B-137508, SEP. 21, 1959

B-137508, SEP. 21, 1959

TO STEPTOE AND JOHNSON, ATTORNEYS AT LAW:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF SEPTEMBER 22, 1958, AND SUBSEQUENT CORRESPONDENCE CONCERNING THE GREER STEEL COMPANY'S REQUEST FOR RESCISSION OF ITS CONTRACT FOR THE PURCHASE OF CERTAIN SURPLUS REAL PROPERTY LOCATED NEAR MORGANTOWN, WEST VIRGINIA, AND FOR REMISSION OF ITS BID DEPOSIT OF $1800.

THE INVITATION FOR BIDS, DISPOSAL NO. GS-03-B/S/-2580, TO BE OPENED JUNE 23, 1958, DESCRIBED THE PROPERTY AND THE IMPROVEMENTS THEREON AS FOLLOWS:

"* * * LOCATED APPROXIMATELY ONE (1) MILE FROM THE CITY OF MORGANTOWN, WEST VIRGINIA, AND ONE-HALF ( 1/2 ( MILE FROM THE WEST END OF THE MORGANTOWN-WESTOVER BRIDGE ON RIVER ROAD, IN MONONGALIA COUNTY, WEST VIRGINIA, BEING A PORTION OF THE SAME LAND CONVEYED TO THE UNITED STATES OF AMERICA BY DEED DATED FEBRUARY 8, 1898, FROM AMOS GILBERT, AND RECORDED IN THE OFFICE OF THE CLERK OF COUNTY COURT OF MONONGALIA COUNTY, WEST VIRGINIA, IN DEED BOOK VOLUME 49, PAGE 1. (SEE ,EXHIBIT A" FOR LEGAL DESCRIPTION).'

PARAGRAPH 1 (A) OF THE "GENERAL TERMS AND CONDITIONS" STIPULATES THAT "ALL BIDS SUBMITTED SHALL BE DEEMED TO HAVE BEEN MADE WITH FULL KNOWLEDGE OF ALL OF THE TERMS, CONDITIONS, AND REQUIREMENTS HEREIN CONTAINED.' PARAGRAPH 2 INVITED AND URGED PROSPECTIVE BIDDERS TO INSPECT THE PROPERTY PRIOR TO SUBMITTING BIDS AND INFORMED THE BIDDERS THAT IN NO CASE WOULD FAILURE TO INSPECT THE PROPERTY CONSTITUTE GROUNDS FOR A CLAIM OR FOR THE WITHDRAWAL OF A BID AFTER OPENING. EXHIBIT "A" REFERRED TO ABOVE CONTAINS A METES AND BOUNDS LEGAL DESCRIPTION OF THE PROPERTY SETTING FORTH THE PROPERTY LINES OF THE PARCEL OFFERED FOR SALE, AS FOLLOWS:

"BEGINNING AT THE NORTHWEST CORNER OF THE LAND OF THE UNITED STATES OF AMERICA AND IN THE EASTERLY RIGHT-OF-WAY LINE OF THE MONONGAHELA RAILWAY COMPANY; THENCE BY THE NORTHERLY LINE OF LAND OF THE UNITED STATES OF AMERICA, SOUTH 74 DEGREES 30 MINUTES EAST 77.72 FEET; THENCE THROUGH LAND OF THE UNITED STATES OF AMERICA, SOUTH 32 DEGREES 30 MINUTES WEST 559.42 FEET AND NORTH 57 DEGREES 30 MINUTES WEST 88.0 FEET AGAIN TO THE EASTERLY RIGHT-OF-WAY LINE OF THE MONOGAHELA RAILWAY COMPANY; THENCE BY SAID RIGHT- OF-WAY LINE NORTH 29 DEGREES 30 MINUTES EAST 16.0 FEET TO A POINT OF CURVE TO THE RIGHT; THENCE BY A CURVE TO THE RIGHT HAVING A RADIUS OF 2849.9 FEET AND WHOSE LONG CHORD BEARS NORTH 32 DEGREES 26 MINUTES EAST 291.64 FEET, AN ARC DISTANCE OF 291.8 EET; THENCE NORTH 35 DEGREES 22 MINUTES EAST 150.0 FEET; AND THENCE THENCE NORTH 35 DEGREES 22 MINUTES EAST 150.0 FEET; AND THENCE NORTH 37 DEGREES 48 MINUTES EAST 79.6 FEET TO THE POINT OF BEGINNING, CONTAINING 1.10 ACRES, MORE OR LESS.'

ALSO, UNDER THE HEADING OF "RESTRICTIONS AND EASEMENTS" BIDDERS WERE NOTIFIED THAT INDEPENDENT ARRANGEMENTS WOULD BE REQUIRED TO BE MADE BY THE SUCCESSFUL BIDDER FOR CONNECTIONS AND EASEMENTS FOR WATER AND SEWAGE SERVICES.

IN RESPONSE TO THE INVITATION NINE BIDS WERE RECEIVED. THE BID OF THE GREER STEEL COMPANY IN THE AMOUNT OF $18,000 WAS HIGHEST. THE NEXT HIGHEST BID WAS IN THE AMOUNT OF $5,177 AND THE LOWEST IN THE AMOUNT OF $1200. ON JUNE 24, 1958, YOUR CLIENT WAS FORMALLY NOTIFIED OF ACCEPTANCE OF ITS BID AND THAT THE $1800 BID DEPOSIT WOULD BE RETAINED AND APPLIED AGAINST THE PURCHASE PRICE AT TIME OF SETTLEMENT.

IN REQUESTING RESCISSION OF THE CONTRACT IT IS ASSERTED IN YOUR LETTER OF SEPTEMBER 22, 1958, AND IN SUBSEQUENT CONFERENCES IN OUR OFFICE THAT THE GREER STEEL COMPANY MADE A MISTAKE IN ITS BID IN THAT IT WAS UNDER THE IMPRESSION THAT THE PARCEL OFFERED FOR SALE BORDERED ON THE MONONGAHELA RIVER, AND THAT THE GOVERNMENT HAD CONSTRUCTIVE NOTICE OF SUCH MISTAKE AT THE TIME OF AWARD. SPECIFIC REFERENCE IS MADE TO THE FACT THAT IN A CIRCULAR NOTICE OF SALE AS WELL AS IN THE PUBLIC ADVERTISEMENT APPEARING IN THE MORGANTOWN POST THE LAND WAS DESCRIBED AS CONSISTING OF ,APPROXIMATELY 1.10 ACRES LOCATED ON THE MONONGEHELA RIVER.' IT IS STATED THAT THE COMPANY INTERPRETED THIS DESCRIPTION AS MEANING THAT PROPERTY ON THE WATER'S EDGE WAS BEING SOLD. IT IS ASSERTED THAT THIS INTERPRETATION WAS STRENGTHENED BECAUSE IT WAS COMMON KNOWLEDGE THAT RIVER FRONT PROPERTY IN THAT AREA HAS A HIGH VALUE AS POTENTIAL SITES FOR BARGE LANDINGS; THE DEED OF FEBRUARY 8, 1898, REFERRED TO IN THE INVITATION FOR BIDS DESCRIBES THE PROPERTY AS FRONTING 1622 FEET ALONG THE LOW WATER LINE OF THE MONONGAHELA RIVER; AND A SHORT TIME BEFORE THE SALE NEARBY PROPERTY SOLD BY THE U.S. ENGINEERS INCLUDED ALL RIVER FRONTAGE OF THE LOCK AREA.

ALSO, REFERENCE IS MADE TO A TELEPHONE CONVERSATION ON JUNE 23, 1958, AFTER THE OPENING OF BIDS, BETWEEN MR. RAESE, VICE PRESIDENT OF THE GREER STEEL COMPANY AND THE CONTRACTING OFFICER WHEREIN MR. RAESE WAS INFORMED THAT HIS COMPANY WAS HIGH BIDDER AND HE WAS ASKED WHETHER HE WAS AWARE OF ALL THE RESTRICTIONS IN THE INVITATION. IT IS STATED THAT MR. RAESE THOUGHT THE CONTRACTING OFFICER WAS REFERRING TO THE RESTRICTIONS SET OUT IN EXHIBIT "A" ATTACHED TO THE INVITATION FOR BIDS PERTAINING TO THE PURCHASER'S RIGHT TO USE THE GOVERNMENT ACCESS ROAD TO THE PROPERTY. IS STATED THAT IT WAS NOT UNTIL TWO WEEKS LATER THAT MR. RAESE DISCOVERED THAT THE LAND PURCHASED DID NOT INCLUDE THE 10-FOOT STRIP ALONG THE RIVER.

IN LETTER OF DECEMBER 24, 1958, THE ADMINISTRATOR OF GENERAL SERVICES TAKES THE POSITION THAT YOUR CLIENT HAD KNOWLEDGE OR SHOULD HAVE HAD KNOWLEDGE PRIOR TO THE AWARD THAT THE PROPERTY OFFERED FOR SALE DID NOT INCLUDE THE 10-FOOT STRIP OF LAND ALONG THE WATER'S EDGE AND THAT THEREFORE THERE DOES NOT EXIST THE TYPE OF MISTAKE JUSTIFYING RESCISSION OF THE CONTRACT. IT IS STATED THAT YOUR CLIENT DID NOT CHECK THE DESCRIPTION OF THE PROPERTY OR INSPECT THE SITE AS URGED BY PARAGRAPH 2 OF THE "GENERAL TERMS AND CONDITIONS" OF THE INVITATION FOR BIDS; THAT THE LEGAL DESCRIPTION OF THE LAND AS CONTAINED IN EXHIBIT "A" OF THE INVITATION AND ACCEPTANCE FORMS IS BY METES AND BOUNDS AND EXCLUDES A STRIP SOME 30 OR 40 FEET WIDE ALONG THE MONONGAHELA RIVER; AND THAT BASED UPON INQUIRIES RECEIVED BY THE CORPS OF ENGINEERS CONCERNING A SALE OR RIGHT TO USE THE WATER FRONTAGE AND RETENTION OF LAND ALONG THE RIVER FRONTAGE BY THE GOVERNMENT WAS APPARENTLY WELL KNOWN TO MANY PROSPECTIVE BIDDERS.

IN AN AFFIDAVIT EXECUTED ON NOVEMBER 21, 1958, BY THE CONTRACTING OFFICER, IN REFERRING TO THE ABOVE TELEPHONE CONVERSATION WITH MR. RAESE ON JUNE 23, 1958, IT IS ASSERTED---

"* * * MR. RAESE WAS ASKED WHETHER HE WAS FULLY INFORMED AS TO THE CONDITIONS UNDER WHICH THE PROPERTY WAS OFFERED FOR SALE, NAMELY, THAT THE USE OF THE ACCESS ROADWAY TO THE PROPERTY WAS SUBJECT TO CERTAIN CONDITIONS IMPOSED BY THE CORPS OF ENGINEERS, U.S. ARMY, AND THAT ARRANGEMENTS WOULD HAVE TO BE MADE WITH THE CORPS OF ENGINEERS, FOR SEWAGE EFFLUENT THROUGH GOVERNMENT-OWNED PROPERTY INTO THE RIVER, THE OTHER ARRANGEMENTS FOR WATER SERVICE WOULD HAVE TO BE MADE WITH THE LOCAL UTILITY COMPANY. MR. RAESE STATED THAT HE WAS AWARE OF THESE CONDITIONS BUT FELT THAT SATISFACTORY ARRANGEMENTS COULD BE WORKED OUT SO THAT HIS COMPANY MIGHT USE THE PROPERTY PURCHASED IN CONNECTION WITH THE ADJACENT PROPERTY ALONG THE MONONGAHELA RIVER FOR LOADING AND UNLOADING MINERALS.

FOLLOWING AN EXAMINATION OF THE CONTRACTING OFFICER'S AFFIDAVIT YOU SUBMITTED AN AFFIDAVIT EXECUTED BY MR. RAESE ON MARCH 9, 1959, WHEREIN HE ASSERTED AMONG OTHER THINGS THAT IN SUBMITTING HIS COMPANY'S BID HE ASSUMED THE PROPERTY WAS WATER FRONT PROPERTY BECAUSE OF THE DESCRIPTION IN THE PUBLIC NOTICE; THAT THE LAND WAS SIMILARLY DESCRIBED IN LOCAL ADVERTISEMENTS; AND THAT IN HIS CONVERSATION WITH THE CONTRACTING OFFICER ON JUNE 23, 1958, THERE WAS NO REFERENCE MADE, EITHER DIRECTLY OR INDIRECTLY, CONCERNING THE EXCLUDED WATER FRONT; THAT NEITHER WAS THERE ANY REFERENCE TO SPECIFIC RESTRICTIONS DEALING WITH WATER SUPPLY; AND THAT HE MADE NO REFERENCE TO THE PROPOSED USE OF THE SITE IN CONNECTION WITH ADJACENT PROPERTY.

IN LETTER OF APRIL 27, 1959, THE ADMINISTRATOR OF GENERAL SERVICES STATES THAT THE CONTRACTING OFFICER HAS EXAMINED THE STATEMENTS MADE BY MR. RAESE IN HIS AFFIDAVIT OF MARCH 9, 1959, WHICH ARE IN CONFLICT WITH THE CONTRACTING OFFICER'S STATEMENTS MADE IN AFFIDAVIT OF NOVEMBER 21, 1958, WHICH HE REAFFIRMS AND THAT HE IS UNABLE TO AGREE WITH MR. RAESE'S VERSION OF THE TELEPHONE CONVERSATION.

AS INDICATED ABOVE, THE TERMS OF SALE INCLUDED A SPECIFIC WARNING THAT FAILURE OF A BIDDER TO INSPECT THE PROPERTY WOULD IN NO CASE FURNISH A BASIS FOR A CLAIM OR FOR WITHDRAWAL OF A BID, AND ALSO AN EXPRESS DISCLAIMER OF WARRANTY BY THE GOVERNMENT AS TO DESCRIPTION. THE VALIDITY OF SUCH PROVISIONS, COMMON IN DISPOSALS OF SURPLUS GOVERNMENT PROPERTY, HAS BEEN FULLY ESTABLISHED BY NUMEROUS DECISIONS OF THE COURTS, AND IT HAS BEEN HELD THAT THE BURDEN OF INSPECTION IMPOSED UPON PROSPECTIVE PURCHASERS EXTENDS TO WHATEVER MEANS OR KINDS OF INSPECTION OR TEST MAY BE NECESSARY TO DETERMINE THE TRUE NATURE OF THE PROPERTY OFFERED. SEE PAXTON-MITCHELL COMPANY V. UNITED STATES, CT.CLS., APRIL 1959, 172 F.SUPP. 463.

ON THE OTHER HAND, SURPLUS SALES ARE NOT EXCEPTED FROM THE APPLICATION OF THE GENERAL RULE THAT AN OFFEREE CANNOT CREATE AN ENFORCEABLE CONTRACT BY ACCEPTANCE OF AN OFFER WHICH HE KNOWS OR HAS REASONABLE GROUNDS TO BELIEVE WAS BASED UPON THE OFFEROR'S MISTAKE OR MISAPPREHENSION AS TO A MATERIAL FACT.

EXAMINATION OF THE RECORDS OF THE GENERAL SERVICES ADMINISTRATION SHOWS THAT THE SURPLUS DECLARATION OF THE CORPS OF ENGINEERS, BY WHICH THE PROPERTY WAS TURNED OVER TO GSA FOR SALE, WAS ACCOMPANIED BY A PLAT WHICH CLEARLY SHOWED THAT THE PROPERTY WAS ENTIRELY REMOVED FROM THE RIVER. THE RECORD FURTHER CONTAINS TWO WRITTEN INQUIRIES RECEIVED BY THE GSA REGIONAL OFFICE BEFORE THE BID OPENING DATE, BOTH INQUIRING SPECIFICALLY AS TO WHETHER THE PROPERTY WAS ON THE RIVER FRONT. IN THE LIGHT OF THESE FACTS, TOGETHER WITH THE FACT THAT THE CIRCULAR NOTICE OF SALE PREPARED AND CIRCULATED BY THE REGIONAL OFFICE REFERRED TO THE PROPERTY AS BEING "ON" THE RIVER, WE FEEL THAT THE FAILURE OF THE FORMAL INVITATION TO CONTAIN ANY CLEAR INDICATION THAT THE PROPERTY INCLUDED NO RIVER FRONTAGE WAS A MATERIAL OMISSION, SUFFICIENT TO PUT THE CONTRACTING OFFICER ON INQUIRY, WHEN THE HIGH BID WAS SO GROSSLY OUT OF LINE WITH THE OTHER BIDS RECEIVED (AS WELL AS WITH THE GOVERNMENT APPRAISAL), AS TO WHETHER THE HIGH BIDDER WAS AWARE OF THE TRUE LOCATION OF THE PROPERTY.

THE CONTRACTING OFFICER RELIES UPON THE VERIFICATION OF THE BID MADE BY THE BIDDER'S REPRESENTATIVE IN THEIR TELEPHONE CONVERSATION AFTER THE OPENING. HOWEVER, ALTHOUGH THE STATEMENTS OF THE TWO PARTIES TO THE CONVERSATION ARE NOT IN COMPLETE AGREEMENT AS TO WHAT WAS SAID, IT SEEMS CLEAR THAT THE BIDDER WAS NOT ASKED, AND DID NOT ANSWER, THE SPECIFIC QUESTION WHETHER OR NOT HE KNEW THAT THE PROPERTY WAS NOT ON THE WATER. THE MOST THAT CAN BE SAID IS THAT, ACCORDING TO THE CONTRACTING OFFICER'S VERSION OF THE CONVERSATION, IT MIGHT BE INFERRED FROM MR. RAESE'S STATEMENTS THAT HE KNEW THAT FACT. SUCH INFERENCE IS NOT, HOWEVER, NECESSARILY REQUIRED, AND IT IS UNEQUIVOCALLY DENIED BY MR. RAESE.

IN THE CIRCUMSTANCES, WE DO NOT BELIEVE THAT THE VERIFICATION OBTAINED MEETS THE REQUIREMENTS OF FAIRNESS LAID DOWN IN UNITED STATESV. METRO NOVELTY MANUFACTURING CO., INC., 125 F.SUPP. 713. WE THEREFORE HOLD THAT THE ACCEPTANCE OF THE GREER STEEL COMPANY'S BID WAS INEFFECTIVE AND THAT THE COMPANY IS NOT BOUND THEREBY.