B-122782, JUL. 7, 1955

B-122782, JUL. 7, 1955

TO THE PURDY COMPANY:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF OCTOBER 12, 1954, REQUESTING REVIEW OF SETTLEMENT DATED NOVEMBER 10, 1953, WHEREIN THERE WAS DISALLOWED YOUR CLAIM FOR $369.78 UNDER CONTRACT NO. N665S-14250, DATED MAY 14, 1953.

UNDER THE CONTRACT, YOU AGREED TO PURCHASE FROM THE CLEAR FIELD NAVAL SUPPLY DEPOT, DISPOSAL DIVISION, OGDEN, UTAH, ITEM NO. 8 COVERING 148 GROSS TONS OF LIGHT SCRAP METAL AT $26 A TON AND ITEM NO. 11 COVERING 145 GROSS TONS OF HEAVY PREPARED STEEL AT $26 A TON. IT APPEARS THAT UPON DELIVERY OF ITEM NO. 8, THE CONSIGNEE, COLUMBIA-GENEVA STEEL DIVISION OF THE UNITED STATES STEEL CORPORATION, REJECTED THE SCRAP METAL SINCE IT WAS FOUND UPON INSPECTION THAT APPROXIMATELY ONE-HALF OF THE BUNDLES WERE CONTAMINATED WITH ASHES, GLASS, CHARCOAL AND LIGHT BANDING MATERIAL WITH AN ESTIMATED FOUR TONS OF UNUSABLE MATERIAL. A CONSIDERABLE NUMBER OF TELEGRAMS AND TELEPHONE CALLS WERE SUBSEQUENTLY EXCHANGED BETWEEN YOU AND THE NAVAL SUPPLY DEPOT WITH RESPECT TO THE DISPOSITION OF THE REJECTED SCRAP METAL. ULTIMATELY, THE SUPPLY DEPOT AGREED TO THE RETURN OF THIS MATERIAL TO THAT ACTIVITY FOR PROPER PREPARATION AND REMOVAL OF THE OBJECTIONABLE MATERIAL PROVIDED YOU WOULD PAY THE FREIGHT COSTS THEREFOR. YOU AGREED TO PAY SUCH COSTS BUT STATED THAT YOU WOULD FILE A CLAIM AGAINST THE GOVERNMENT FOR RECOVERY THEREOF. YOU NOW CLAIM $369.78 REIMBURSEMENT FOR FREIGHT, DEMURRAGE AND FEDERAL TAX PAID IN THAT CONNECTION.

YOUR REQUEST FOR REVIEW OF THE SETTLEMENT APPEARS TO BE BASED PRIMARILY ON THE CONTENTION THAT THE GOVERNMENT AUTHORIZED THE RETURN OF THE MATERIAL REGARDLESS OF THE CONTRACT PROVISIONS; ALSO, THAT, AT THE TIME OF THE NEGOTIATIONS FOR THE DISPOSITION OF THE SCRAP METAL, THERE WAS NO REFUSAL OR DENIAL OF YOUR CLAIM BY THE NAVAL SUPPLY DEPOT BUT, TO THE CONTRARY, THE DEPOT RECOGNIZED THE MERITS OF YOUR CLAIM BUT NO ALLOTTED FUNDS WERE IMMEDIATELY AVAILABLE FOR REIMBURSEMENT THEREOF.

IN THIS SITUATION, AS IN ALL CASES WHERE A WRITTEN CONTRACT EXISTS, THE RIGHTS AND LIABILITIES OF THE PARTIES MUST BE DETERMINED IN ACCORDANCE WITH THE TERMS AND CONDITIONS OF THE AGREEMENT WHICH THEY SIGNED. THERE IS NOTHING IN CONTRACT NO. N665S-14250 WHICH, EITHER EXPRESSLY OR BY IMPLICATION, WOULD SUBJECT THE GOVERNMENT TO LIABILITY FOR THE PAYMENT OF ANY FREIGHT CHARGES WHICH MAY HAVE ACCRUED BY REASON OF THE RETURN OF THE REJECTED SCRAP METAL. THE RECORD CLEARLY SHOWS THAT YOU, AS THE SHIPPER, AUTHORIZED THE RAILROAD COMPANY TO MAKE THE RETURN SHIPMENT. EQUALLY IMPORTANT IS THE FACT THAT IT APPEARS THE NAVAL SUPPLY DEPOT STEADFASTLY INSISTED ON YOUR PAYMENT OF THE FREIGHT CHARGES AS A PREREQUISITE TO PERMITTING RETURN OF THE SCRAP METAL. THE RECORD IS ENTIRELY DEVOID OF ANY UNDERSTANDING, AGREEMENT, ETC., INFORMAL OR OTHERWISE, AS TO THE APPROVAL BY THE DEPARTMENT OF THE NAVY, OF ANY SUBSEQUENT CLAIM TO BE FILED BY YOU AND WHILE, AS CONTENDED BY YOU, THAT DEPARTMENT MAY NOT HAVE REFUSED OR DENIED SUCH A CLAIM AT THAT TIME, NO PARTICULAR SIGNIFICANCE MAY BE ATTACHED THERETO SINCE AN ADMINISTRATIVE OFFICE CANNOT ALLOW OR DENY A CLAIM OF THIS NATURE, IT BEING ONE RATHER FOR SETTLEMENT BY THE GENERAL ACCOUNTING OFFICE.

WHAT STILL MAY BE EVEN MORE CONTROLLING IN THIS MATTER HAS TO DO WITH YOUR CONTENTION THAT THE CLEAR FIELD NAVAL SUPPLY DEPOT AUTHORIZED A RETURN OF THE SCRAP METAL REGARDLESS OF THE PROVISIONS OF THE CONTRACT. IN THIS CONNECTION, IT CONSISTENTLY HAS BEEN HELD BY THE COURTS AND THIS OFFICE THAT, GENERALLY, UNDER A CONTRACT OF SALE SUCH AS HERE, THE "AS IS" PROVISION CONSTITUTES AN EXPRESS DISCLAIMER OF WARRANTY AND, THEREFORE, NO WARRANTY MAY BE IMPLIED. SEE, IN THAT CONNECTION, LUMBRAZO V. WOODRULL, 175 N.E. 525; W. E. HEDGER COMPANY V. UNITED STATES, 52 F.2D 31, CERTIORARI DENIED, 284 U.S. 676; TRIAD CORPORATION V. UNITED STATES, 63 C.CLS. 151; AND I. SHAPIRO AND COMPANY V. UNITED STATES, 66 C.CLS. 424. HENCE, IN THE ABSENCE OF SOME PARTICULARLY UNIQUE CIRCUMSTANCES, NOT SHOWN IN THE RECORD, THE LEGALITY OF THE AUTHORIZATION WHICH PERMITTED THE RETURN OF THE SCRAP METAL IS HIGHLY QUESTIONABLE AND A FURTHER INVESTIGATION OF THE MATTER MIGHT VERY READILY REVEAL THAT A DECLARATION OF DEFAULT PROPERLY SHOULD ISSUE AGAINST YOU AS THE RESULT OF YOUR REFUSAL TO ACCEPT THE SCRAP METAL UNDER A CONTRACT OF THIS NATURE.