Case: ASSOCIATED TRADERS, INC. v. THE UNITED STATES
Abbreviation: Associated Traders, Inc. v. United States
Decision Date: 1959-01-14
Docket Number: No. 359-55
Citation: 144 Ct. Cl. 744
Volume: 144
Reporter: United States Court of Claims Reports
Court: United States Court of Claims
Jurisdiction: United States
Parties: ASSOCIATED TRADERS, INC. v. THE UNITED STATES
Judges: EdgeRtoN, Circuit Judge, sitting by designation; Lara-more, Judge; Madden, Judge/ and Whitaker, Judge concur.
Pages: 744–761

Head Matter:
ASSOCIATED TRADERS, INC. v. THE UNITED STATES
No. 359-55.
Decided January 14, 1959
Mr. Solomon Dimond for the plaintiff.
Mr. George L. Ware, with whom was Mr. Assistant Attorney General George OoeJiran Doub, for the defendant.

Opinion:
JONES, OMef Judge,
delivered the opinion of the court:
Plaintiff seeks reformation of a supply contract on the ground of alleged misrepresentation on the part of a representative of the defendant. In the alternative, it seeks reimbursement for asserted excess repurchase costs which the defendant paid for that portion of the contract materials which plaintiff failed to deliver according to the terms of its supply contract with the defendant.
The essential facts are clearly set out in our findings and will be summarized here.
According to the contract, plaintiff was to furnish 5,920 gallons of liquid "Adhesive, Label, Water Resistant" conforming to designated specifications, to be delivered in equal amounts, in five-gallon cans, to the Fort Worth Quartermaster Depot, Fort Worth, Texas, and Sharpe General Depot, Lathrop, California. The price finally agreed upon was $1.67 per gallon, f. o. b. the respective destinations.
The request for bids stipulated that it was to be a negotiated contract.
The proposals were sent to 55 prospective bidders and bids were received on various sub-items from 22 bidders. The proposal form required the bidder to state whether it was a regular dealer or manufacturer of adhesive supplies, and stipulated that if the bidder proposed to use Government surplus a complete description of the product, the quantity to be used, and date and source of acquisition should be set forth in the proposal.
On one of the items involved in this suit there were nine bidders and on another item there were six bidders.
Plaintiff stated that it was a regular dealer in the supplies bid upon and if awarded the contract it would deliver supplies which it had acquired from one of the Quartermaster General depots in Ogden, Utah, in 1948; that it held the material in 53-gallon drums, but that delivery would be made in new five-gallon cans acquired from a can manufacturing company.
Plaintiff offered to furnish the supplies at $1.97 per gallon, f. o. b. destination. The other bidders on the particular items were somewhat higher, ranging from $2.11 up to $3.56 per gallon.
Plaintiff was tlie only bidder wbicb was not a manufacturer of the adhesive, and the only bidder who offered government surplus material. Plaintiff had purchased this material at 150 per gallon in 1948, but there is no evidence as to the storage or other costs incurred by plaintiff thereafter in connection with the adhesive.
The specifications set up detailed standards for the material. These are disclosed in finding 6. Plaintiff supplied a one-quart sample of the adhesive it intended to furnish under its bid. This sample met the standards set out in the specifications.
About February 15, 1951, after being advised that plaintiff's sample met the specifications, a Mr. Davis, the assigned purchasing agent of the procurement agency in New York, telephoned to plaintiff at Denver, Colorado, advising plaintiff's vice president and secretary-treasurer that its sample of adhesive had passed the required test. He requested that plaintiff's bid on the items which it had offered to furnish be reduced to $1.67 per gallon, giving as his reasons for the request that the adhesive material was purchased by plaintiff as "war surplus" at a greatly reduced price; that it was probably not up to the standard of that being manufactured at the time the bid was submitted, and that the material had possibly deteriorated due to the long storage after the time of the original manufacture.
Plaintiff's officers at first objected to Mr. Davis' statement and replied that the material was in good condition and would be in compliance with the sample submitted. At the close of the conversation, however, the bidder's representative stated that the matter would be taken up with the officers of the plaintiff company and that a telegram would be sent as to whether or not plaintiff would offer the material at a lower price. On February 15, 1951, the plaintiff's vice president, Mr. Ben Barnes, with the approval of the officers of the plaintiff company, sent a telegram advising that it would furnish the supplies covered by its bid at $1.67 per gallon.
The award was made and the contract entered into for the plaintiff to furnish 5,920 gallons of adhesive in the manner and at the places heretofore mentioned.
On April 23, 1951, the General Testing Laboratory Division of tlie Quartermaster Corps reported that the composite sample taken from containers in plaintiff's warehouse met the required specifications.
Plaintiff delivered 5,145 gallons of contract material and defaulted on the remaining 775 gallons. Plaintiff first requested permission to ship 765 gallons of material from its stores in San Francisco, but a few days later advised the defendant that it could not furnish the San Francisco adhesive because it had become contaminated due to damage to the drum containers.
On June 8, 1951, defendant's contracting officer asked plaintiff whether it would furnish the undelivered 775 gallons of contract material, at the same tune advising that if it did not do so it would become necessary for defendant to purchase the undelivered portion elsewhere and charge the excess cost against plaintiff's account. By letter dated July 10,1951, defendant warned plaintiff that the contract would be partially terminated for default unless plaintiff replied by July 20. Plaintiff made no reply. Thereafter, by letter dated September 13, 1951, defendant's contracting officer advised plaintiff by letter that its right to deliver the 775 gallons was cancelled and that it would purchase the 775 gallons of adhesive in the open market and any excess cost would be charged to the plaintiff's account. On September 14, 1951, the defendant's contracting officer mailed copies of a request for quotation on the 775 gallons to each of the other bidders who had submitted offers when the original bids had been requested.
The low bidder was the Union Paste Company of Hyde Park, Massachusetts, which bid $2.70 per gallon on 10 gallons, f. o. b. Fort Worth Quartermaster Depot, and $2.85 per gallon on 765 gallons, f. o. b. Sharpe General Depot. By negotiation, Mi*. Davis induced the company to reduce the bid for the 765 gallons to $2.30 per gallon, or a total reduction of $420.75.
The Union Paste Company delivered the 775 gallons of adhesive at the price of $2.70 per gallon for 10 gallons, and $2.30 per gallon for 765 gallons. This was a fair and reasonable price for the contract material on October 16, 1951. If plaintiff had performed its contract to deliver the 775 gallons of material, the cost to defendant would have been $492.25 less than was paid to the Union Paste Company. The defendant collected from plaintiff the $492.25.
Plaintiff protested and appealed to the Armed Services Board of Contract Appeals. Pertinent parts of the decision are set out in finding 18. The board held that the particular adhesive that plaintiff contracted to furnish was purchased by it at a very low price as surplus; that no other similar material was available in that area at that price; that for these reasons the repurchase was not made under sufficiently similar specifications to warrant the contracting officer's charging plaintiff with the excess cost of the 775 gallons of material which was actually purchased in lieu of what the plaintiff failed to furnish; and that there were other avenues by which the Government could approach the problem of recovering its damages arising from the default in delivery. Therefore, the board found that the means selected by the contracting officer were not appropriate in this instance. Seven members of the board concurred in the opinion; three concurred in the result; and four dissented.
The Comptroller General refused to follow the decision of the board and upheld the action of the contracting officer in assessing and collecting the damages resulting from plaintiff's failure to deliver the 775 gallons of liquid adhesive.
Plaintiff first asserts that the Government made a misrepresentation which would warrant a reformation of the contract. Second, that the decision of the Armed Services Board of Contract Appeals holding that the reprocurement was not made under sufficiently similar specifications to warrant the contracting officer's basing the amount of excess costs on such bids was final and binding upon the defendant.
Taking up the first of these contentions, we find nothing in the record even approaching such a misrepresentation as would justify a reformation of the contract. Plaintiff alleges that at the time Mr. Davis sought a reduction in the price from $1.97 to $1.67 per gallon Mr. Davis knew that the sample had met the tests provided in the specifications and that he did not inform the plaintiff that the sample had met the tests. This is the primary basis of its charge of misrepresentation. Mr. Davis' testimony was that "We notified, or I believe I telephoned Associated Traders, telling them the sample had passed." Some years had passed and, of course, memories were not as fresh after the passage of years as they would have been otherwise.
At any rate, the plaintiff knew, or certainly should have known, that the contract terms would require that his product meet the specifications. Otherwise the sale could not be consummated. This fact was disclosed in the bids and in the contract that was ultimately signed. Even if there had been no disclosure we think that in all the circumstances revealed here it would be a very thin basis for a court's undertaking to reform a contract on the ground that there had been misrepresentation. We find no adequate basis for holding that there was any sufficient misrepresentation or any adequate ground for reforming the contract.
To be actionable, the misrepresentation must be relied upon and must induce the recipient to do something to his detriment which he would not otherwise have done. In re Wilson-Nobles-Barr Co., 256 Fed. 966; 5 Williston on Contracts (Rev. ed. 1937) § 1515.
To justify a reformation of the contract the evidence must be of a very clear and convincing character. Philippine Sugar Estates Development Co. v. Philippine Islands, 247 U. S. 385; James Stewart & Co., Inc. v. United States, 94 C. Cls. 95. We find the evidence of misrepresentation insufficient to meet the tests laid down by the authorities.
The second count which plaintiff presents is the more .serious one. It involves the binding effect of the decision of the Board of Contract Appeals on the propriety of the repurchase by the defendant under the default clause of the contract. It seems to us, however, that we have here a question of the interpretation of the contract which involved a question of law and therefore not binding (41 U. S. C. (1952 ed., Supp. II) § 321-322). There is no real dispute as to the essential facts in the case. Under the contract the parties had agreed that in the event of termination for default the Government could procure supplies "similar to those terminated and the Contractor should be liable for any excess costs for such similar supplies It is the meaning to be ascribed to the word "similar" as used in this clause which is in issue here.
The gravamen of plaintiff's complaint is not that there was no default but that in repurchasing, a different quality of product was secured. As a matter of fact, however, plaintiff's adhesive and that repurchased met the requirements of the same specifications. There is not in the record any evidence of the age of the repurchased material, nor as to the time within which any deterioration might occur when the commodity was locked in airtight drums. The plaintiff reduced the quantity of adhesive delivered not on account of the nature of the material but because of contamination due to the damaged containers. Evidently this had occurred in handling or while in storage. Whether this contamination was the result of exposure to the air or to rust or dust or other materials is not quite clear from the evidence.
We do not understand that the word "similar" must in all cases be treated as meaning "identical". A composite of the definitions of the word "similar" as given in Black's and B'ouvier's law dictionaries is to the effect that it means "nearly corresponding; resembling in many respects; somewhat like; having a general likeness or sameness in all essential particulars." Barely has it been held to mean identical, other than when applied to criminal cases. The definitions in the standard dictionaries are to the same general effect.
The only requirement prescribed in the invitation to bid and in the contract is that the adhesive should conform to the specifications set out. The surplus material which was delivered and the material repurchased both met these specifications.
The plaintiff concededly did not comply with its contract. It did not furnish the quantity of adhesive that it had agreed to furnish. The terms of the contract provided that in the event of failure the commodity might be purchased elsewhere and the excess cost charged to plaintiff's account. Plaintiff was advised on June 8, 1951, that it would be necessary for it to deliver the 775 gallons of contract material and that if it did not, it would be necessary for defendant to purchase the commodity against plaintiff's account. By letter dated July 10, 1951, defendant warned plaintiff that the contract would be partially terminated for default by July 20, unless delivery was made. Plaintiff made no reply to any of these communications. By letter dated September 13, 1951, defendant's contracting officer advised plaintiff that the unperformed part of its contract was being terminated. The plaintiff had the period from June 8,1951, to September 13, 1951, to undertake to procure the commodity elsewhere. It made no move to do so. None of the other bidders had surplus material. The defendant made every reasonable effort to secure the additional commodity at the lowest obtainable price. It induced the company that furnished the additional material to reduce its price.
We find no sufficient reasonable basis on which to sustain either of plaintiff's contentions.
The petition will be dismissed.
It is so ordered.
EdgeRtoN, Circuit Judge, sitting by designation; Lara-more, Judge; Madden, Judge/ and Whitaker, Judge concur.
FINDINGS OF FACT
The court, having considered the evidence, the briefs and argument of counsel, and the report of Trial Commissioner Roald A. Hogenson, makes the following findings of fact:
1. Plaintiff is a Colorado corporation with its principal office at Denver, Colorado.
2. On January 11, 1951, the New York Quartermaster Procurement Agency issued its "Request and Proposal (Negotiated Procurement)" requesting bids on four different types of adhesives to be delivered to depots located in various parts of the United States. It was stated that prices quoted would be for delivery f. o. b. destinations. Item 1 was "Adhesive, Label, Water Resistant (5 Gal. Can)" with "Specification: Shall conform to requirements set forth in Ordnance Department, U. S. Army Tentative Specification No. AXS-1472 dated 29 November 1944."
This case concerns only sub-items d and f of item 1, on which destinations, delivery schedule and quantities were set forth as follows:
d. Fort Worth Quartermaster Dept.
1400 gals. During month oí February 1951
1560 " " " " March 1951
‡ ‡ t t
f. Sharpe General Depot
1400 gals. During month of February 1951
1560 gals. " " " March 1951
Sharpe General Depot is at Lathrop, California; and Fort Worth Quartermaster Depot is at Fort Worth, Texas.
It was stated in the Bequest for Proposal that Mr. David D. Davis, purchasing agent in the issuing office, was assigned the responsibility for purchase of the items described and to administer any contracts resulting from awards under the Bequest for Proposal.
In all, proposal forms were sent to 55 prospective bidders, and bids were received on various sub-items from 22 bidders.
3. The Bequest for Proposal contained the following statement:
The award will normally be made to the low bidder, but the Government reserves the right to negotiate with any bidder or other producer and to reject any and all quotations received.
The Proposal form required the bidder to state whether it was a regular dealer or manufacturer of the supplies bid upon, and also whether it proposed or did not propose
to use components acquired from Government surplus or residual inventory resulting from terminated Government contracts. (If bidder proposes to use Government surplus, a complete description, the quantity to be used, date and source of acquisition shall be set forth in the proposal.)
4. Plaintiff submitted bids only on items Id and If, being one of nine bidders on item Id and one of six on item If. Plaintiff represented that it was a regular dealer in the supplies bid upon, and in the letter transmitting its bid, stated in part as follows:
If awarded this contract, we propose to use Government surplus Adhesive, label, water resistant, stock #AXS-1472, acquired from QMSS Utah General Depot, Ogden, Utah, in 1948. Since this material is in 53 gallon drums, the containers we will use will be new and in conformance with specification #Jan-P-124, and we will ac quire them from the Continental Can Co. and will require a DO priority with which to purchase above mentioned containers.
We are forwarding under separate cover to Mr. David E. [sic] Davis in your office, a one quart sample for testing purposes.
Since the material is in our possession, we can make delivery within fourteen days of the date that we receive the award, which fourteen days will be required to receive the five gallon containers from Continental Can Co. in Kansas City.
5. Plaintiff's bid on both items Id and If was for delivery of 2960 gallons each to the Fort Worth Quartermaster Depot and the Sharpe General Depot at $1.97 per gallon, f. o. b. destination.
The other 8 of the 9 bids on item Id ranged from $2.11514 to $3.56 per gallon. The other 5 of the 6 bids on item If ranged from $2.30 to $3.56 per gallon.
Plaintiff was the lowest bidder on both items Id and If. There were three other bids which might be considered comparable to plaintiff's bid if freight costs be deducted from the quoted prices, but defendant requested only quoted prices, f. o. b. destination.
Plaintiff was the only bidder which was not a manufacturer of the adhesive, and only plaintiff offered Government surplus material.
Plaintiff paid 15 cents per gallon in 1948 for the adhesive in 53-gallon drums, but there is no evidence as to the costs incurred by plaintiff thereafter in connection with the adhesive.
6. At the time of submitting its bid, plaintiff supplied the New York Quartermaster Procurement Agency with a one-quart sample of the adhesive which it intended to furnish under its bid. The bids were opened on January 22, 1951, and under date of January 24, 1951, the New York Quartermaster Procurement Agency forwarded plaintiff's sample to and requested testing by the Philadelphia Quartermaster Depot, stating in a letter as follows:
1. There has been forwarded this date to your Depot, a sample of Adhesive, Label, Water Resistant, submitted by Associated Traders, Inc., 2575 West 8th Avenue, Denver 4, Colorado, with Proposal No. QM-30-280-5TNEG-129, listed as Item 1, Adhesive, Label, Water Resistant, 5 gallon can, Ordnance Department, U. S. Army Tentative Specification No. AXS-1472 dated 29 November 1944 (copy of Proposal and Specification inclosed) .
2. The Adhesive bid on by this company was acquired from Government surplus, and as this company is low bidder on part of the requirements, it is requested that the sample be tested, and this office advised as promptly as possible whether same meets specifications in all respects.
Specification AXS-1472 set up standards for material, workmanship, resistance to water, high or low temperatures, salt water, oil, accelerated ageing, speed of drying túne, and effects on marking ink.
By letter and enclosure dated February 12,1951, the Philadelphia Quartermaster Corps advised the New York Quartermaster Procurement Agency that plaintiff's sample of its adhesive complied in all respects with the requirements of Specification AXS-1472.
7. On or about February 15,1951, after being advised that plaintiff's sample complied with the specification, Mr. David D. Davis, the assigned purchasing agent of the New York Quartermaster Procurement Agency, telephoned from his New York Office to plaintiff at Denver, Colorado, and advised plaintiff's vice-president and its secretary-treasurer that plaintiff's sample of adhesive had passed the required tests. Mr. Davis then requested that plaintiff's bid on items Id and If be reduced to $1.67 per gallon, giving as reasons for his request that plaintiff's adhesive material was purchased by plaintiff as "war surplus" at a greatly reduced price, that it was probably not up to the standard of that being manufactured at the present time, and that the material had possibly deteriorated due to the long storage from the time of the original manufacture until the present time.
Plaintiff's officers objected to Mr. Davis' statements and replied that the material was in good condition and would be in compliance with the sample submitted. Plaintiff, however, closed the conversation by stating that the matter would be taken up with the officers of plaintiff company and that a telegram would be sent as to whether or not plaintiff would offer the material at a lower price.
On February 15, 1951, plaintiff's vice-president, Mr. Ben Barnes, with the approval of the officers of plaintiff company, sent the following telegram to the New York Quartermaster Procurement Agency, Attention of David Davis:
Befone will accept offer 1.67 per gallon items one D and one F proposal neg 129. air mail immediately complete specifications on cans and do priority
8. By U. S. Army Purchase Order, dated March 1,1951, defendant awarded plaintiff contract No. DA-30-280-QM-11854, to furnish 5,920 gallons of Adhesive, Label, Water Resistant (5 gal. can) conforming to Specification AXS-1472 at $1.67 per gallon, to be delivered in equal amounts to Fort Worth Quartermaster Depot and Sharpe General Depot, f. o. b. destination, delivery to be completed during March 1951.
9. The contract contained the following provisions, among others:
11. Default
(a) The Government may, subject to the provisions of paragraph (b) below, by written Notice of Default to the Contractor terminate the whole or any part of this contract in any one of the following circumstances:
(i) If the Contractor fails to make delivery of the supplies or to perform the services within the time specified herein or any extension thereof; or
(ii) if the Contractor fails to perform any of the other provisions of this contract, or so fails to make progress as to endanger performance of this contract m accordance with its terms, and in either of these two circumstances does not cure such failure within a period of 10 days (or such longer period as the Contracting Officer may authorize in writing) after receipt of notice from the Contracting Officer specifying such failure.

(c) In the event the Government terminates this contract in whole or in part as provided in paragraph (a) of this clause, the Government may procure, upon such terms and in such manner as the Contracting Officer may deem appropriate, supplies or services similar to those so terminated, and the Contractor shall be liable to the Government for any excess costs for such similar supplies or services, Provided, That the Contractor shall continue the performance of this contract to the extent not terminated under the provisions of this clause.
10. On April 23, 1951, the Quartermaster Corps General Testing Laboratory Division reported that the composite sample taken from many containers in plaintiff's warehouse met Specification AXS-1472.
11. Plaintiff delivered 5,145 gallons of contract material and defaulted on the remaining 775 gallons. On May 21, 1951, plaintiff requested permission to ship 765 gallons of material from its stores in San Francisco, but 10 days later, advised defendant that it could not furnish the San Francisco adhesive because it had become contaminated due to damage to the drum-containers.
On June 8,1951, defendant's contracting officer asked plaintiff whether plaintiff would furnish the undelivered 775 gallons of contract material, advising that if plaintiff did not, it would be necessary for defendant to purchase the quantity against plaintiff's account. By letter dated July 10, 1951, defendant warned plaintiff that the contract would be partially terminated for default unless plaintiff replied by July 20. There was no reply, and by letter dated September 13, 1951, defendant's contracting officer advised plaintiff as follows:
Reference is made to Purchase Order No. 0.1.13745, Contract No. DA-30-280-QM-11854, dated 1 March 1951, awarded to your company for 5,920 gallons of Adhesive Label, Water-Resistant (5-gal. cans).
Your company failed to reply to our letter dated 10 July 1951 as to your intention to complete delivery of remaining undelivered balance of 775 gallons of Adhesive Label, Water-Resistant; 10 gallons for delivery to Fort Worth, Texas and 765 gallons for delivery to Sharpe General Depot, Lathrop, California. In view of the fact that completion of delivery was required on or before 31 March 1951, your company has breached the contract.
You are hereby advised that your right to deliver the balance of 775 gallons is hereby terminated in accordance with the Default Article, par. 11 of Contract Clauses Standard Form 32.
Purchase of said undelivered balance of 775 gallons of Adhesive Label, Water-Resistant, will be made in the open market. Any excess cost occasioned by tbe Government thereby will be charged to your account.
This action may be considered as a finding and determination of the Contracting Officer under the Disputes Articles of the contract.
12. On September 14, 1951, the defendant's contracting officer mailed copies of the following request for quotation to the eight bidders who, in addition to the plaintiff, had submitted bids on items Id and If of the original Request for Proposal:
Quotation is requested in triplicate F. O. B. Destination for 775 gallons of the following item :
ADHESIVE, LABEL, WATER RESISTANT (5-gallon Cans)
stock number: 52-A-120
specification : Shall conform to requirements set forth in Ordnance Department, U. S. Army Tentative Specification No. AXS-1472 dated 29 November 1944.
DOMESTIC PACK UNIT PRICE TOTAL AMT.
10 gallons to be delivered to Fort Worth QM Depot
Fort Worth, Texas
765 " " " " " Sharpe General Depot
Lathrop, California
packing : Shall be packed in 5-gallon containers in accordance with Joint Army-Navy Specification JAN-P-140, Paragraphs G-l and G-2.
marking: Shall be in accordance with Quartermaster Corps Tentative Specification OQMG No. 94B dated 21 March 1949
delivery : To be completed by 15 October 1951.
All quotations to be received in this office not later than 24 September 1951, signed by an official of your company.
Four quotations were received in response.
13. The Union Paste Company of Hyde Park, Massachusetts, was low bidder at $2.70 per gallon on 10 gallons f. o. b. Fort Worth Quartermaster Depot and $2.85 per gallon for 765 gallons f. o. b. Sharpe General Depot.
By negotiation, Mr. Davis reduced the bid for 765 gallons to $2.30 per gallon or a total reduction of $420.75.
The material offered by Union Paste Company was tested by the Quartermaster Corps Laboratory and found to comply with United States Army Tentative Specification No. AXS-1472.
14. On October 16, 1951, Union Paste Company received a purchase order for 10 gallons of adhesive @ $2.70 per gallon f. o. b. Fort Worth Quartermaster Depot and 765 gallons of adhesive @ $2.30 per gallon f. o. b. Sharpe General Depot. Except for prices, delivery dates, and contract amounts, the specifications and contract provisions were identical with contract DA-30-280-QM-11854.
The prices contained in the purchase order represented the fair and reasonable price of the contract material on October 16,1951.
15. The Union Paste Company performed its contract and was paid $1,786.50, the contract price, by the defendant. If plaintiff had performed under its contract, the 775 gallons of material would have cost defendant $1,294.25, or $492.25 less than was paid Union Paste Company.
16. On January 23,1952, defendant sent the following letter to plaintiff:
By reason of the partial termination of subject order, Contract No. DA 30-280-QM-11854, as reported in letter from the Contracting Officer, forwarded your company under date of 13 September 1951, excess costs in the total amount of $492.25 have been occasioned the Government. Said excess costs, chargeable to your company have been computed as follows:
Cost of purchase under subject order:
775 gal. @ $1.67_$1,294.25
Cost of repurchase:
10 gal. @ $2.70_'_ $27. 00
765 gal. @ $2.30_ 1, 759. 50 1, 786. 50
Excess cost of repurchase_ • 492.25
It is therefore requested that certified check in the amount of $492.25, made payable to the Treasurer of the United States be immediately forwarded this agency for proper adjustment of this account.
17. Plaintiff paid defendant the additional cost of $492.25 under protest and appealed to the Armed Services Board of Contract Appeals.
18. On April 27,1954, the Armed Services Board of Contract Appeals found in pertinent part, as follows:
_ While the appeal covers the question of default in delivery, as well as the assessment of excess costs, the controversy is limited to the latter. The appellant does not attempt to justify the failure to deliver, and we may. assume for the purposes of this opinion, without so finding, that the contract was properly terminated for default.
The appellant attacks the assessment of excess costs on the ground that the Government bought the material at a low price because it was surplus and therefore probably not in prime condition. It is claimed that such material cannot properly be replaced by purchase in the open market. The Government replies that it bought according to stock number and specification, that a sample of appellant's material was tested and found to comply with the specifications, and that it was proper to repurchase specification material in the open market.
It is clear that the contract price was low because the material sold was unique in having been purchased by the contractor at a low price as surplus, regardless of its condition. That fact was recognized, not only in the willingness of the contractor to accept a low price but expressly in the contract description. No material was bought except that which was included in the 1948 sale at the Utah General Depot. It would presumably have been impossible to purchase any other such material at the same price. Certainly no such offers were received. The recognition of that fact constitutes the only conceivable purpose in including the description in the contract. Since there was no other material that answered that description, none could be purchased in the open market. The appellant cannot be charged with the excess cost of material which does not answer the description.
We hold that this was, in essence, the purchase of a particular lot of adhesive having unique characteristics and that an invitation to bid on the repurchase of adhesive generally was not made under sufficiently similar specifications to warrant the contracting officer basing the amount of excess costs on such bids. There are other avenues by which the Government may approach the problem of recovering its damages arising from, the default in delivery but we find the means selected by the contracting officer were not appropriate in this instance.
Seven members of the Board concurred, three concurred in the result and four dissented.
19. Plaintiff's contract with the defendant contained the usual "Disputes" clause which in effect provided that the decision of the Armed Services Board of Contract Appeals on any dispute concerning a question of fact arising under the contract would be final and conclusive on the parties.
20. Upon review of the action of the Armed Services Board of Contract Appeals, the Comptroller General refused to follow the decision of the Board and upheld the action of the contracting officer in assessing and collecting the damages for plaintiff's failure to deliver the 775 gallons of contract material.
CONCLUSION OK LAW '
Upon the foregoing findings of fact, which are made a part of the judgment herein, the court concludes as a matter of law that the plaintiff is not entitled to recover, and the petition is therefore dismissed.