B-174595, MAR 7, 1972

B-174595, MAR 7, 1972

SALES CONTRACT - INTERPRETATION OF PROVISIONS - PAROL EVIDENCE RULE CONCERNING THE PROPRIETY OF RETURNING A DEPOSIT HELD BY THE FOREST SERVICE ON A TIMBER SALES CONTRACT WITH THE LOW LOGGING COMPANY. WHILE THE REGIONAL FORESTER HAS CONCEDED THAT THE INTERNAL MEMORANDUM OF MAY 23, 1969, MAY HAVE CONFUSED THE COMPANY AS TO THE METHOD OF DESIGNATING LOGS AS STANDARD OR SUBSTANDARD, A READING OF SECTIONS A2 AND B6.41 TOGETHER CLEARLY REQUIRES THAT ANY PORTION OF A LOG SEGMENT MEETING THE STANDARD REQUIREMENTS OF TABLE 1 SPECIFICATIONS SHOULD BE PRICED AS STANDARD. THE COMP. GEN. FINDS NOTHING IN THE SUBJECT MEMORANDUM WHICH WOULD INDICATE A CONTRARY INTENTION AND, IN ANY EVENT, IT IS WELL SETTLED THAT PAROL EVIDENCE MAY NOT BE USED TO VARY THE CLEAR TERMS OF A WRITTEN CONTRACT. 3 CORBIN ON CONTRACTS 573. ACCORDINGLY, THE VOUCHER MAY NOT BE CERTIFIED FOR PAYMENT.

TO MR. GEORGE D. BREITMEIER:

YOUR LETTER OF NOVEMBER 3, 1971, REQUESTS AN ADVANCE DECISION AS TO WHETHER A VOUCHER IN FAVOR OF LOW LOGGING COMPANY FOR RETURN OF A TIMBER SALE DEPOSIT MAY BE CERTIFIED FOR PAYMENT.

ON JUNE 1, 1970, LOW LOGGING COMPANY WAS AWARDED A TIMBER SALE CONTRACT FOR 342 ACRES, MORE OR LESS, AT THE GIFFORD PINCHOT NATIONAL FOREST. THE CONTRACT PROVIDED THAT STANDARD PIECES WOULD BE SOLD FOR $30.50 PER "M BD. FT." AND SUBSTANDARD PIECES AT $.25 PER ACRE. IN ORDER TO DETERMINE IF A PIECE IS STANDARD OR SUBSTANDARD, TABLE 1 OF CONTRACT SECTION A2 PROVIDES THAT THE LOG MUST BE AT LEAST 12 FEET LONG, CONTAIN NOT LESS THAN 20 BOARD FEET AND HAVE AN INSIDE BARK DIAMETER AT THE SMALL END OF AT LEAST 6 INCHES. A DISPUTE HAS ARISEN AS TO WHETHER OR NOT A LOG WHOSE DIAMETER AT THE SMALL END IS LESS THAN 6 INCHES BUT CONTAINS A SEGMENT WHICH MEETS THE TABLE 1 REQUIREMENTS SHOULD BE CONSIDERED STANDARD OR SUBSTANDARD. LOW LOGGING COMPANY CONTENDS THAT THE ENTIRE LOG IS SUBSTANDARD EVEN IF A SEGMENT OF THE LOG DOES MEET THE TABLE 1 SPECIFICATIONS WHEREAS THE FOREST SERVICE CONTENDS THAT THE PORTION OF THE LOG WHICH MEETS THE STANDARD SHOULD BE PRICED AT THE RATE OF $30.50 PER M BD. FT.

AN INTERNAL FOREST SERVICE MEMORANDUM DATED MAY 23, 1969, FROM THE ASSISTANT REGIONAL FORESTER STATES IN PART:

"A LOG OR PRODUCT TO QUALIFY AS A STANDARD SIZE PIECE MUST MEET ALL OF THE QUALIFICATIONS IN TABLE 1. *** IF IT IS LESS THAN THE MINIMUM DIAMETER, IT IS SUBSTANDARD."

THE MEMORANDUM GIVES SEVERAL EXAMPLES OF SUBSTANDARD PIECES, BUT THERE IS NO EXAMPLE OF A LOG HAVING A DIAMETER BELOW THE TABLE 1 REQUIREMENT.

ON FEBRUARY 20, 1970, THE FOREST SERVICE ISSUED ANOTHER INTERNAL MEMORANDUM DISCUSSING TABLE 1 REQUIREMENTS IN GENERAL AND THE MINIMUM DIAMETER REQUIREMENT IN PARTICULAR. IT STATES THAT ALTHOUGH A LOG MUST MEET TABLE 1 REQUIREMENTS TO BE CONSIDERED STANDARD, IF A LOG WITH A DIAMETER SMALLER THAN THE TABLE 1 REQUIREMENT COULD HAVE BEEN BUCKED (CUT AT PRESCRIBED LENGTHS) AT THE MINIMUM CONTRACT DIAMETER AND STILL PRODUCE A LOG MEETING THE TABLE 1 REQUIREMENTS, IT IS A STANDARD LOG. BASED UPON THE FEBRUARY 20, 1970, MEMORANDUM, LOW LOGGING COMPANY HAS BEEN CHARGED AT THE STANDARD LOG PRICE FOR THOSE SEGMENTS OF LOGS WHICH MEET TABLE 1 REQUIREMENTS EVEN THOUGH THE SMALL END DIAMETER DOES NOT MEET THE MINIMUM SIZE SPECIFICATION. BOTH MEMORANDA WERE IN EFFECT ON THE DATE OF CONTRACT FORMATION. THE RECORD INDICATES THAT THE CONTRACTOR WAS AWARE OF THE FIRST MEMORANDUM AT THE TIME OF AWARD BUT THERE IS NO EVIDENCE TO SHOW THAT HE WAS AWARE OF THE LATTER MEMORANDUM AT THAT TIME.

CONTRACT SECTION B8.5 "DISPUTES" STATES THAT THE INTENT OF THE PURCHASER AND FOREST SERVICE IS TO AGREE UPON THE INTERPRETATION AND PERFORMANCE OF THE CONTRACT AND THAT A DECISION MAY BE APPEALED UNDER THE PROCEDURE SET FORTH IN 36 CFR 211.20 ET SEQ. BASED UPON THIS DISPUTES CLAUSE, COUNSEL FOR LOW LOGGING REQUESTED A DECISION FROM THE REGIONAL FORESTER ON THE VALIDITY OF HIS CLIENT'S CLAIM. THE REGIONAL FORESTER INTERPRETED THE CONTRACT TO REQUIRE THAT LOGS BE BUCKED AND THAT ANY LOG SEGMENTS MEETING THE TABLE 1 REQUIREMENTS SHOULD BE PAID FOR AT STANDARD LOG PRICES. THE REGIONAL FORESTER ALSO DECIDED THAT BECAUSE LOW LOGGING COULD HAVE BEEN CONFUSED IN INTERPRETING THE CONTRACT BECAUSE OF THE MAY 23, 1969, INTERNAL MEMORANDUM, A REFUND WOULD BE APPROPRIATE SUBJECT TO APPROVAL OF OUR OFFICE.

WE AGREE WITH THE REGIONAL FORESTER'S INTERPRETATION OF THE MEANING OF THE CONTRACT. CONTRACT SECTION B6.41 "FELLING AND BUCKING" READS IN PART AS FOLLOWS:

"LOG LENGTHS SHALL BE VARIED SO AS TO OBTAIN THE GREATEST REASONABLE UTILIZATION OF MATERIAL *** ."

A READING OF SECTIONS A2 AND B6.41 TOGETHER CLEARLY REQUIRES THE PURCHASER TO CUT THE MAXIMUM NUMBER OF STANDARD PIECES BASED UPON THE UTILIZATION STANDARDS IN TABLE 1. THAT PORTION OF A LOG SEGMENT MEETING THE STATED REQUIREMENTS SHOULD BE CONSIDERED STANDARD AND SHOULD BE PRICED ON THAT BASIS, EVEN THOUGH ANOTHER PORTION OF THE LOG DOES NOT MEET THE DIAMETER STANDARD. OTHERWISE, A CONTRACTOR COULD REMOVE VALUABLE LOGS AND PAY ONLY A FRACTION OF THEIR VALUE BY FAILING TO BUCK THE INADEQUATE DIAMETER END. SUCH AN INTERPRETATION WOULD BE ILLOGICAL AND CONTRARY TO THE CLEAR LANGUAGE OF THE PROVISIONS.

WE FIND NOTHING IN THE MEMORANDUM OF MAY 23, 1969, WHICH WOULD INDICATE A CONTRARY INTENTION. IN ANY CASE THE RULE IS CLEAR THAT EXTRANEOUS OR PAROLE EVIDENCE MAY NOT BE USED TO VARY THE CLEAR TERMS OF A WRITTEN CONTRACT. 3 CORBIN ON CONTRACTS 573. THEREFORE, THE VOUCHER, WHICH WILL BE RETAINED, MAY NOT BE CERTIFIED FOR PAYMENT.