B-161469, MAY 26, 1967

B-161469, MAY 26, 1967

TO WEISMAN AND LEBE:

REFERENCE IS MADE TO YOUR LETTER OF MAY 2, 1967, REQUESTING REVIEW OF OUR SETTLEMENT DATED MARCH 8, 1967, WHICH DISALLOWED THE CLAIM OF THE WESTERN NON-FERROUS METALS CORPORATION FOR $19,790.67, REPRESENTING DAMAGES UNDER SCRAP SALES INVITATION P.S.-2-66, ISSUED BY ITT FEDERAL SUPPORT SERVICES, INC., AN AGENT OF THE ATOMIC ENERGY COMMISSION, BECAUSE THE SCRAP ALLEGEDLY CONTAINED A HIGHER PERCENTAGE OF LEAD THAN SHOWN IN THE INVITATION.

THE CLAIM WAS DENIED ESSENTIALLY BECAUSE THE SCRAP WAS SOLD UNDER A DISCLAIMER OF WARRANTY AND BECAUSE THERE WAS NOTHING IN THE RECORD SHOWING BAD FAITH OR FRAUD ON THE PART OF THE SELLING ACTIVITY IN ITS DESCRIPTION OF THE SCRAP.

YOU POINT OUT THAT IN THE SETTLEMENT CERTIFICATE THERE IS A STATEMENT THAT---

"IN A REPORT FURNISHED THIS OFFICE BY THE ATOMIC ENERGY COMMISSION IT IS STATED THAT THEIR TECHNICAL PEOPLE ADVISE THAT THE MATERIAL FROM WHICH THE SCRAP WAS GENERATED COULD NOT HAVE PRODUCED THE SCRAP MATERIAL TO THE ANALYSIS YOU REPORT.'

YOU STATE THAT YOUR CLIENT IS IN COMPLETE AGREEMENT WITH THE STATEMENT. HOWEVER, YOU STATE THAT YOUR CLIENT DID NOTHING TO THE SCRAP OTHER THAN CAUSE IT TO BE SHIPPED FROM THE PLACE OF PURCHASE TO THE ULTIMATE DESTINATION AND THAT INSPECTION BY THREE COMPANIES AT DESTINATION INDICATED THAT THE LEAD CONTENT PERCENTAGES RANGED FROM 4.5 TO 10 PERCENT. THE INVITATION STATED APPROXIMATE PERCENTAGES OF LEAD CONTENT OF 0.01, 0.2 AND 1 PERCENT. YOU STATE THAT THE FOREGOING SUGGESTS THAT BETWEEN THE TIME THE BASE MATERIAL WAS ACQUIRED AND USED BY THE ATOMIC ENERGY COMMISSION AND THE TIME THE SCRAP FROM THE BASE MATERIAL WAS ACQUIRED BY YOUR CLIENT, MATERIAL WITH A SUBSTANTIAL PERCENTAGE OF LEAD WAS ADDED TO AND MIXED WITH THE SCRAP. YOU SUGGEST THEREFORE THAT THERE WAS A DELIBERATE INTENTION TO DEFRAUD ANY PURCHASER OF THE SCRAP OR THAT SUCH ERRANT INDIFFERENCE EXISTED WITH RESPECT TO THE STORAGE OF THE SCRAP AS TO AMOUNT TO BAD FAITH. YOU SUGGEST THAT THE CIRCUMSTANCES WOULD THEREFORE REMOVE THE VEIL OF PROTECTION THAT ORDINARILY SURROUNDS DISCLAIMER OF WARRANTY SALES.

THE ATOMIC ENERGY COMMISSION AGENT INVESTIGATED THIS MATTER WHEN THE CLAIM WAS FIRST ASSERTED AFTER THE SALE. THE RECORD SHOWS THAT REPRESENTATIVE SAMPLES OF THE MATERIAL WERE TESTED BY SPECTROCHEMICAL TECHNIQUES AND THE RESULTS OF THE TESTS WERE REPORTED TO THE DISPOSAL MANAGER BEFORE THE MATERIAL WAS ADVERTISED FOR SALE. THE TEST RESULTS INCLUDED IN THE INVITATION WERE THE SAME RESULTS REPORTED TO THE DISPOSAL MANAGER. FURTHER, IT WAS INDICATED THAT THE SKIMMINGS AND DROSS, THE TURNINGS AND THE CYLINDERS WHICH MAKE UP THE SCRAP ARE KEPT SEPARATE AT THE PRODUCTION LINE AND ARE TAKEN BY TRUCK TO A RAIL SIDING NORTH OF THE PROCESS AREA WHERE THEY ARE DUMPED AWAITING DISPOSAL. ADDITIONALLY, IT WAS INDICATED THAT THERE WAS NONEW OPERATION IN THE AREA WHICH WOULD HAVE CONTRIBUTED MATERIAL TO ANY OF THE SCRAP. THEREFORE, IT IS NOT APPARENT FROM THE RECORD THAT THE ATOMIC ENERGY COMMISSION AGENT ACTED IN THE MANNER YOU SUGGEST.

THE DESCRIPTION IN THE SALES INVITATION WAS BASED ON THE "BEST AVAILABLE INFORMATION"--- AS STATED IN THE INVITATION--- HAVING BEEN TAKEN FROM INFORMATION FURNISHED BY THE PROPERTY HOLDING ACTIVITY REQUESTING SALE OF THE SCRAP. THE EFFECT OF THE "BEST AVAILABLE INFORMATION" CLAUSE WAS CONSIDERED IN A CASE INVOLVING YOUR CLIENT. SEE WESTERN NON-FERROUS METALS CORP. V. UNITED STATES, 192 F.SUPP. 774, WHEREIN THE COURT SAID:

"THE CONTRACTUAL PROVISION UPON WHICH PLAINTIFF STAKES ITS CLAIM STATES THAT "THE DESCRIPTION IS BASED UPON THE BEST AVAILABLE INFORMATION.' WHEN READ IN THE CONTEXT OF THE UNEQUIVOCAL LANGUAGE IN WHICH IT IS SET, IT IS CLEAR THAT IT WOULD BE ERRONEOUS TO INTERPRET THE PROVISION AS OBLIGATING DEFENDANT TO MAKE ANY EFFORTS WHATSOEVER TO OBTAIN RELIABLE INFORMATION, OR TO INTERPRET IT AS A WARRANTY THAT THE INFORMATION SUPPLIED IS THE BEST INFORMATION THAT CAN BE OBTAINED.

THE REASONABLE AND APPARENT INTERPRETATION IS THAT DEFENDANT REPRESENTS ONLY THAT IT POSSESSES NO INFORMATION BETTER THAN THAT WHICH IS OFFERED.

THE INFORMATION INCLUDED IN THE SUBJECT INVITATION APPEARS TO HAVE BEEN BASED UPON INFORMATION OBTAINED FROM SAMPLING PORTIONS OF THE SCRAP AND IT DOES NOT APPEAR THAT THERE WAS ANY PROCESS IN THE AREA WHICH WOULD HAVE CONTRIBUTED ADDITIONAL MATERIAL TO THE SCRAP. THUS, THERE IS NO EVIDENCE OF FRAUD OR BAD FAITH AS YOU SUGGEST.

IN THE CIRCUMSTANCES, THERE DOES NOT APPEAR TO BE ANY LEGAL BASIS FOR GRANTING THE RELIEF REQUESTED. THEREFORE, THE SETTLEMENT OF MARCH 8, 1967, IS SUSTAINED.