B-111732, AUG. 29, 1956
Highlights
TALLY: REFERENCE IS MADE TO YOUR LETTER OF MAY 31. THE MATTER WAS PREVIOUSLY CONSIDERED IN A DECISION OF OCTOBER 26. 750 BY REASON OF THE FACT THAT THE TOTAL CONTRACT CONSIDERATION WAS REDUCED FROM $2. WE ARE OF THE OPINION THAT THE AMOUNT ACTUALLY PAID TO THE AGENT MAY PROPERLY BE CONSIDERED AS REPRESENTING THE EXTENT OF THE CONTRACTOR'S LIABILITY FOR THE BREACH OF THE CONTINGENT-FEE COVENANT OF THE CONTRACT. SETTLEMENT WILL ISSUE IN FAVOR OF THE MICHIGAN NATIONAL BANK.
B-111732, AUG. 29, 1956
TO MR. B. J. TALLY:
REFERENCE IS MADE TO YOUR LETTER OF MAY 31, 1956, WITH ENCLOSURES, CONCERNING A CLAIM OF BRADLEY-MILLER AND COMPANY FOR $15,628.80 UNDER DEPARTMENT OF THE ARMY CONTRACT NO. DA-36-038-ORD-2393, DATED DECEMBER 12, 1950, AS AMENDED, AND A CLAIM OF THE GOVERNMENT IN THE AMOUNT OF $42,660 AS LIQUIDATED DAMAGES FOR THE BREACH OF THE CONTRACT ARTICLE ENTITLED "COVENANT AGAINST CONTINGENT FEES.'
THE MATTER WAS PREVIOUSLY CONSIDERED IN A DECISION OF OCTOBER 26, 1953, TO THE MICHIGAN NATIONAL BANK, SAGINAW, MICHIGAN, AND IN A DECISION DATED FEBRUARY 24, 1956, TO MR. JOHN P. PURCELL, YOUR ASSOCIATE. OUR POSITION HAS BEEN THAT THE AMOUNT RECOVERABLE BY THE GOVERNMENT FOR THE BREACH OF THE CONTINGENT-FEE COVENANT OF THE CONTRACT SHOULD EQUAL THE FEE OF $42,660, WHICH THE TRUSTEE IN BANKRUPTCY AGREED TO PAY HARRY K. TUCKER, JR., FOR SECURING THE GOVERNMENT CONTRACT, SUBJECT TO POSSIBLE ADJUSTMENT TO THE SUM OF $27,750 BY REASON OF THE FACT THAT THE TOTAL CONTRACT CONSIDERATION WAS REDUCED FROM $2,113,000 TO $1,387,500 BY VIRTUE OF A REDUCTION OF 50 PERCENT IN THE QUANTITY OF AMMUNITION BOXES REQUIRED FOR DELIVERY UNDER THE CONTRACT, AND AN INCREASE IN THE UNIT PRICE FROM $1.412 TO $1.85, PURSUANT TO THE PROVISIONS OF THE FIRST WAR POWERS ACT, 1941, AS AMENDED BY PUBLIC LAW 921, 81ST CONGRESS, 64 STAT. 1257.
UPON FURTHER CONSIDERATION, SINCE THE ARMY CONTRACT ADJUSTMENT BOARD WHICH APPROVED THE PRICE INCREASE ESTIMATED THAT THE CONTRACTOR WOULD ABSORB A LOSS OF APPROXIMATELY $80,000 ON THE ADJUSTED PRICE AND QUANTITY, AND SINCE THE RECORD SHOWS THAT THE NEW MANAGEMENT OF BRADLEY-MILLER AND COMPANY REPUDIATED THE OBJECTIONABLE AGENCY AGREEMENT, WHICH HAD BEEN ENTERED INTO BY A COURT-APPOINTED RECEIVER APPARENTLY WITHOUT AUTHORITY, WE ARE OF THE OPINION THAT THE AMOUNT ACTUALLY PAID TO THE AGENT MAY PROPERLY BE CONSIDERED AS REPRESENTING THE EXTENT OF THE CONTRACTOR'S LIABILITY FOR THE BREACH OF THE CONTINGENT-FEE COVENANT OF THE CONTRACT.
ACCORDINGLY, SETTLEMENT WILL ISSUE IN FAVOR OF THE MICHIGAN NATIONAL BANK, SAGINAW, MICHIGAN, AS ASSIGNEE OF BRADLEY-MILLER AND COMPANY, FOR THE AMOUNT OF $7,365.18 ($15,628.80 LESS $8,263.62) AS IN FULL AND FINAL SETTLEMENT OF ALL CLAIMS ARISING OUT OF THE CONTRACT.