B-145231, AUG. 24, 1961

B-145231, AUG. 24, 1961

TO ACE SURPLUS ENGINES AND PARTS COMPANY:

REFERENCE IS MADE TO YOUR ATTORNEYS' LETTER OF JULY 13, 1961, REQUESTING RECONSIDERATION OF OUR DECISION OF APRIL 4, 1961, WHICH SUSTAINED GENERAL ACCOUNTING OFFICE SETTLEMENT DATED DECEMBER 16, 1959, DISALLOWING YOUR CLAIM IN THE AMOUNT OF $2,350.70 FOR PARTIAL REFUND OF AN AMOUNT PAID BY YOU FOR ROCKER ARM ASSEMBLIES PURCHASED FROM THE REDISTRIBUTION AND MARKETING DIVISION, CONTRACTING BRANCH, KELLY AIR FORCE BASE, SAN ANTONIO, TEXAS, UNDER INVITATION NO. 41-608-S-59-59, DATED APRIL 17, 1959.

THE FACTS OF THE MATTER WERE SET OUT FULLY IN THE DECISION OF APRIL 4, 1961, AND NEED NOT BE REPEATED HERE. THE CHIEF CONTENTION NOW ADVANCED BY YOUR ATTORNEYS AS A BASIS FOR YOUR CLAIM IS THAT THE DISPOSAL OFFICER WAS CHARGEABLE WITH BAD FAITH SINCE HE "COUNTED THESE ASSEMBLIES AND CERTIFIED THAT THE ROCKER ARM ASSEMBLIES WERE ALL PRESENT WITH BEARINGS," WHEREAS 2,137 OF THE ASSEMBLIES DELIVERED TO YOU WERE WITHOUT BEARINGS.

THERE IS NOTHING IN THE RECORD HERE AVAILABLE TO INDICATE THAT REPRESENTATIVE OF THE GOVERNMENT SPECIFICALLY CERTIFIED THAT ALL THE ASSEMBLIES INCLUDED BEARINGS. HOWEVER, EVEN IF SUCH A SPECIFIC CERTIFICATION WERE MADE, THERE IS NOT PERCEIVED ANY REASON FOR ASSUMING THAT IT WAS MADE IN BAD FAITH. AS STATED, IN SUBSTANCE, IN OUR DECISION OF APRIL 4, 1961, THERE IS NOTHING IN THE RECORD TO SHOW OR INDICATE THAT THE CONTRACTING OFFICER OR HIS AGENTS ACTED OTHER THAN IN GOOD FAITH THROUGHOUT THE TRANSACTION, THOUGH ACTING UNDER A MISAPPREHENSION AS TO THE FACTS. SUCH A SITUATION IS NOT UNUSUAL IN CONNECTION WITH THE SALE OF SURPLUS PROPERTY BY THE GOVERNMENT. IN DISPOSING OF SURPLUS MATERIALS, THE GOVERNMENT IS NOT ENGAGED IN NORMAL TRADE AND FREQUENTLY IS NOT AWARE OF THE CONDITION OR THE QUANTITY OF THE GOODS IT SELLS. THAT FACT IS MADE KNOWN TO ALL BIDDERS BY THE TERMS OF THE CONTRACT WHEREBY THE PARTIES AGREE THAT THE RISK AS TO THE CONDITION AND THE QUANTITY OF THE MATERIAL SOLD IS ASSUMED BY THE PURCHASER AS ONE OF THE ELEMENTS OF THE BARGAIN. SEE 36 COMP. GEN. 612.

MILLER HARNESS CO. V. UNITED STATES, 241 F.2D 781, REFERRED TO IN OUR DECISION OF APRIL 4, 1961, INVOLVED FACTS AND CIRCUMSTANCES QUITE SIMILAR TO THOSE FOUND IN THE INSTANT MATTER. THE COURT REJECTED THE PURCHASER'S CLAIM ARISING FROM THE ABSENCE OF CERTAIN STRAPS AND IRONS ALTHOUGH A REPRESENTATIVE OF THE GOVERNMENT HAD STATED TO THE BIDDER THAT SUCH STRAPS AND IRONS WERE INCLUDED.

WITH RESPECT TO THE APPLICABILITY OF PARAGRAPH 8 OF THE GENERAL SALE TERMS AND CONDITIONS ENTITLED "ADJUSTMENT FOR VARIATION IN QUANTITY OR WEIGHT," QUOTED IN OUR DECISION OF APRIL 4, 1961, THE FILE INDICATES THAT YOU RECEIVED THE NUMBER OF ROCKER ARM ASSEMBLIES STATED IN EACH OF THE FOUR ITEMS AWARDED TO YOU, THE ONLY QUESTION BEING AS TO THE KIND, QUALITY OR CHARACTER OF THE ASSEMBLIES DELIVERED.

THERE ARE MANY COURT CASES INVOLVING CLAIMS BASED ON INFERIOR QUALITY OR KIND OF MATERIAL DELIVERED UNDER CONTRACTS CONTAINING PROVISIONS SIMILAR TO THOSE INCLUDED IN YOUR CONTRACT WITH THE GOVERNMENT. IN SUCH CASES, ALSO, THE COURTS HAVE HELD UNIFORMLY THAT PURCHASERS HAVE NO RIGHT TO EXPECT, HAVE NOTICE NOT TO EXPECT AND CONTRACT NOT TO EXPECT ANY WARRANTIES WHATEVER. SEE AMERICAN ELASTICS INC. V. UNITED STATES, 84 F.SUPP. 198, AFFIRMED 187 F.2D 109, CERTIORARI DENIED, 342 U.S. 829; SNYDER CORP. V. UNITED STATES, 68 CT.CL. 667; SAMUEL AND SONS V. UNITED STATES, 61 CT.CL. 373; PAXTON MITCHELL COMPANY V. UNITED STATES, 172 F.SUPP. 463.

PARAGRAPH 2 OF THE GENERAL SALE TERMS AND CONDITIONS, ALSO QUOTED IN OUR DECISION, DEFINITELY NEGATIVES SUCH DEFECTS AS THE BASIS OF CLAIMS. THE EFFECT OF THAT PROVISION IS TO PLACE ON THE PURCHASER THE ENTIRE RISK OF DEFECTS, EVEN IN THE ABSENCE OF ANY SPECIFIC NOTICE OF DEFECTS IN THE PROPERTY. OTHERWISE, THAT PROVISION OF THE INVITATION WOULD BE MEANINGLESS AND THE GOVERNMENT WOULD BE SUBJECTED TO A FLOOD OF COMPLAINTS AND CLAIMS ARISING FROM SALES OF SURPLUS PROPERTY. IN THAT CONNECTION, YOUR SPECIAL ATTENTION IS INVITED TO THE RECENT USE OF DADOURIAN EXPORT CORPORATION V. UNITED STATES, DECIDED BY THE U.S. COURT OF APPEALS FOR THE SECOND CIRCUIT ON JUNE 5, 1961, WHEREIN THE COURT STATED:

"* * * WHEN THE GOVERNMENT SELLS SURPLUS GOODS IT IS TRYING TO DISPOSE OF A VAST MISCELLANY OF USED AND UNUSED PROPERTY IN AN EFFORT, SO FAR AS MAY UNDER THE CIRCUMSTANCES BE POSSIBLE, TO MINIMIZE ITS LOSS. SALES OF THIS CHARACTER ARE PROCESSED ON A MASS QUANTITY BASIS BY MEMBERS OF THE ARMED FORCES WHO SELDOM IF EVER HAVE ANY EXPERTISE IN THE PARTICULAR ITEMS WHICH COME TO THEIR WAREHOUSES AND DEPOTS. BUYERS OF SUCH SURPLUS PROPERTY KNOW PERFECTLY WELL THAT THERE IS ALWAYS THE CHANCE OF BUYING PROPERTY THAT MAY TURN OUT TO BE OF LITTLE VALUE, OR MAY DEVELOP INTO A GREAT BARGAIN WITH A HUGE WINDFALL OF PROFIT. ACCORDINGLY, THE GOVERNMENT VERY PROPERLY HAS PROTECTED ITSELF BY FORMULATING ITS CONTRACT FOR THE SALE OF SUCH SURPLUS PROPERTY SO AS TO SHIFT THE RISK FROM ITSELF TO THE BUYER. AS PROFESSOR CORBIN TELLS US, A PARTY TO A CONTRACT MAY AGREE TO ASSUME CERTAIN RISKS THAT IN THE ABSENCE OF AGREEMENT THE LAW WOULD NOT CAST UPON HIM. SEE 3 CORBIN CONTRACTS (1960), SECTION 598. SEE ALSO UNITED STATES V. HATHAWAY, 9 CIR., 1957, 242 F.2D 897. * * *"

UPON RECONSIDERATION, THE ACTION HERETOFORE TAKEN ON YOUR CLAIM IS AFFIRMED, THERE APPEARING NO LEGAL BASIS FOR ALLOWANCE OF ANY PART OF THE CLAIM.