Rochester Iron and Metal Co. v. United States

• Decision Date: 11 December 1964
• Citation: 168 Ct. Cl. 422,339 F.2d 640
• Parties: ROCHESTER IRON AND METAL CO. v. The UNITED STATES.
• Court: U.S. Claims Court

168 Ct. Cl. 422, 339 F.2d 640 (1964)

ROCHESTER IRON AND METAL CO. v. The UNITED STATES.

Cong. 1-59.

United States Court of Claims.

December 11, 1964.

F. Trowbridge vom Baur, Washington, D. C., for plaintiff. Manuel D. Goldman, Rochester, N. Y., of counsel.

Gerson B. Kramer, Silver Spring, Md., with whom was Asst. Atty. Gen., John W. Douglas, for defendant.

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

DURFEE, Judge, delivered the following opinion with which LARAMORE, Judge, concurs, and announced the judgment of the court:

This Congressional reference case presents the issue of whether or not a contractor who received 1,940 tons of steel less than the approximate total tonnage bid upon in an "as is, where is" contract has a legal or equitable claim against the Government for this shortage.¹

In 1951 the State Department transferred responsibility for a large quantity of returned lend-lease steel to the Department of Defense, which in turn assigned the steel to the Philadelphia Ordnance District, Philadelphia, Pennsylvania. After disposing of part of the steel via a shipment to the Tennessee Valley Authority, the Ordnance District prepared an invitation for bids for the remaining steel. Early in 1953, pursuant to preparing such invitation for bids, the property disposal officer of the Ordnance District, Mr. Welsh, made calculations of the estimated tonnage of the remaining steel. The steel was stored in 27 piles, and in making the tonnage calculation, Mr. Welsh took measurements of each pile. He made allowances for the estimated space between the individual pieces of steel in each pile, and then converted the number of pounds per cubic foot into tonnage for each pile. Each pile was then allocated into one of three lots.²

The Ordnance District then issued the invitation for bids for the steel in each of the three lots. On April 27, 1953 lot No. 1, as advertised in the bid, contained approximately 8,700 tons of billets. Lot No. 2 contained approximately 5,400 tons of rounds, and in lot No. 3 there was approximately 1,765 tons of rounds. The invitation for bids advised and urged the bidders to inspect the lots prior to submitting the bids.

Section two of the invitation which pertained to the condition of the property, stated in pertinent part as follows:

"2. 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 upon the best available information, but the Government makes no guaranty, warranty, or representation, expressed or implied, as to quantity, kind, character, quality, weight, size, or description of any of the property, or its fitness for any use or purpose, 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 Section 21 of the invitation, title to the steel was to pass to the successful bidder upon payment in full of the purchase price; said purchase price in turn was to be based upon "the total estimated weights set forth in this invitation." Emphasis added.

Adjustments of money due under the contract were provided for in Section 22, which stated:

"Final adjustment of monies due from a buyer shall be firmed upon the actual weight of steel delivered. The weight certification of the carrier will be considered final. Claims for an adjustment of monies due, or paid, must be made on or before 17 August 1953. Should there be no claim for adjustment, the approximate weights of each lot, as indicated in this invitation, shall be accepted as the final weight." Emphasis added.

Plaintiff's representatives, as advised and urged by the invitation, inspected the three lots before submitting their bid. They thereafter submitted their bid, and on June 1, 1953 defendant accepted plaintiff's bid as to lots 1 and 3, while accepting the bid of another company, Boston Metals Company, as to lot 2. Full payment was made by plaintiff to defendant on June 5, and pursuant to the terms of the contract, title to lots 1 and 3 became vested in plaintiff.

Plaintiff had intended to resell all of the steel it had purchased, and to have it loaded for shipment within a twelve-weeks' period after the passage of title.³ Despite plaintiff's continuous advertising, there was little demand for the steel, and plaintiff was unable to sell the steel and thus obtain its exact tonnage by weighing the loaded cars before the final date of adjustment, August 17.

By letter of July 8 plaintiff wrote to the Philadelphia Ordnance District, and requested an extension of time for final adjustment to November 17, 1953. The request for extension of time was denied by defendant on July 27, 1953.

Thereafter, no further important events transpired in this case until more than two years later on November 21, 1955. On that date the Philadelphia Ore Dock Company (see footnote 3), discovered that there had been an overshipment of the estimated tonnage from lot 2 (owned by Boston Metals) of 2116.575 tons of steel. Plaintiff had by this time shipped only about one-half of its steel and subsequently requested a piece count of the remaining steel in April of 1956. On April 24, 1956 plaintiff was informed by Ore Dock that plaintiff was short in the neighborhood of 2,000 tons. A check of Ore Dock's records showed that no steel owned by plaintiff had been shipped out other than by plaintiff's orders. On October 11, 1956, after the last of plaintiff's steel was loaded for shipment, it was found that the total net tonnage stored by Ore Dock of plaintiff's lots 1 and 3 was 1940.002 tons short of the estimated weight contracted and paid for by plaintiff in its contract with defendant.

Since there were no mistakes either in loading the steel or in keeping the records of such loading and storage, the shortage by plaintiff and the overage by Boston Metals must be attributed to the method used by defendant of measuring the tonnage in each lot, as hereinbefore described. Defendant evidently had underestimated lot 2 to be some 2,100 plus tons less than the actual tonnage, and evidently had over-estimated lots 1 and 3 combined to be some 1,900 plus tons more than the actual tonnage.

Plaintiff's subsequent request for adjustment of the purchase price paid for the steel, in the form of a claim for $117,913.20 for the 1940.002 tons of shortage in lots 1 and 3, was rejected by the Comptroller General. The reasons for rejection were, (1) that the contract was an "as is" and "where is" one, and (2) the final adjustment date under the contract was August 17, 1953.

We believe that these facts do not provide a basis for a claim, either legal or equitable, against the Government. Under the invitation for bids, prospective bidders were "invited and urged" to inspect the property before submitting bids. Plaintiff did inspect the property, and while a shortage would not have been apparent to the naked eye, the word "urged" as used in the invitation should have alerted plaintiff to the fact that the property might not exactly conform to defendant's description. This is especially true since the contract was an "as as" and "where is" one, with a specific disclaimer of warranty as to weight and size. Furthermore, the Government's invitation plainly stated that "the description is based on the best available information." If all this were not enough to alert plaintiff that there might be a possible discrepancy between the actual tonnage of the steel and the amount of tonnage listed in the invitation, then certainly, the word approximate as used to describe the amount of tonnage in the invitation should have revealed to plaintiff the fact that the amount might not be exact.

The very nature of an "as is" and "where is" contract serves notice upon a prospective purchaser that the risk of loss is on the purchaser. In other words, "Let the buyer beware." Such has been the established law for almost forty years. As this court stated in M. Samuel & Sons v. United States, 61 Ct.Cl. 373, 381-382 (1925):

"This description alone would have been sufficient to put plaintiff on notice that there was no guaranty as to the character or the amount of material. It was visited with knowledge of the meaning of the expression `as is, where is.\' It means that the seller sells without guaranty as to the amount or condition of the material; that he sells what may be found in the lot; that he does not profess to know accurately himself the amount or character of the material, and that the purchaser must take his chances on what he will get."

It is apparent that the risks involved in purchasing the property were plainly known to plaintiff before the sale was made. The contract was consummated between the parties fairly and openly. Certainly this standard disposal contract was neither unduly broad nor oppressive. There is a broad policy reason for placing the risk upon the purchaser in such a contract. This policy was examined and explained in Dadourian Export Corporation v. United States, 291 F.2d 178, 182 (C.A.2nd Cir.), (1961):

"By way of preliminary it is to be noted that this is no ordinary contract between buyer and seller for the purchase and sale of a valuable commodity. When the government sells surplus goods it is trying to dispose of a vast miscellany of used and unused property in an effort, so far as may under the circumstances be possible, to minimize its loss. Sales of this character are processed on a mass quantity basis by members of the armed forces who seldom if ever have any expertise in the particular items which come to their warehouses and depots. Buyers of such surplus property know perfectly well that there is always the chance of buying property that may turn out to be of little value, or may develop into a great bargain with a huge windfall of profit. Accordingly, the

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