT IN ACCORDANCE WITH PREVAILING LOCAL USAGE--- SUCH AS TO THE SITE FROM WHICH BORROWED--- IN THE ABSENCE OF ANY AGREEMENT RELATIVE TO THE MANNER OF THE RETURN; HOWEVER, WHERE THERE IS NO UNDERSTANDING OR INTENTION THAT THE GOVERNMENT ASSUME THE EXPENSE OF REDELIVERY, IT IS SUFFICIENT TO NOTIFY THE OWNER OF THE INTENTION TO TERMINATE THE BAILMENT AFTER THE ALLOWANCE OF A REASONABLE PERIOD OF TIME FOR THE OWNER TO CALL FOR THE EQUIPMENT. IT IS PROPER THAT CLAIMS FOR LOSS OR DAMAGE TO PRIVATE PROPERTY LOANED TO THE GOVERNMENT IN WHICH THERE IS A DOUBT AS TO THE LIABILITY OF THE GOVERNMENT AS BAILEE BE FORWARDED TO THIS OFFICE FOR DIRECT SETTLEMENT, TOGETHER WITH THE ESSENTIAL PAPERS, A COMPLETE REPORT OF THE FACTS SURROUNDING THE BAILMENTS, ADMINISTRATIVE RECOMMENDATIONS, AND CITATIONS TO THE APPROPRIATIONS CHARGEABLE IN THE EVENT OF ALLOWANCE OF THE CLAIMS.

COMPTROLLER GENERAL WARREN TO THE PRICE ADMINISTRATOR, OFFICE OF PRICE ADMINISTRATION, JANUARY 22, 1946:

REFERENCE IS MADE TO YOUR LETTER OF NOVEMBER 1, 1945, AS FOLLOWS:

WHEN THE OFFICE OF PRICE ADMINISTRATION WAS CREATED AND ITS PROGRAM OF LOCAL BOARD OPERATIONS ESTABLISHED, IT WAS NECESSARY TO OBTAIN THE COOPERATION AND SUPPORT OF LOCAL CITIZENS IN FURNISHING IMMEDIATELY, SPACE AND EQUIPMENT. THIS COOPERATION AND SUPPORT WAS READILY OBTAINED AND IN MANY INSTANCES SPACE AND EQUIPMENT WERE LOANED TO OPA FREE OF CHARGE.

NOW THAT THE OFFICE OF PRICE ADMINISTRATION IS CURTAILING ITS PROGRAM AND LIQUIDATING SEVERAL THOUSAND BOARDS, WE ARE CONFRONTED WITH SEVERAL PROBLEMS COVERING THE RETURN OF SUCH BORROWED EQUIPMENT TO THE RIGHTFUL OWNERS.

1. IN SOME INSTANCES THE LOAN OF EQUIPMENT WAS COVERED BY A WRITTEN AGREEMENT CONTAINING A PROVISION THAT THE EQUIPMENT WOULD BE RETURNED TO THE OWNER IN AS GOOD CONDITION AS WHEN RECEIVED, ORDINARY WEAR AND TEAR EXCEPTED. WE NOW HAVE BEFORE US A SPECIFIC CASE WHEREBY A SAFE WAS LOANED TO A LOCAL WAR PRICE AND RATIONING BOARD AND SUCH LOAN WAS COVERED BY AN AGREEMENT CONTAINING THE FOLLOWING CLAUSE: "THE GOVERNMENT AGREES TO BECOME RESPONSIBLE FOR THE SAFEKEEPING OF SAID EQUIPMENT AND AGREES TO RETURN SAME TO THE LENDER AT THE END OF THE LOAN PERIOD IN THE SAME CONDITION IN WHICH IT WAS LOANED EXCEPTING REASONABLE WEAR AND TEAR ARISING FROM THE CAREFUL USE OF EQUIPMENT.' THE LOCAL BOARD WAS BURGLARIZED AND THE SAFE WAS BROKEN INTO BY USE OF EXPLOSIVES, THEREBY CAUSING CONSIDERABLE DAMAGE. CAN THE OFFICE OF PRICE ADMINISTRATION PAY FOR THE NECESSARY REPAIRS OR PAY ANY COMPROMISE IT MAY REACH WITH THE OWNER OF THE SAFE?

2. ANOTHER QUESTION WHICH HAS ARISEN IS WHETHER OR NOT THE OFFICE OF PRICE ADMINISTRATION CAN PAY FOR DAMAGE OR TOTAL LOSS OF EQUIPMENT WHICH WAS LOANED TO OPA AND COVERED BY A WRITTEN LOAN AGREEMENT WHICH DOES NOT CONTAIN ANY PROVISION ON THE CONDITION OF THE EQUIPMENT UPON ITS RETURN TO ITS OWNER.

3. CERTAIN LOANS OF EQUIPMENT WERE NOT COVERED BY ANY WRITTEN AGREEMENT. HOWEVER, IN SOME INSTANCES THERE WAS A VERBAL UNDERSTANDING TO THE EFFECT THAT THE EQUIPMENT WOULD BE RETURNED IN AS GOOD A CONDITION AS RECEIVED. CAN THE OFFICE OF PRICE ADMINISTRATION PAY FOR THE DAMAGE OR TOTAL LOSS OF EQUIPMENT UNDER THESE CONDITIONS?

4. THE LOAN OF EQUIPMENT ALSO GIVES RISE TO THE PROBLEM OF PHYSICALLY RETURNING THE LOANED EQUIPMENT TO THE OWNER. MAY THE OPA PAY THE NECESSARY EXPENSES INCIDENT TO THE RETURN OF EQUIPMENT TO ITS OWNER WHEN SUCH EQUIPMENT WAS LOANED TO OPA FREE OF CHARGE?

AS I HAVE INDICATED ABOVE, THE PROBLEMS DISCUSSED HEREIN ARE IN NEED OF AN IMMEDIATE ANSWER, AND I HOPE YOU WILL GIVE THIS MATTER YOUR PROMPT ATTENTION.

ANSWERS TO THE QUESTIONS SUBMITTED INVOLVE A CONSIDERATION OF APPLICABLE PRINCIPLES OF THE LAW OF BAILMENTS. ORDINARILY, THE GOVERNMENT AS BAILEE BECOMES RESPONSIBLE FOR NEGLIGENCE IN THE USE AND CARE OF THE PROPERTY ENTRUSTED TO IT. THIS RESPONSIBILITY USUALLY IS FIXED BY THE EXPRESS TERMS OF THE AGREEMENT, BUT, IF THERE BE NONE, IT IS IMPOSED BY LAW. IN THIS CONNECTION, HOWEVER, IT IS WELL SETTLED THAT, IN THE ABSENCE OF A SPECIAL UNDERTAKING ENLARGING SUCH RESPONSIBILITY, THE BAILEE DOES NOT BECOME AN INSURER OF THE PROPERTY AND IS NOT RESPONSIBLE FOR DAMAGE OR LOSS RESULTING FROM AN UNAVOIDABLE ACCIDENT OR UNDER CIRCUMSTANCES WHICH MIGHT NOT REASONABLY HAVE BEEN FORESEEN AND PROVIDED AGAINST. SEE, GENERALLY, 8 C.J.S. BAILMENTS SECTION 22 AND 26.

THE STANDARD OF CARE OBLIGATORY UPON THE BAILEE, AND THE ATTENDANT LIABILITY FOR DAMAGE OR LOSS, DEPENDS UPON THE NATURE OF THE BAILMENT. WHEN EQUIPMENT IS LOANED TO THE GOVERNMENT FREE OF CHARGE, A GRATUITOUS BAILMENT RELATIONSHIP IS CREATED UNDER WHICH THE GOVERNMENT UNDERTAKES TO EXERCISE GREAT CARE AND TO BECOME LIABLE FOR SLIGHT NEGLIGENCE IN THE USE OF THE EQUIPMENT. IN SUCH CASES, COMPENSATION USUALLY IS ALLOWABLE FOR DAMAGE OR LOSS IF THE EVIDENCE CLEARLY SHOWS THAT SUCH DAMAGE OR LOSS WAS PROXIMATELY CAUSED BY NEGLIGENCE IN FAILING TO EXERCISE THE HIGH DEGREE OF CARE REQUIRED. SEE, GENERALLY, 8 C.J.S. BAILMENTS SECTION 29.

IN THE SITUATION OUTLINED WITH REFERENCE TO YOUR FIRST QUESTION, THE LIABILITY OF THE GOVERNMENT TO BEAR THE COST OF REPAIRS NECESSARY TO RESTORE THE SAFE WHICH WAS DAMAGED BY BURGLARS IS FOR DETERMINATION IN THE LIGHT OF THE INTENTION OF THE PARTIES, WHICH, IN THE ABSENCE OF OTHER CLEAR EVIDENCE, IS TO BE GATHERED FROM THE EXPRESS WRITTEN AGREEMENT "TO BECOME RESPONSIBLE FOR THE SAFE-KEEPING OF SAID EQUIPMENT" AND "TO RETURN SAME TO THE LENDER AT THE END OF THE LOAN PERIOD IN THE SAME CONDITION IN WHICH IT WAS LOANED EXCEPTING REASONABLE WEAR AND TEAR ARISING FROM THE CAREFUL USE OF EQUIPMENT.' IN THE ABSENCE OF OTHER EVIDENCE OF INTENT, THE RESPONSIBILITY UNDERTAKEN THEREBY WOULD APPEAR TO HAVE BEEN THAT OF THE USUAL BAILEE WITH ENLARGEMENT. THE GOVERNMENT DID NOT IN SO MANY WORDS ASSUME LIABILITY FOR LOSS FROM EVERY CAUSE WHATSOEVER OR GUARANTEE TO RETURN THE SAFE IN GOOD CONDITION IN ALL EVENTS; AND, HENCE, THE AGREEMENT MAY NOT BE REGARDED AS CONSTITUTING A SPECIAL COVENANT TO INSURE THE SAFE FROM DAMAGES OR LOSS DUE TO CAUSES BEYOND ITS CONTROL. SEE CARY- DAVIS TUG AND BARGE CO. V. FOX, 22 F.2D 64. CONSEQUENTLY, IF THE BURGLARY OCCURRED WITHOUT NEGLIGENCE ON THE PART OF THE OFFICE OF PRICE ADMINISTRATION--- THAT IS, DESPITE AN EXERCISE BY IT OF THE REQUISITE HIGH DEGREE OF CARE--- THE GOVERNMENT IS NOT UNDER ANY LEGAL DUTY TO MAKE THE NECESSARY REPAIRS. HOWEVER, THERE IS A CONSIDERABLE CONFLICT IN THE DECIDED CASES AS TO THE RESPONSIBILITY OF A BAILEE UNDER A BAILMENT CONTRACT CONTAINING PROVISIONS SIMILAR TO THOSE CONTAINED IN THE CASE UNDER CONSIDERATION. FOR THAT REASON, A CONTRARY CONCLUSION MIGHT BE REQUIRED, IN A PARTICULAR CASE, UPON THE PRESENTATION OF CLEAR EVIDENCE OF AN INTENTION ON THE PART OF THE GOVERNMENT TO BE LIABLE FOR DAMAGE UNDER SUCH CIRCUMSTANCES.

THE SECOND SITUATION INVOLVES A WRITTEN AGREEMENT WHICH DOES NOT CONTAIN ANY PROVISION AS TO THE CONDITIONS IN WHICH THE EQUIPMENT LOANED FREE OF CHARGE IS TO BE RETURNED. HERE THE LIABILITY OF THE GOVERNMENT IS THAT IMPOSED BY LAW--- PREDICATED UPON AN IMPLIED COVENANT TO EXERCISE GREAT CARE IN THE POSSESSION AND USE OF THE EQUIPMENT AND TO RETURN IT IN AS GOOD CONDITION AS WHEN RECEIVED, ORDINARY WEAR AND TEAR EXCEPTED. UNLESS DAMAGE OR LOSS RESULTED FROM NEGLIGENCE IN FAILING TO EXERCISE SUCH CARE, THE GOVERNMENT IS NOT LIABLE THEREFOR.

WHERE, AS IN THE SITUATION COVERED BY YOUR THIRD QUESTION, THE LOANED EQUIPMENT IS RECEIVED UNDER A VERBAL AGREEMENT MERELY TO RETURN IT IN AS GOOD CONDITION AS WHEN RECEIVED, THE LIABILITY OF THE GOVERNMENT IS FOR DETERMINATION IN THE SAME MANNER. UNLESS IT IS CLEAR FROM ALL OF THE FACTS AND CIRCUMSTANCES THAT THE AGREEMENT IS ONE OF INSURANCE PROVIDING FOR A RETURN OF THE EQUIPMENT IN GOOD CONDITION IN ALL EVENTS, OR UNLESS THE DAMAGE OR LOSS HAS RESULTED FROM NEGLIGENCE, THE GOVERNMENT IS NOT REQUIRED TO BEAR ANY EXPENSE OF RESTORATION TO ORIGINAL CONDITION.

WITH RESPECT TO YOUR FOURTH QUESTION, RELATING TO THE AUTHORITY OF THE OFFICE OF PRICE ADMINISTRATION TO PAY EXPENSES INCIDENT TO A RETURN OF LOANED EQUIPMENT TO ITS OWNERS, THERE IS PERCEIVED NO OBJECTION TO THE PAYMENT OF SUCH EXPENSES AS MAY BE NECESSARY WHEN THE CONDITIONS OF THE LOANS CONTEMPLATE SUCH A RETURN. IN THE EVENT THAT THERE IS NO EXPRESS AGREEMENT IN THIS RESPECT, THE LAW APPLIES A DUTY TO RETURN THE PROPERTY IN ACCORDANCE WITH PREVAILING LOCAL USAGE, SUCH AS TO THE SITE FROM WHICH BORROWED. BUT IN INSTANCES WHERE THE PROPERTY WAS DELIVERED TO THE GOVERNMENT WITHOUT ANY UNDERSTANDING OR INTENTION THAT THE GOVERNMENT ASSUME THE BURDEN AND EXPENSE OF REDELIVERY, IT WOULD APPEAR SUFFICIENT TO FURNISH THE OWNERS APPROPRIATE NOTIFICATION OF INTENTION TO TERMINATE THE BAILMENT AFTER THE ALLOWANCE OF A REASONABLE PERIOD OF TIME FOR THEM TO CALL FOR IT. SEE, GENERALLY, 8 C.J.S. BAILMENTS SECTION 37 AND 41.

OF COURSE, SLIGHT DIFFERENCES IN THE FACTS AND CIRCUMSTANCES IN ANY CASE MAY AFFECT THE LIABILITY OF THE GOVERNMENT. CONSEQUENTLY, IN THE ABSENCE OF A DETAILED REPORT COVERING ALL PERTINENT FACTS IN EACH CASE, IT IS NOT POSSIBLE, IN RESPONSE TO YOUR GENERAL INQUIRIES, TO DO MORE THAN DISCUSS BRIEFLY SOME OF THE MORE IMPORTANT PRINCIPLES OF LIABILITY REGARDED AS GENERALLY APPLICABLE TO THE PROBLEMS OUTLINED. FOR THAT REASON IT IS SUGGESTED THAT ALL CLAIMS IN WHICH THERE MAY BE THE SLIGHTEST DOUBT AS TO THE LIABILITY OF THE GOVERNMENT BE FORWARDED TO THE CLAIMS DIVISION OF THE GENERAL ACCOUNTING OFFICE FOR DIRECT SETTLEMENT, ACCOMPANIED BY THE ESSENTIAL PAPERS, A COMPLETE REPORT OF THE FACTS SURROUNDING THE BAILMENTS, ADMINISTRATIVE RECOMMENDATIONS, AND CITATIONS TO THE APPROPRIATIONS CHARGEABLE IN THE EVENT OF ALLOWANCE OF THE CLAIMS INVOLVED.