Aircraft Associates & Mfg. Co. v. United States

• Decision Date: 18 March 1966
• Docket Number: No. 403-62.,403-62.
• Parties: AIRCRAFT ASSOCIATES & MFG. CO., Inc. v. The UNITED STATES.
• Court: U.S. Claims Court

174 Ct. Cl. 886, 357 F.2d 373 (1966)

AIRCRAFT ASSOCIATES & MFG. CO., Inc. v. The UNITED STATES.

No. 403-62.

United States Court of Claims.

March 18, 1966.

Charles A. Hobbs, Washington, D. C., for plaintiff. Robert W. Barker, Washington, D. C., attorney of record. Wilkinson, Cragun & Barker and Claron C. Spencer, Washington, D. C., of counsel.

Isaac D. Benkin, Washington, D. C., with whom was Asst. Atty. Gen. John W. Douglas, for defendant. James F. Merow, Washington, D. C., of counsel.

Before COWEN, Chief Judge, and LARAMORE, DURFEE, DAVIS and COLLINS, Judges.

COWEN, Chief Judge.

On July 22, 1957, plaintiff contracted to purchase from the Government 306 surplus aircraft carcasses (mostly B-29 and B-50 types) at a bid price of $1,532,601.94. The surplus aircraft were located at Davis-Monthan Air Force Base in Tucson, Arizona, and payment was to be made to the Government within 10 days of the date of the contracting officer's invoices for aircraft delivered to the contractor. Under the terms of the contract, the purchaser had the right to remove intact certain parts and items of equipment for resale. The remainder of the aircraft was to be demilitarized by cutting them apart and putting them through a reduction furnace to sweat or melt off the aluminum content. All scrapping of the airplanes was to take place under the watchful eyes of the Government on the base, where the contractor was required to furnish and install at his expense a furnace for melting into ingots the aluminum contained in the aircraft.

In preparing its bid, plaintiff calculated its expected profit on its estimate of the material it could recover and sell. The principal item was the aluminum which was to be cast into ingots and sold on the market. Plaintiff also expected to realize a profit on the resale of engines, propellers, seats, and other usable parts, plus various items of scrap. The hoped for gain did not materialize for several reasons. Among these was a drop in the aluminum market and two factors which considerably reduced the quantity of material recoverable from the carcasses. The first factor was a miscalculation by plaintiff of the total weight of the 306 airplanes, plus a highly optimistic guess as to the amount of aluminum that could be obtained from the carcasses. The second factor was the removal by personnel of defendant of a substantial number of parts from the aircraft between the time the invitation for bids was issued and before title passed to plaintiff. Claims for shortages in gross weight and in aluminum content and for the missing parts were filed with the contracting officer and, upon his denial thereof, an appeal was taken to the Armed Services Board of Contract Appeals. After a full hearing, the Board by decision rendered June 29, 1961, denied plaintiff's claim in all respects, except a claim for parts removed after September 16, 1958, the date of Supplemental Agreement No. 2 entered into between the parties. Thereafter, the Board accepted a stipulation of the parties that plaintiff was entitled to a credit of $4,449.50 for the fair market value of those parts.

In Count One of its petition in this court, plaintiff seeks a recovery of approximately $225,000 for the shortages in the weights of the carcasses delivered. In Count Three of the petition, plaintiff claims $565,000 for the value of the parts removed by defendant's representative.¹ With respect to plaintiff's claim as to the shortage in the gross weights of the aircraft, the ASBCA held that plaintiff had assumed the risks inherent in an "as-is-where-is" contract, the provisions of which expressly disclaimed any guaranty, warranty, or representation as to the weight of the property. The Board also decided that plaintiff could not recover on the parts removal claim, because it had released that claim in the Supplemental Agreement No. 2 of September 16, 1958. The Board held that the release was not executed by plaintiff under economic duress and that the release was a complete defense to the claim.

In its motion for summary judgment defendant asserts that all the material facts are contained in the record and decision of the ASBCA and that the Disclaimer of Warranties clause in the contract and the release signed by plaintiff defeat its right to recovery. Defendant has also interposed a counterclaim for the unpaid balance due on the contract. Plaintiff agrees that the facts relating to its claim for deficiencies in the weight of aircraft purchased are not in dispute and that the claim may be decided on the pending motion. With respect to its claim for the missing parts, however, plaintiff contends that if the facts contained in the administrative record are not sufficient to invalidate the release executed by plaintiff, it is entitled to a trial de novo on that issue, which is said to be decisive of defendant's liability on the missing parts claim.

After studying the ASBCA decision, we note that the Board made very few findings of fact as such. Aside from its decision on the legal questions presented, the Board's opinion consists for the most part of a recital of much, but not all, of the material evidence offered by both parties. However, we have available to us not only the decision but the complete record of the hearing before the Board. Consequently, we agree with defendant that there is no occasion to resort to extraneous evidence for the resolution of the issues relating to plaintiff's right to recover and to plaintiff's liability on defendant's counterclaim. P.L.S. Coat & Suit Corp. v. United States, 180 F.Supp. 400, 148 Ct.Cl. 296 (1960).

Claim for Shortage of Gross Weights — Count One of the Petition

The aircraft carcasses were offered for sale "as-is-and-where-is" and were to be bid on a "per each" basis and not by the pound. The invitation for bids listed them as follows:

"2. AIRCRAFT CARCASSES, residue of reclaimed B-50 aircraft without engines. Estimated total Gross Weight approximately 40,000 pounds each. A number of main landing wheels and other components removed * * *.

"3. AIRCRAFT CARCASSES, residue of reclaimed B-29 Cocooned aircraft with engines. Estimated total Gross as-is Weight 65,000 pounds each * * *.

"4. AIRCRAFT CARCASSES, residue of reclaimed B-29 aircraft, non-cocooned, with total of 39 each engines, nose wheels removed and 10 missing, also a number of main landing wheels and other components removed. Estimated Total Gross, as-is Weight 62,000 pounds each * * *.

"5. AIRCRAFT CARCASSES, residue of reclaimed B-29 aircraft, Non-Cocooned with engines and propellers with the following exceptions: 1 each engine, 30 each propellers, spark plugs, antennas and other minor components, have been removed from this item of aircraft carcasses. The nose landing wheels will be removed upon delivery to the contractor. Estimate total gross as-is weight 63,000 lbs. each * *."

The listed estimated weights were arrived at by personnel at the San Bernardino Air Materiel Area, Norton Air Force Base, California, who used weight and balance data contained in documents received from the Davis-Monthan Air Force Base. Plaintiff's manager visited Davis-Monthan Air Force Base in March 1957, where he inspected a half dozen airplanes that were open. He made a further inspection on April 5, 1957. According to figures which plaintiff submitted to the ASBCA and now claimed in Count One of the petition, about 12 percent less gross weight was received than the estimated amounts. The ASBCA found there was nothing to show that the estimated weights contained in the invitation for bids were arbitrarily arrived at or that they were unreasonable. The finding is supported by substantial evidence. Moreover, the following provision of the contract put plaintiff on notice that it assumed the risk that the estimated weights would be less than the actual weights and that no representation or warranty of any kind was given as to the weight of the surplus property:

"CONDITION OF PROPERTY. — All property listed herein is offered for sale `as is\' and `where is,\' and without recourse against the Government * *. The description is based on the best available information, but the Government makes no guaranty, warranty, or representation, expressed or implied, as to * * * weight * * * of any of the property * * * and no claim will be considered for allowance or adjustment or for rescission of the sale based upon failure of the property to correspond with the standard expected; this is not a sale by sample."

Under the uncontroverted facts before us, the law is settled that the above-quoted provision must be given effect and that it precludes plaintiff's recovery on the weight shortage claim. We need do no more than repeat our previous holding that this standard provision in Government disposal contracts is neither unduly broad nor oppressive. The policy that dictated the reasons for placing such risks upon the purchaser of surplus property sold by the Government has been considered and examined in many cases. See Rochester Iron and Metal Co. v. United States, 339 F.2d 640, 168 Ct. Cl. 422 (1964), and cases cited therein. We concur in the ASBCA decision that there is no merit to the claim asserted in Count One of plaintiff's petition and it is therefore dismissed, as is Count Two, which plaintiff has abandoned.

Missing Parts Claim — Count Three of the Petition

Although the evidence in the administrative record is not sufficient to provide a complete description of the parts removed or the value thereof, it is conceded that defendant removed a large number of parts from the aircraft between the time the invitation for bids was issued and the dates on which title passed to plaintiff. The ASBCA held that "under these circumstances it is considered that appellant would have been entitled to an adjustment in the absence of a release of his claims." Defendant's sole defense to its liability to plaintiff for the value of the missing parts is the release contained in ...