B-151144, APR. 25, 1963

B-151144, APR. 25, 1963

TO DIECRAFT, INC.:

FURTHER REFERENCE IS MADE TO A LETTER DATED MARCH 15, 1963, FROM CABLE AND MCDANIEL, REQUESTING, IN YOUR BEHALF, REVIEW OF OUR SETTLEMENT DATED FEBRUARY 26, 1963, DISALLOWING YOUR CLAIM FOR A REFUND OF THE BID DEPOSIT OF $2,612 MADE BY YOU IN CONNECTION WITH CONTRACT NO. N62777S-1863, DATED APRIL 12, 1962.

IN RESPONSE TO INVITATION NO. B-28-62-N62777S, ISSUED ON MARCH 23, 1962, BY THE INSPECTOR OF NAVAL MATERIAL, PROPERTY DISPOSAL DIVISION, CHICAGO, ILLINOIS, YOU SUBMITTED A BID DATED APRIL 6, 1962, ACCOMPANIED BY THE REQUIRED BID DEPOSIT IN THE FORM OF A CERTIFIED CHECK FOR $2,612, OFFERING TO PURCHASE ITEM NO. 96, COVERING A LATHE FOR $13,060. AMONG OTHER DESCRIPTIVE DETAILS SET FORTH FOR ITEM NO. 96 WAS THAT THE MACHINE WAS A BULLARD COMPANY VERTICAL LATHE, CUT MASTER MODEL, AND MANUFACTURED IN 1945. THE CONDITION OF THE LATHE WAS DESCRIBED AS USED, USABLE WITHOUT REPAIRS, GOOD, AND THE ACQUISITION COST WAS SHOWN TO BE $20,000. APPEARS THAT 16 OTHER BIDS WERE RECEIVED FOR ITEM NO. 96, RANGING FROM $6,107 TO $1,101. YOUR BID, WHICH WAS THE HIGHEST BID RECEIVED, WAS ACCEPTED BY THE GOVERNMENT CONTRACTING OFFICER ON APRIL 12, 1962, THEREBY CONSUMMATING CONTRACT NO. N62777S-1863. BY LETTERS DATED APRIL 16 AND 23, 1962, YOU ADVISED THE INSPECTOR OF NAVAL MATERIAL, PROPERTY DISPOSAL DIVISION, THAT YOU WOULD NOT ACCEPT DELIVERY OF THE LATHE AT YOUR BID PRICE OF $13,060, SINCE IT HAD BEEN LEARNED BY YOUR REPRESENTATIVES, UPON CALLING AT THE CURTISS WRIGHT CORPORATION, UTICA, MICHIGAN, TO PICK UP THE MACHINE, THAT IT WAS NOT A CUT MASTER VERTICAL LATHE, BUT WAS A MACHINE OF AN ALTOGETHER DIFFERENT VINTAGE AND, THEREFORE, YOU REQUESTED A RETURN OF YOUR BID DEPOSIT OF $2,612. YOU FILED A CLAIM FOR REFUND OF THE BID DEPOSIT AND THE CLAIM WAS DISALLOWED BY GENERAL ACCOUNTING OFFICE SETTLEMENT DATED FEBRUARY 26, 1963, FOR THE REASONS SET FORTH THEREIN.

IN THEIR LETTER DATED MARCH 15, 1963, REQUESTING REVIEW OF THE SETTLEMENT, CABLE AND MCDANIEL REITERATE THE BASIS OF YOUR CLAIM, NAMELY, THAT THE VERTICAL LATHE COVERED BY ITEM NO. 96 WAS NOT A CUT MASTER MODEL AND, ALSO, THAT IT WAS NOT MANUFACTURED IN 1945. THE ATTORNEYS STRESS, APPARENTLY AS THE PRIME BASIS FOR THEIR REQUEST FOR REVIEW, THAT A MR. RALLI, AN AUTHORIZED SPOKESMAN FOR THE PROPERTY DISPOSAL DIVISION, UPON BEING CONTACTED BY YOU BY TELEPHONE, HAD AFFIRMED THE ERRONEOUS DESCRIPTION SET FORTH IN THE INVITATION AS TO THE CUT MASTER TYPE OF LATHE AND THE YEAR OF MANUFACTURE. THE ATTORNEYS URGE THAT SUCH AN AFFIRMATION CONSTITUTES AN EXCEPTION TO THE NORMAL APPLICATION OF THE DISCLAIMER OF WARRANTY RULE IN GOVERNMENT SURPLUS PROPERTY SALE CASES.

IT CONSISTENTLY HAS BEEN HELD BY THE COURTS AND OUR OFFICE THAT, IN THE ABSENCE OF BAD FAITH, SUCH AN EXPRESS DISCLAIMER OF WARRANTY AS THAT SET FORTH IN CONTRACT NO. N62777S-1863 AND REFERRED TO IN OUR SETTLEMENT DATED FEBRUARY 26, 1963, WHICH SPECIFICALLY REFERS TO, AMONG OTHERS, THE KIND AND CHARACTER OF THE PROPERTY BEING OFFERED FOR SALE, VITIATES ANY AND ALL WARRANTIES WHICH OTHERWISE MIGHT ARISE OUT OF A SALES TRANSACTION. SEE LUMBRAZO V. WOODRUFF, 175 N.E. 525; W. E. HEDGER CO. V. UNITED STATES, 52 F.2D 31, CERTIORARI DENIED 284 U.S. 676; TRIAD CORPORATION V. UNITED STATES, 63 CT.CL. 151; AND I. SHAPIRO AND CO. V. UNITED STATES, 66 CT.CL. 424. THERE IS NOTHING IN THE RECORD BEFORE US TO INDICATE BAD FAITH ON THE PART OF THE SALES CONTRACTING OFFICER IN CONNECTION WITH THE TRANSACTION. THE BASIC PRODUCT ADVERTISED FOR SALE UNDER ITEM NO. 96 WAS A LATHE AND THAT IS EXACTLY WHAT WAS SOLD TO YOU. THE FACT THAT A VARIANCE EXISTED BETWEEN SOME OF THE DESCRIPTIVE DETAILS OF THE LATHE SET FORTH IN THE INVITATION AND THE LATHE THAT WAS ACTUALLY SOLD TO YOU--- THE LATHE SOLD WAS A "SPIRAL DRIVE" MODEL AND MANUFACTURED IN 1937--- MAY BE ATTRIBUTED TO NOTHING MORE THAN AN HONEST ERROR WHICH IS COMPLETELY COVERED BY THE DISCLAIMER OF WARRANTY CLAUSE SET FORTH IN ARTICLE 2 OF THE GENERAL SALE TERMS AND CONDITIONS OF THE INVITATION. THE EFFECTIVENESS OF SUCH A DISCLAIMER OF WARRANTY CLAUSE IN A GOVERNMENT SURPLUS SALE OF THIS KIND DOES NOT APPEAR TO WARRANT A FURTHER DISCUSSION HERE, SINCE YOUR ATTORNEYS ACKNOWLEDGE THE EXISTENCE OF THE FOREGOING NORMAL RULE AS GENERALLY GOVERNING THE SALES OF GOVERNMENT SURPLUS PROPERTY.

MOREOVER, NO MERIT MAY BE ACCORDED TO THE BASIC CONTENTION OF CABLE AND MCDANIEL THAT THE TELEPHONIC AFFIRMATION BY MR. RALLI OF THE ERRONEOUS DESCRIPTION OF THE LATHE CREATES AN EXCEPTION TO THE GENERAL RULE IN THIS TYPE OF CASE. ARTICLE 2 OF THE GENERAL SALE TERMS AND CONDITIONS OF THE INVITATION, WHICH WAS INCORPORATED AS A PART OF CONTRACT NO. N62777S-1863, EXPRESSLY SETS FORTH THE DETAILED CONDITIONS OF THE DISCLAIMER OF WARRANTY CLAUSE AND YOU FULLY AGREED TO THE WRITTEN TERMS THEREOF. THUS, THE ORAL STATEMENTS, SUCH AS THOSE ALLEGEDLY MADE BY MR. RALLI TO YOU, MAY BE CONSIDERED TO HAVE BEEN MERE EXPRESSIONS OF OPINION ONLY AS TO THE TYPE OF LATHE HE THOUGHT WAS BEING SOLD. WE CAN PERCEIVE OF NO LEGAL BASIS FOR ATTACHING ANY MORE LIABILITY TO AN HONEST ERRONEOUS ORAL DESCRIPTION OF ANY OF THE PROPERTY BEING OFFERED FOR SALE UNDER THESE CONDITIONS THAN TO AN ERRONEOUS WRITTEN DESCRIPTION OF THE PROPERTY WHICH IS COMPLETELY COVERED BY THE DISCLAIMER OF WARRANTY CLAUSE. TO PERMIT MORE EMPHASIS TO BE PLACED UPON AN ORAL DESCRIPTION OF THIS KIND THAN ON THE CONVENTIONAL WRITTEN DESCRIPTION WOULD, OF COURSE, IN MANY CASES, DEFEAT THE VERY PURPOSE OF THE EXPRESS DISCLAIMER OF WARRANTY PROVISION AND, IN FACT, WOULD ALSO BE TANTAMOUNT TO THE ACCEPTANCE OF ORAL TESTIMONY OR EVIDENCE TO VARY OR ABROGATE THE TERMS OF A WRITTEN INSTRUMENT.

ALSO, ARTICLE 1 OF THE GENERAL SALE TERMS AND CONDITIONS OF CONTRACT NO. N62777S-1863 EXPRESSLY PROVIDED THAT "IN NO CASE WILL FAILURE TO INSPECT CONSTITUTE GROUNDS FOR THE WITHDRAWAL OF A BID AFTER OPENING.' UNDER THIS ARTICLE BIDDERS WERE NOT ONLY INVITED, BUT URGED AND CAUTIONED, TO INSPECT THE PROPERTY BEFORE SUBMITTING A BID. THE RECORD SHOWS THAT YOU MADE NO INSPECTION. FURTHER, IN THIS REGARD, THERE CAN BE NO DOUBT THAT HAD SUCH AN INSPECTION BEEN MADE BY YOU THE DISCREPANCIES TO WHICH YOU NOW REFER WOULD HAVE BEEN NOTICED IMMEDIATELY BY YOU. MOREOVER, THE ATTORNEYS ADVISE THAT WHEN YOU FIRST VIEWED THE DESCRIPTION OF ITEM NO. 96, YOU NOTICED THAT THE SERIAL NUMBER LISTED FOR THE LATHE DID NOT AGREE WITH YOUR UNDERSTANDING OF THE VINTAGE OF THE MACHINE. THIS APPARENTLY CAUSED YOU TO SUSPECT THE PROBABLE EXISTENCE OF AN ERRONEOUS DESCRIPTION, BUT YOU NEVERTHELESS ELECTED TO FORGO AN INSPECTION. IN VIEW OF THIS, THERE MUST BE APPLIED HERE THE RULE ESTABLISHED BY THE DECISIONS OF OUR OFFICE THAT WHERE A BIDDER FAILS TO MAKE AN INSPECTION UNDER SUCH A CONTRACT OF SALE-- - WHETHER SUCH FAILURE WAS DUE TO THE BIDDER'S OPINION THAT INSPECTION WAS NOT NECESSARY OR WHETHER THE INSPECTION WAS IMPRACTICAL, IF NOT IMPOSSIBLE --- THE BIDDER HAS ELECTED TO ASSUME ANY RISK WHICH MIGHT EXIST BY REASON OF A VARIANCE BETWEEN THE DESCRIPTION OF THE PROPERTY SET FORTH IN THE INVITATION AND THE PROPERTY ACTUALLY DELIVERED. THE BIDDER'S RESPONSIBILITIES IN THIS CONNECTION APPEAR TO BE CLEARLY SET FORTH IN PAXTON-MITCHELL COMPANY V. UNITED STATES, 172 F.SUPP. 463, WHEREIN IT WAS HELD THAT, NOTWITHSTANDING THE DIFFICULTIES ATTENDANT UPON AN INSPECTION, IT IS INCUMBENT UPON THE BIDDER TO MAKE THE KIND OF INSPECTION THAT IS EFFECTUAL.