text:
    UNITED STATES of America, Appellee, v. Arlester SCOTT, Appellant.
    No. 73-1207.
    United States Court of Appeals, Eighth Circuit.
    Submitted Sept. 13, 1973.
    Decided Oct. 19, 1973.
    Kenneth C. West, Kansas City, Mo., for appellant.
    Anthony P. Nugent, Jr., Asst. U. S. Atty., Kansas City, Mo., for appellee.
    Before GIBSON and BRIGHT, Circuit Judges, and TALBOT SMITH, Senior District Judge.

       Eastern District of Michigan, sitting by designation.

   PER CURIAM.

Defendant-Scott appeals a jury verdict, finding him guilty of selling heroin in violation of 21 U.S.C. § 841(a)(1). He urges as the sole ground of error that the Government’s unobjected-to cross-examination of and introduction of testimony in rebuttal to evidence of a key defense witness constituted plain error. We reject this contention and affirm.

At the trial on the merits, the Government sought to prove that the defendant sold heroin to a government informer, named LaFoy Thomas, in a transaction observed at a distance by several federal agents. The defense contended that the money received by Scott from Thomas was merely the repayment of an old debt. To bolster this theory, the defense produced a seemingly unimpeachable young social worker, Miss Saundra Kay Davis, who had been with defendant-Scott on the night in question and who testified that she did not observe the defendant give anything to Thomas in return for the money.

During direct examination, Miss Davis was asked: “Have you ever been involved in any kind of narcotics in your life or anything like that?” She replied in the negative. On cross-examination, the Government counsel asked: “Have you ever been present on any occasions when narcotics were sold?” Again she replied in the negative, whereupon the Government called informer-Thomas back to the stand to testify that he had once purchased drugs from one Bernie Murray in her presence. In surrebuttal, Miss Davis denied the occurrence of such an event and testified that she had been at work at the Boys’ Club during the time of this alleged sale.

We deem it of the utmost importance that, throughout this exchange of testimony, defense counsel never objected to the line of questioning in cross-examination or to the evidence in rebuttal, nor did he seek a recess or continuance in order to secure work records of the Boys’ Club which, according to Miss Davis’ testimony on surrebuttal, would have corroborated her statements. Defendant now comes before this court on appeal urging that the Government’s attack on Miss Davis’ credibility is plain error.

Whatever may be the merits of defendant’s criticisms of the Government’s rebuttal under normal standards of relevancy and prejudice, where a cross-examiner receiving an answer from a witness on a collateral matter may not seek to rebut such testimony, the test of “plain error” under F.R. Crim.P. Rule 52(b) is a far more stringent one. It has been distinctly spelled out in Black v. United States, 309 F.2d 331, 342 (8th Cir. 1962), cert. denied, 372 U.S. 934, 83 S.Ct. 880, 9 L.Ed.2d 765 (1963), as follows:

This Court has “repeatedly held that the plain error rule should be applied with caution and should be invoked only to avoid a miscarriage of justice.” Johnson v. United States, 8 Cir., 291 F.2d 150, 156.

We are satisfied that the circumstances of this case do not present an appropriate occasion to invoke this singular doctrine.

The record shows that defendant did not seek to exclude the evidence by objection or motion. He recalled witness-Davis to deny the informer’s statement and by this means again focused on the conflict in testimony between the informer, sought to be proved incredible, and an apparently disinterested witness, Ms. Davis. The jury passed on the credibility issue and made a finding adverse to the defendant. Post-trial, he moved for a new trial on the grounds that the conviction rested on perjured testimony, and introduced affidavits containing Ms. Davis’ employment records which purported to show her at work at the approximate time the informer allegedly purchased drugs from Bernie Murray in her presence. The judge denied the motion. This theory was renewed in defendant’s motion to proceed on appeal in forma pauperis. On appeal, Scott urges that we consider the motion as one made under Criminal Rule 33 for a new trial in the interests of justice and that we hold that the trial court committed plain error in his ruling denying a new trial.

From the record, we think it quite ap-. parent that defendant sought acquittal, and, later, sought to overturn the conviction on credibility grounds. These matters were addressed properly to the jury and the trial court. Determinations of credibility rest with the trier of fact and not with the appellate court.

Accordingly, we find no “plain error” in this case. ■

Affirmed.

      . Arpan v. United States, 260 F.2d 649, 658 (8th Cir. 1958); see generally, McCormick’s Handbook of the Law of Evidence (2d Ed. 1972) § 47.


source: Caselaw Access Project

author: PER CURIAM:

license: Public Domain

text:
    UNITED STATES of America, Plaintiff-Appellee, v. George Purdie WASHINGTON, Defendant-Appellant.
    No. 73-1043.
    United States Court of Appeals, Fifth Circuit.
    Oct. 12, 1973.
    Theodore J. Sakowitz, Miami, Fla. (court-appointed), not under CJA, J. V. Eskenazi, Federal Public Defender, Miami, Fla., for defendant-appellant.
    Robert W. Rust, U. S. Atty., Carol M. Anderson, Asst. U. S. Atty., Miami, Fla., for plaintiff-appellee.
    Before WISDOM, COLEMAN and SIMPSON, Circuit Judges.
   PER CURIAM:

George Purdie Washington was charged in a nine-count indictment with violating Title 18 U.S.C. § 922(a)(6), each count charging an identical violation on a different date between October 22, 1971, and April 6, 1972, by making in connection with the acquisition of one or more firearms from a licensed dealer, a false statement by signing a Form #4473, “Firearms Transaction Record,” denoting that he had not been convicted in any court of a crime punishable by imprisonment for more than one year, when he had in fact been convicted of a felony on September 25, 1968. Twenty-three such forms admittedly signed by Washington during the time covered by the indictment were received in evidence, each representing a separate firearm purchase from the same dealer.

Despite his signature on the forms and testimony that the forms had been read to him and explained to him by the dealer, Washington defended at his non-jury trial on the claimed basis of his failure to understand the forms, and his inability to read and write more than his name and address. The court found him guilty under eight counts, one count being dismissed by the prosecution during the trial. Washington was sentenced to five years confinement on a single count, with probation to follow as to the convictions upon the additional seven counts.

Insufficiency of the evidence to sustain the court’s guilty finding — specifically the charge that the admittedly false statements on the forms were made knowingly and with intent to deceive — -is the sole issue raised on appeal. We reach the view that the circumstances presented by the evidence, viewed in the light most favorable to the government, were sufficient to support an inference beyond a reasonable doubt by the trier of fact, in this instance the court, that the statutory requirement was met; viz, that the false statements as to a prior felony conviction were made knowingly and with intent to deceive the dealer with respect to the lawfulness of the sale. Cf. United States v. Garcia, 5 Cir. 1973, 479 F.2d 322.

Affirmed.


text:
    UNITED STATES of America, Plaintiff-Appellee, v. Leonard Warren BOYETT and Jim Eldridge May, Sr., Defendants-Appellants.
    No. 73-2406
    Summary Calendar.

    United States Court of Appeals, Fifth Circuit.
    Oct. 5, 1973.
    Rehearing and Rehearing En Banc Denied Nov. 6, 1973.
    Henry R. Barksdale, Pensacola, Fla., for defendants-appellants.
    William Stafford, U. S. Atty., Robert L. Crongeyer, Jr., Asst. U. S. Atty., Pensacola, Fla., for plaintiff-appellee.
    Before GEWIN, COLEMAN and MORGAN, Circuit Judges.

       Rule 18, 5th Cir. See Isbell Enterprises, Inc . v. Citizens Casualty Co. of New York et al., 5th Cir. 1970, 431 F.2d 409, Part I.

   PER CURIAM:

This is an appeal from a judgment of conviction for the knowing possession of goods stolen while in interstate shipment in violation of 18 U.S.C. § 659 (1970). The first error specified is the denial of the motion of appellants for a judgment of acquittal because of an insufficiency of evidence and the lack of sufficient evidence to sustain the jury’s finding of guilt. There is no merit in this contention. Glasser v. United States, 315 U.S. 60, 62 S.Ct. 457, 86 L.Ed. 680 (1942). The second contention is that since appellants offered an explanation of their possession of recently stolen property, the trial court erred in giving the instruction sanctioned in United States v. Barnes, 412 U.S. 837, 93 S.Ct. 2357, 37 L.Ed.2d 380 (1973). Since the Supreme Court also stated in Barnes that a defendant’s explanation of possession would not automatically bar the giving of that instruction, id. at 845, 93 S.Ct. at 2362, 37 L.Ed.2d at 387 n. 9, appellants’ second contention is unavailing. The third specification of error is spawned by the fact that the trial court required appellants to recall and requestion a government witness before proceeding to impeach him. Since the attempted impeachment was not curtailed, we hold that if error was committed, it was harmless.

The judgment of the district court is affirmed.


text:
    Eric M. LINDEN, Plaintiff-Appellant, v. EASTERN ASSOCIATED TERMINALS COMPANY, Defendant-Appellee.
    No. 73-2201
    Summary Calendar.

    United States Court of Appeals, Fifth Circuit.
    Oct. 18, 1973.
    Rehearing Denied Nov. 13, 1973.
    Owen J. Bradley, New Orleans, La., for plaintiff-appellant.
    J. Walter Ward, Jr., New Orleans, La., for defendant-appellee.
    Before BELL, GODBOLD and INGRAHAM, Circuit Judges.

       Rule 18, 5 Cir.; see Isbell Enterprises, Inc. v. Citizens Casualty Co. of New York et al., 5 Cir., 1970, 431 F.2d 409.

   PER CURIAM:

Appellant was injured while walking across a spar barge owned by his employer, the appellee. He seeks to recover damages from his employer, despite the exclusive coverage provisions of applicable workmen’s compensation legislation, on the theory that his injury resulted from breach of the vessel’s warranty of seaworthiness. See Jackson v. Lykes Bros. S.S. Co., 1967, 386 U.S. 731, 87 S.Ct. 1419, 18 L.Ed.2d 488. The court below entered summary judgment for the employer on the grounds that the barge was not in navigation and thus extended no warranty of seaworthiness. We affirm.

The appellee operates barge docks. However, barges are not secured directly to its docks. Rather, they are secured to a row of floating spar barges which themselves are moored against the docks. The spar barge on which appellant was injured had no cargo bottom, had never been used by the appellee as other than a spar barge and, according to the appellee, was permanently committed to such use as a dock extension. While it conceivably was usable for carrying deck cargo, any movement of the barge would have required loosening numerous cables attaching the barge to the dock, to adjacent spar barges, and to deadmen sunk in the river bottom. The only instance in which appellee had moved the barge was about nine months before appellant’s injury and was for the exclusive purpose of repair.

In Roper v. United States, 1961, 368 U.S. 20, 23, 82 S.Ct. 5, 7 L.Ed.2d 1, 3, the Supreme Court stated that, “The test for determining whether a vessel is in navigation is the ‘status of the ship’ .... This is a question of fact, . . . and consequently reversible only upon a showing of clear error.” Applying this standard we conclude that the district court was not clearly erroneous in finding that appellee’s spar barge had been withdrawn from navigation. Therefore, the judgment of that court is

Affirmed.


text:
    Robert M. ROSE and Doris D. Rose, Petitioners-Appellants, v. COMMISSIONER OF INTERNAL REVENUE, Respondent-Appellee.
    No. 73-2023
    Summary Calendar.

    United States Court of Appeals, Fifth Circuit.
    Nov. 2, 1973.
    Rehearing and Rehearing En Banc Denied Dec 28, 1973.
    Robert M. Rose, M. D., pro se.
    Scott P. Crampton, Asst. Atty. Gen., Ernest J. Brown, Acting Chief, Fred B. Ugast, Acting Asst. Atty. Gen., Tax Div., U. S. Dept, of Justice, Lawrence B. Gibbs, Acting Chief Counsel, IRS, Washington, D. C., for respondent-appellee.
    Before GEWIN, COLEMAN and MORGAN, Circuit Judges.

       Rule 18, 5 Cir.; see Isbell Enterprises, Inc. v. Citizens Casualty Company of New York et al., 5 Cir., 1970, 431 F.2d 409, Part I.

   PER CURIAM:

This is an appeal from the Tax Court of the United States. The appellants, Dr. and Mrs. Robert M. Rose, contend that they are entitled to medical deductions for the cost of food, lodging, and other living expenses of their daughter caused by seeking a climate more favorable to a serious bronchial condition. There can be no doubt that the daughter was intensely ill and that she was greatly benefitted by leaving her home in New Orleans for Arizona and Florida.

Dr. Rose, however, steadfastly declines to accept the medical non-deductibility of the cost of food, lodging, and similar living expenses while away from home under such circumstances.

We now hold, for the second time, that these expenses are not deductible. See Rose v. Commissioner, 435 F.2d 149 (1970), affirming per curiam, 52 T.C. 521 (1961), cert. denied, 402 U.S. 907, 91 S.Ct. 1377, 28 L.Ed. 647 (1971).

The decision of the Tax Court is

Affirmed.


text:
    Vaso BORETA, Plaintiff-Appellant, v. Edward J. KIRBY, Director of the Department of Alcoholic Beverage Control of the State of California, et al., Defendants-Appellees.
    No. 71-2879.
    United States Court of Appeals, Ninth Circuit.
    Oct. 17, 1973.
    Charles O. Morgan, Jr. (argued), S. Derek Spencer, San Francisco, Cal., for plaintiff-appellant.
    Theodore Sachsman (argued), Cooper, Sachsman & MacKay, Leonard M. Sperry, Jr., Deputy Atty. Gen. (argued), Evelle J. Younger, Atty. Gen., James E. Sabine, Asst. Atty. Gen., Robert L. Bergman, Deputy Atty. Gen., Robert A. Padway, William S. MacKay, Cooper, Sachsman & MacKay, San Francisco, Cal., for defendants-appellees.
    Before CHAMBERS and SNEED, Circuit Judges, and FERGUSON, District Judge.

       The Honorable Warren J. Ferguson, United States District Judge for the Central District of California, sitting by designation.

   OPINION

PER CURIAM:

The order of dismissal of this civil rights action, D.C., 328 F.Supp. 670, is affirmed. We hold that the waiver signed by Boreta in connection with his company's application for a liquor license authorized that which is complained of here now.

Authorizations, such as that executed by the plaintiff, are not valid indefinitely. A practice of requiring regular and not too infrequent authorizations would serve to reduce the significance of the constitutional issues with which the court below was concerned. No opinion is here expressed regarding the immunity of any of the defendants had the examination of the bank accounts in this case been unauthorized.


text:
    William F. BASKA, Plaintiff-Appellant, v. WESTERN AGENCY, INC., and SS WESTERN PLANET, Defendants-Appellees.
    No. 73-2115
    Summary Calendar.

    United States Court of Appeals, Fifth Circuit.
    Oct. 31; 1973.
    William F. Baska, pro se.
    David Redford, E. D. Vickery, Houston, Tex., for defendants-appellees.
    Before BELL, GODBOLD and GEE, Circuit Judges.

       Rule 18, 5 Cir.; See Isbell Enterprises, Inc. v. Citizens Casualty Co. of New York et al., 5 Cir., 1970, 431 F.2d 409.

   PER CURIAM:

The District Court dismissed this case for repeated refusal by plaintiff-appellant to abide by a settlement agreement previously reached with appellee. The dismissal order terminated the right of appellant to withdraw from the registry of the District Court $3,000 deposited by appellee pursuant to the settlement agreement. Appellee is entitled to an affirmance of the dismissal but expresses its willingness that appellant be granted a brief additional time in which to execute the releases heretofore approved by the District Court and withdraw the said $3,000. This court adopts that suggestion, and the dismissal is modified accordingly. For a period of 30 days from the date of the mandate of this court the appellant may execute the said releases and withdraw the sum of $3,000, subject to such protective orders, if any, as the District Court may wish to enter. Upon such withdrawal by appellant of the funds or if not so withdrawn then upon the expiration of said 30 days, the dismissal order of the District Court, as hereby modified, is affirmed.


text:
    Cunnie CATO and C. T. Westmoreland, on their own behalf and on behalf of other persons similarly situated, Plaintiffs-Appellants, v. INTERNATIONAL LONGSHOREMAN’S ASSOCIATION et al., Defendants, The Board of Trustees of the Galveston Wharves and the City of Galveston, Defendants-Appellees.
    No. 73-2452
    Summary Calendar.

    United States Court of Appeals, Fifth Circuit.
    Nov. 6, 1973.
    Hubert L. Gill, Austin, Tex., for plaintiffs-appellants.
    V. W. McLeod, Galveston, Tex., for Board of Trustees.
    Warner F. Brock, Houston, Tex., for Int. Longshoreman’s Assn.
    Tommy B. Duke, Houston, Tex., for Bunge Corp. and others.
    Before JOHN R. BROWN, Chief Judge, and DYER and SIMPSON, Circuit Judges:

       Rule 18, 5 Cir.; See Isbell Enterprises, Inc. v. Citizens Casualty Company of New York et al., 5 Cir. 1970, 431 F.2d 409, Part I.

   PER CURIAM:

We agree with the district court that (1) the plaintiffs-appellants’ claim under the Railway Labor Act, Title 45, U.S.C. Sec. 151 is barred by the statute of limitations; and (2) that the Civil Rights Act, Title 42, U.S.C. Sec. 1981 does not support the plaintiffs-appellants’ claim against these appellees. The partial judgment of the district court is

Affirmed.

      . Appealed from under a Rule 54(b), F.R.Civ.P. certificate.

      . Reported at 364 F.Supp. 489.


text:
    James Edward CLAYTON, Plaintiff-Appellant, v. Clarence JONES, Sheriff, Dallas County, Defendant-Appellee.
    No. 73-2574.
    United States Court of Appeals, Fifth Circuit.
    Nov. 7, 1973.
    James Edward Clayton, pro se.
    John B. Tolle, Asst. Dist. Atty., Dallas, Tex., for defendant-appellee.
    Before THORNBERRY, GOLDBERG and RONEY, Circuit Judges.
   PER CURIAM:

The appeal is ordered dismissed for want of prosecution for appellant’s failure to file a brief within the time fixed by the rules. Rule 9(b). See Tidwell v. Dees, 5th Cir. 1972, 464 F.2d 1297.


author: DURFEE, Senior Judge.

text:
    LOCKHEED AIRCRAFT CORPORATION, LOCKHEED-GEORGIA COMPANY DIVISION v. The UNITED STATES.
    No. 250-67.
    United States Court of Claims.
    Oct. 17, 1973.
    Gilbert A. Cuneo, Washington, D. C., attorney of record, for plaintiff. David V. Anthony, Whilden S. Parker, Sellers, Conner & Cuneo, Washington, D. C., Harry S. Baxter, Albert C. Tate, Jr., Kilpatrick, Cody, Rogers, McClatchey & Regenstein, Atlanta, Ga., of counsel.
    Leslie H. Wiesenfelder, Washington, D. C., with whom was Asst. Atty. Gen. Harlington Wood, Jr., for defendant.
    Before COWEN, Chief Judge, DURFEE, Senior Judge, and DAVIS, SKELTON, NICHOLS, KUNZIG and BENNETT, Judges.

      ON PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT PURSUANT TO RULE 168(c)(1) AND DEFENDANT’S CROSS MOTION FOR SUMMARY JUDGMENT
   DURFEE, Senior Judge.

This is a continuation of the case considered in Lockheed Aircraft Corp. v. United States, 432 F.2d 801, 193 Ct.Cl. 86 (1970), where we reviewed a decision of the Armed Services Board of Contract Appeals (ASBCA or Board). We determined defendant, the United States, was entitled to reduce the price of a $10,500,000 negotiated fixed-price contract between the Air Force and plaintiff, Lockheed, pursuant to the Defective Pricing clause of that contract and the Truth in Negotiations Act, 10 U.S.C. § 2306(f) (1970). The prime contract price reduction equalled dollar for dollar the amount of certain overstated material cost items totaling $191,877.00 included in a subcontract between Lockheed and Midwestern Instruments, Inc. (Midwestern). Cost estimates of items of the Midwestern subcontract were included in Lockheed’s prime contract proposals.

We further decided in Lockheed, supra, that plaintiff was entitled to set off against the material cost overstatement, to the extent of that overstatement, royalties and development costs that Midwestern “had overlooked and excluded” from its cost estimates. Lockheed, supra, 432 F.2d at 807, 193 Ct.Cl. at 98. As authority for allowing the offset of understatement of costs in contract price information furnished the Government against the overstatement of costs were relied upon Cutler-Hammer, Inc. v. United States, 416 F.2d 1306, 189 Ct.Cl. 76 (1969). We suspended proceedings in order to allow the ASBCA to determine the net price reduction to be allowed the Government after understatement was substracted from overstatement.

The ASBCA found the amount of understated royalty costs (plus markups) to be $87,936.00. When subtracted from the overstatement of $191,877.00, a net price reduction of $103,941.00 in the Government’s favor would have resulted. However, the Board, adopting an argument advanced by defendant, ruled that the royalty costs were not eligible for setoff since the failure to disclose cost information which resulted in the understatement of royalty costs by Midwestern had been intentional. The ASBCA reasoned that under the Defective Pricing Clause and Truth in Negotiations Act only an inadvertent understatement of costs is allowable as a set-off.

On cross motions for summary judgment this case comes to us for Wunderlich Act review of the Board’s decision disallowing the Midwestern understated royalty costs as setoffs and finding the United States entitled to a net price reduction of $191,877.00 which was the full amount of the material cost overstatement. We believe the royalty costs were erroneously excluded as setoffs.

Plaintiff has argued that under our decision in Cutler-Hammer, supra, an understatement of costs may qualify as a setoff whether it is inadvertent or intentional. The Board and defendant contend that Cutler-Hammer did not deal with the issue of intentional understatements. The ASBCA and defendant urge that Lockheed suggests, and the Truth in Negotiations Act compels, the conclusion that only unintentional understatements may be setoff against overstatements.

Even assuming arguendo that it makes a difference whether an understatement of cost estimates furnished the Government in a negotiated fixed-price contract situation is intentional or unintentional, we observe that the Board committed several errors in finding an intentional understatement of Midwestern royalty costs.

Following the suspension of proceedings pursuant to our decision in Lockheed in order to give the ASBCA an opportunity to determine the amount of the net reduction of the subject contract’s price, both plaintiff and defendant chose to rest on the record made in the first proceeding before the Board. In viewing the evidence in this record and in making its findings, the Board arbitrarily and capriciously cast upon plaintiff the burden of proving that the understatement of royalty costs was unintentional. The Government has the burden of proving its entitlement to a price reduction under the Defective Pricing Clause. Sylvania Electric Products, Inc. v. United States, 479 F.2d 1342, 202 Ct.Cl. (1973). If the Government seeks to enlarge the net price reduction allowed by urging that certain non-disclosed data was intentionally withheld and therefore should not be considered in setoff, it bears the burden of proof on the issue of intentional nondisclosure.

The Board compounded its error by relying upon plaintiff’s failure to carry the burden of proof on the issue of intentional nondisclosure as chief proof that the royalty costs were intentionally undisclosed and thus understated. In its Finding 11-D the Board stated:

D. We conclude that Midwestern’s omission of the royalty data was an intentional management choice. We are not able to find why it made such a choice during the original negotiations or in 1963 when it gave a voluntary price reduction. We may not find that the choice was based on the possible existence of a Government license or a fear of competition, or similar specific facts, again because there is no such contention or evidence in the record. But we may not ignore the fact that Midwestern could have had what it regarded as good reasons for not disclosing the data. Perhaps of most importance there is no evidence in the record to show that the omission was, in fact, unintentional and appellant argues strenuously that offsets are allowable notwithstanding the fact that they are intentional. [Emphasis added.]

Moreover, viewing the record as a whole, we conclude that there is not substantial evidence to support the Board’s conclusion that the understatement of royalty costs was intentional.

The • Board readily admitted that the record before it on the “Offsets” issue was “quite limited” and “meager.” The record indicates that during the time of the negotiations between Midwestern and Lockheed for the subcontract, Minneapolis-Honeywell Regulator Company had obtained judgment against Midwestern for infringement of a patent which related to the component to be supplied Lockheed under the subcontract. However, up to the time the subcontract was definitized on June 6, 1962, uncontradicted testimony showed that Midwestern believed it could avoid infringement of the patent by alterations to the component to be supplied Lockheed. Seeking to enforce its judgment Honeywell filed contempt proceedings, arguing that the alterations to the component contemplated by Midwestern would not avoid infringement. In December 1962 Honeywell and Midwestern reached an agreement whereby Midwestern paid patent royalties to Honeywell which withdrew contempt proceedings. The ASBCA found: “During the year 1962 the matter of royalties was ‘considerably up into the air.’ At some unidentified point during the year, Midwestern came to believe it had to pay royalties.”

Midwestern did not disclose its potential royalty liability during subcontract negotiations. The liability was also not disclosed in March 1963 when Midwestern voluntarily reduced its subcontract price; this price reduction had been agreed to by the subcontractor and the Air Force after an audit in September 1962.

Based upon this factual background, the ASBCA wove speculation with conjecture in arriving at the conclusion that information concerning the contingency of Midwestern’s royalty liability had been purposely withheld. The ASBCA in Part A of Finding 11 stated:

* * * At the time of negotiations for the subcontract in early 1962, if Midwestern had disclosed complete royalty information it would have disclosed that it was attempting to avoid infringement and might not have to pay any royalties despite Honeywell’s successful suit. We are unable to find why Midwestern did not ask for a “savings” clause to cover its potential liability. There could have been one or more reasons, as indicated in finding No. 10 above, but the record contains no evidence concerning them. Our conclusory finding is that Midwestern did not include royalty data in its price proposal because for reasons not fully clarified in the record, it did not want to ask Lockheed (and the Government) to absorb those potential costs. In short, the omission was intentional. [Emphasis added.]

Finding 10, referred to above, itself contains no factual support for the Board’s conclusion.

The factual support for the Board’s conclusion that the information concerning royalty costs was intentionally withheld became even more tenuous as the Board speculated on “what would have happened at the subcontract negotiations if all omitted data on both material costs and royalty costs had been disclosed.”

The only “hard” evidence the Board could muster is that Midwestern knew of its possible liability to Honeywell for royalties at the time of the subcontract negotiations and further that Midwestern knew of its actual liability for royalties after December 1962 when thereafter in March 1963 it voluntarily reduced its subcontract price.

The evidence in the record simply is not substantial enough to support the Board’s conclusion of intentional understatement. The substantial evidence standard of reasonableness has not been met. Turnbull, Inc. v. United States, 389 F.2d 1007, 1014, 180 Ct.Cl. 1010, 1024 (1967).

In its motion for summary judgment plaintiff asks us to go beyond just ruling that it is entitled to a setoff in the amount of royalty costs. Plaintiff asks us to consider its argument that the Government has not met its burden of proof that Midwestern’s failure to disclose material cost data caused an overstatement of Lockheed’s prime contract price. This issue was fully briefed in Lockheed, supra, and decided there. We said at 432 F.2d 801, 807, 193 Ct.Cl. 86, 98:

In accordance with our opinion, the Government is allowed to reduce Lockheed’s contract price by the amount of the overstatement resulting from its subcontractor Midwestern’s defective material cost data.

Plaintiff’s motion for summary judgment that the Government is not entitled to reduce the price of plaintiff’s contract in any amount and that plaintiff is entitled to recover all sums withheld by or previously paid over to the Government pursuant to the decision of the contracting officer dated October 19, 1964, is therefore denied. We Averse the decision of the Board on the setoff issue. Defendant is entitled to a net price reduction of $103,941.00. However, it appears that defendant has already collected $234,623.00 as a price reduction and that plaintiff has since been refunded $42,746.00, although the amounts may still be in dispute. Accordingly, the case is remanded to the Armed Services Board of Contract Appeals to determine the precise amount of plaintiff’s recovery, with appropriate proceedings under Pub.L. 92-415, this opinion and General Order No. 3 of 1972. Counsel for plaintiff is designated as the responsible reporting attorney under paragraph 9(a) of General Order No. 3.

      . Lockheed Aircraft Corp., Locklieed-Georgia Co. Div., 67-1 BCA ¶ 6356.

      . PART XVIII — PRICE REDUCTION FOR DEFECTIVE COST OF PRICING DATA (NOV. 1962)
      (a) If the Contracting Officer determines that any price, including profit or fee, negotiated in connection with this contract was increased by any significant sums because the Contractor, or any subcontractor in connection with a subcontract covered by (c) below, furnished incomplete or inaccurate cost or pricing data or data not current as certified in the Contractor’s Certificate of Current Cost or Pricing Data, then such price shall be reduced accordingly and the contract shall be
      modified in writing to reflect such adjustment.

      . Originally, $234,623 was deducted from amounts due plaintiff to make up for the reduction in contract price as a result of overstatements. Plaintiff was later refunded $42,-746. The difference, $191,877.00, reflects the amount of overstated cost items.

      . Plaintiff dropped its claim of a setoff of development costs; only the issue of royalty costs as setoffs was before the Board.

       Lockheed Aircraft Corp., Lockheed-Georgia Div., 72-1 BCA ¶ 9370.

      . 41 U.S.C. §§ 321, 322 (1970).


author: NICHOLS, Judge.

text:
    J. A. MAURER, INC. v. The UNITED STATES.
    No. 34-71.
    United States Court of Claims.
    Oct. 17, 1973.

      Norman Jacobson, New York City, attorney of record for plaintiff.
    Michael J. Rubin, Washington, D. C., with whom was Asst. Atty. Gen. Harlington Wood, Jr., for defendant.
    Before COWEN, Chief Judge, and DAVIS, SKELTON, NICHOLS, KASHIWA, KUNZIG and BENNETT, Judges.
    ON PLAINTIFF’S MOTION AND DEFENDANT’S CROSS MOTION FOR SUMMARY JUDGMENT
   NICHOLS, Judge.

The decisive issue in this review of a decision of the Armed Services Board of Contract Appeals (ASBCA), Appeal of J. A. Maurer, Inc., 69-2 BCA j[ 7884, under the standards of the Wunderlich Act, 41 U.S.C. §§ 321-322, turns chiefly on the question of impossibility of performance of an Air Force contract terminated in 1966 for default in performance. Of secondary importance (to us, but not so relegated in plaintiff’s view) are plaintiff’s other contentions based on its interpretation of the contract requirements.

Fact recitals herein are based on ASBCA findings, except as indicated. In the desert at the Air Force Missile Development Center (AFMDC) Holloman Air Force Base, 9 miles west of Alamogordo, New Mexico, the Air Force has a high speed test track, on which special sleds are propelled at great velocity while data is recorded and digested by elaborate equipment for research purposes. The track, which was extended in 1956-57 to its present length of some 35,000 feet (about 7 miles) consists of two rails embedded in a concrete girder foundation. The parallel rails run north and south, are 7 feet apart, and are seamlessly welded where the sections join. A “Fiducial line” runs parallel to and 9 inches outside of the western rail. The fiducial line serves as an essential reference for alignment of the track rails, which must be flat and straight to an extreme degree of accuracy to minimize destructive vibrations that are accentuated by sled speed and track irregularity. At each of 352 locations spaced 99'8// apart along the length of the fiducial line there is inserted a bench mark by reference to which at that point the lateral and vertical positions of the rails can be compared and periodically adjusted as they get out of sync through use, or through deformations in expansion and contraction during temperature extremes, or because of foundation settlement. Vertical movements of the rails exceed lateral movements. Sometime ago the Coast and Geodetic Survey established the fiducial line bench marks to an accuracy of approximately 1 arc second by use of a conventional theodolite.

This degree of accuracy did not satisfy the Air Force, as indicated by its Technical Exhibit A dated November 20, 1964, which was later incorporated into the procurement from which this action derives. Technical Exhibit A, which proposed a study and report on lineal survey methods for the test track, and a determination of its linear coefficients of expansion, for the purpose of improving the accuracy of existing techniques and facilities, was attached to the Government’s Request for Proposal (RFP) issued on December 8, 1964, to seven companies, including the plaintiff at its request. In its initial form the RFP covered the features outlined in Technical Exhibit A, and was to be essentially a study program.

The plaintiff’s Technical Proposal submitted in response to the RFP and dated January 17, 1965, compared several potential survey methods and of them recommended as a means interferometric and diffraction alignment techniques as opposed to electronic techniques. It particularly advocated using the Van Heel alignment apparatus to determine the lineal integrity of the fiducial line to reference the track alignment, which apparatus offered alignment accuracy reputed to be within a few tenths of an arc second. Another method, using.the Axicon apparatus, was also described. Plaintiff’s proposal quoted a price of $60,782.90.

It was the only one submitted to the Government from the seven firms receiving the RFP. On February 18, 1965, Dr. Woodson, the head of plaintiff’s newly formed Optics Division and a highly respected authority in the field of interferometry (said to be second only to Dr. Van Heel of Holland), gave an oral presentation concerning plaintiff’s Technical Proposal to a group of Air Force technical representatives at AFMDC, at which he rendered a convincing explanation of the Van Heel technique which plaintiff planned to use in measuring the lineal integrity of the test track and in setting up an improved system for its continuous monitoring. He described the proposed equipment, the achievable accuracy he foresaw as possible, and the environmental problems to be solved. Because of budgetary restrictions the Government on March 2, 1965, issued Amendment No. 1 to its Technical Exhibit A, which deleted the original requirement to measure the “coefficient of expansion” of the track (i. e., its exact length under temperature fluctuations), enlarged the lineal integrity requirement by applying it to the entire length of the track instead of merely a portion thereof, and provided that the Government should retain the survey equipment employed.

The parties then negotiated a price of $31,943 reflecting the foregoing amendments to the Government’s Technical Exhibit A, and on May 17, 1965, consummated the contract in suit which called for items 1 and 3 only. Item 1 was divided into two phases: engineering services to investigate techniques to improve lineal surveys (Phase I), and an actual survey throughout the 7-mile track (Phase II). Item 3 required plaintiff to provide the Government with “Improved Lineal Survey Equipment (ILSE), such as the Van Heel Alignment Apparatus; the Light Source (Laser) and Collimating Lens — fringes.” The plaintiff’s proposal culminating in the contract included an estimated allowance of $4,000 for the Van Heel equipment. The contract intentionally omitted Phase III work of item 1 contained in the Government’s original Technical Exhibit A involving the measurement of the track length, although plaintiff had submitted a separate figure for Phase III work should the Air Force find the wherewithal.

There followed months of effort to perform the contract, time extensions, validation of the intrinsic accuracy of the interferometric procedure, but ultimate failure because of inability to develop a convection barrier which would provide sufficient shelter to laser beams traveling through it in an outdoor environment so as to duplicate the accuracy in measurements that it attained under controlled laboratory conditions indoors. In the end, when the contract was terminated for default, it appeared that accomplishment of the contract objective might be technically possible given sufficient funds and time, but practically impossible to accomplish within the monetary and time limits allowed by the fixed price contract. See, however, discussion below of ASBCA findings on this topic.

A factor of fundamental impact in the case is that alignment measurements in excess of 1 arc second of accuracy had not been theretofore achieved with the new generation of interferometric and diffractometer apparatus and techniques outside of controlled laboratory conditions. The prime aim of the contract— to better the existing 1 arc second of accuracy of the test rack which had been obtained by use of a standard theodolite —had never been done before in an uncontrolled, outdoor environment such as that at the Holloman test track, and in retrospect proved to be beyond the state of the art, particularly within the short period (4 months) and contract price ($31,943) allowed for performance in this instance. That the plaintiff was fully aware of the difficulties and of the risk of failure involved is shown not only by its knowledge of paragraph 3 of the Government’s Technical Exhibit A which described the physical environment of the track, but also by plaintiff’s Technical Proposal of January 17, 1965 which recognized the atmospheric turbulence and the temperature gradients at Holloman to be a major problem, but proposed to overcome it by means of using interferometric equipment involving the projection of a laser beam through a light tube superimposed on the test track rail. The purpose of the tube was to serve as a “convection barrier” to shield the laser beam passing through it from the atmospheric effects of its desert surrounding, namely, wind, sun, temperature fluctuations, “ground boil”, “grazing rays”, etc., which had a drastic effect on the supersensitive measurement apparatus which plaintiff intended to use. In effect, the convection barrier was aimed at duplicating laboratory conditions in an outdoor environment.

Despite Dr. Woodson’s congenital optimism over his ability to counter the atmospheric hazards in order to apply a hitherto laboratory technique in an outdoor ambience, the plaintiff’s other officials had their mental reservations and suspected the undertaking to be on the research frontier, but deferred to Dr. Woodson’s superior expertise. The contract was to become a proving ground of his theoretical calculations and scientific judgment, and in the end he conceded that the amount of research involved exceeded his expectations.

Basic to Dr. Woodson’s plan were the availability of suitable interferometric equipment and the devising of a convection barrier consisting of connected tubes which would shield the sensitive light source. The Van Heel apparatus was selected as preferred equipment, but when in June 1965 Dr. Woodson visited Dr. Van Heel in Holland to arrange for the equipment and to discuss prospective problems, he found that the apparatus could not be delivered for three months, at best, not soon enough to meet the 4 months’ time available for contract performance. Dr. Woodson then decided to use another apparatus recently designed by Mr. Saunders of the Bureau of Standards for alignment measurement purposes. The Saunders apparatus was an interferometer, while the unavailable Van Heel apparatus was based on interference and diffraction and was accordingly termed a diffractometer, but both of them were embraced in the field of interferometry and were designed to make accurate optical measurements in a controlled laboratory environment free of atmospheric disturbances, under which conditions they were capable of .1 arc second of accuracy or better. Dr. Woodson considered that both of the apparatuses in question performed the same function in somewhat different ways, and thought the Saunders device to be the more sensitive of the two. The Saunders equipment had never been used outdoors nor did its inventor think it could be, as Dr. Woodson understood prior to contract award. The Van Heel apparatus had been used with disappointing results in an outdoor test in Holland, yielding over a short distance an accuracy of only 1 to % arc second. The Government was unaware that plaintiff had decided to use the Saunders equipment instead of the Van Heel until so advised by plaintiff’s first monthly progress report for the period ending July 12, 1965. The contracting officer in acknowledging the advice stated that the Saunders apparatus “may even be superior to the Van Heel for long sighting lines.” As late as December 16, 1965, the plaintiff considered that the Saunders equipment, as it was being modified by plaintiff, was “even superior to the original one contemplated [i. e., the Van Heel]”, so the unavailability of the Van Heel apparatus was not then considered by plaintiff to be the reason for its ultimate failure to achieve the desired result. The ASBCA findings imply that the substitution had no causal connection with the failure.

The dissimilarities in the Van Heel and Saunders techniques were not significant, in the ASBCA’s eyes, for both were usable in making optical measurements to an extraordinary degree of refinement in a controlled laboratory environment, while as it came to pass neither was within the state of existing art to make measurements of comparable accuracy in an uncontrolled natural environment. This proved to be the obstacle plaintiff was unable to overcome. Finally, Dr. Woodson, who was eventually dismissed by plaintiff for his inability to solve the problem which led to default termination of the contract, testified as the Government’s witness that the Saunders equipment would constitute equipment “such as” the Van Heel in the science of interferometry. He should know.

Reverting to the convection barrier problem, plaintiff contemplated using connected 20' lengths of tubing 7' in diameter so that the laser beams could travel in a straight line and be isolated from atmospheric disturbances. The tubing was to be mounted on the test tract at night for the making of measurements in 4,000’ segments at a time. Turbulence was less at night than during the day, and moreover this schedule would not interfere with the Air Force use of the test track during the day. (The plaintiff’s contention that unavailability of the test track interfered with its contract performance is without substance, as the Board also found.) At first, the plaintiff thought of using polyethylene tubing, but because of its greater rigidity elected to use aluminized waterproof cardboard tubing which was purchased and delivered about October 1965. It was intended to mount the connected tubing in some fashion 7’’ above the test track in assemblies of 4,000' at a time. The 7" suspension above the track was to insulate the convection barrier from distorted readings which might result from contact with the track because of a thermogradient imbalance between the temperature on one side of the track and that on the other side caused by the night breeze in the desert blowing against one side and not the other. It was calculated that it would take about 4 hours to set up each of the 4,000’ assembled segments of convection barrier, and about 3 hours to disassemble it, with the actual shooting of measurements being done rather quickly once the setup was ready. If 4,000' segments were set up and measurements taken on consecutive nights, plaintiff expected to be able to survey the entire 35,000’ track in nine nights when the equipment was perfected.

This did not transpire, because plaintiff was never able to develop a convection barrier that would insulate the atmosphere sufficiently to make accurate measurements outdoors. It abandoned its original plan to conduct a pilot test in Long Island during the fall of 1965 because its modifications of the Saunders apparatus were not ready in time.

After substantial delays, and a time extension to March 1, 1966, in January 1966 the plaintiff set up a 55’ experimental test track inside of a structure at Holloman which provided conditions which were of less than laboratory quality but considerably better than in the open. With this experimental setup an encouraging accuracy of .072 arc seconds was obtained, which converts to an unpreeedented one-fourth of a thousandth of a second in a distance of 55'. This accomplishment, which vindicated Dr. Woodson’s faith in the inherent accuracy of the modified Saunders apparatus, was superior to the 1 arc second of accuracy obtained previously with a theodolite at the test track. But unfortunately it could not be duplicated outdoors, despite several efforts on track lengths from 75' to as much as 3,200'.

By this time it was clear that the Saunders equipment was suitable but no means had been found to use it outdoors with an acceptable degree of accuracy. At the time that plaintiff virtually ceased further performance under the contract, which was about March 1966, Dr. Woodson felt that, with an investment of another $10,000 or $20,000, and further time, a solution could be found. However, by now the plaintiff had spent a claimed $61,000 in its efforts to perform in contrast to a contract price of $31,943 and actual contract payments of $22,290, and regarded the contract to be for practical purposes impossible of performance. So it discharged Dr. Wood-son in April 1966, and thereafter until default termination of the contract on November 1, 1966, engaged in fruitless negotiations with the Air Force to either terminate the contract for convenience and reimburse the plaintiff for its losses, or convert the contract to a cost-reimbursable basis, in which case it was willing to waive its claim for losses. There was little reason for the plaintiff by that time to have had much confidence remaining in Dr. Woodson’s belief that a successful end was in sight with a modest additional expenditure, for already the performance period had far exceeded the original 4 months and plaintiff’s cost had far exceeded the contract price. In terminating the contract for default the contracting officer also demanded reimbursement of the $22,290 paid the plaintiff in progress payments. The plaintiff appealed the termination to the ASBCA on November 21, 1966, and on September 10, 1969, the appeal was denied, leading to the present review proceeding.

The ASBCA decision, with much thoughtful discussion, states the conclusion as follows: “ * * * The excuses of practical impossibility and ‘commercial senselessness’ are not available under the circumstances.”, terms which the ASB.CA rightly considered to be synonymous. It restricted the proper application of practical impossibility to the cases where “specifications [are] furnished by the Government or otherwise warranted by it, even though impliedly.”, there being no such' implied warranty found in the present case. Nor did the Government have a superior knowledge of the technology and withhold it, as in Helene Curtis Industries, Inc. v. United States, 312 F.2d 774, 160 Ct.Cl. 437 (1963). (There is nothing to suggest any Government representative concerned in the procurement had knowledge of the technology in any way equal to Dr. Woodson’s).

The trial.judge upheld the plaintiff on the “impossibility” issue, differing with the ASBCA. He apparently agreed with the ASBCA on other issues, which he did not address in any detail, deeming plaintiff’s contentions to lack substance. Since we agree with the ASBCA and differ with the trial judge as to impossibility, we find it necessary to give plaintiff’s other contentions more notice. We take them up first, leaving impossibility to the end.

Plaintiff’s main point is that under the requirement in Item 3 for “Improved Lineal Survey Equipment (ILSE) such as the Van Heel Alignment Apparatus * * (emphasis supplied) the Saunders equipment is too unlike to be “such as”. Therefore, when plaintiff switched to the Saunders device, it was a cardinal change. “The contract as written was impossible to perform because the Van Heel Alignment Apparatus was not available. A new contract came into existence, and the language should have been changed if defendant wanted to preserve its privilege of declaring a default.” The ASBCA analyzes the record in detail to show that plaintiff always had the option to make the switch. We agree with what it says, but a shorter answer is that in adopting the Saunders device without notice to defendant, plaintiff interpreted the contract in a sense clearly contrary to what it now urges. It did not even allow defendant the option to retain the Van Heel device at the cost of some delay, possibly less than defendant ultimately granted in time extensions anyway. A party cannot, after a controversy has arisen, arbitrarily abandon the contract interpretations it acted on to the other’s knowledge when their relations were harmonious. Gresham & Co., Inc. v. United States, 470 F.2d 542, 200 Ct.Cl. 97 (1972). It should be noted, of course, that this argument though using the word “impossible” does not concern the issue of commercial or technological impossibility, dealt with infra.

Plaintiff also urges that standards of performance were not given and therefore the contract was effectively unenforceable. We think, as did the ASBCA, that plaintiff knew what it was trying to do when it was trying to do it, and cannot now urge that the level of satisfactory performance was imprecise.

We also agree with the ASBCA that neither the short time originally allowed for performance, nor the modest contract price, establish that it did not call for research and development, when its own terms show that it did.

Turning, then, to the main legal issue, we note that the ASBCA had several things to say about the impossibility issue, mostly unfavorable to plaintiff, but in the end did not attempt to determine whether the contract was impossible to perform, in the legal as opposed to the scientific sense. A careful reading of the Decision part of its opinion that could have been labeled Conclusions of Law, shows that its position was that the excuse of legal impossibility is only available where “under Government specifications, failure to perform is due to the circumstance that no way is known in industry how to manufacture the supplies in question according to the specified design or performance characteristics. * * * [T]he Government [therefore] is held to an implied warranty.” This is not such a case, because here the plaintiff was to supply methodology and design. In these circumstances, the parties did not intend “limitations with reference to the state of the art.” Plaintiff “knew the work tasks to be performed had not been done before”. In these circumstances, no implied warranty could be imputed to the Government. Therefore the conceptual underpinning for the impossibility defense as here invoked was missing.

The reasoning is in general in accord with our decisions and strongly supported by them. In Austin Co. v. United States, 314 F.2d 518, 161 Ct.Cl. 76, cert. denied, 375 U.S. 830, 84 S.Ct. 75, 11 L.Ed.2d 62 (1963), we assumed that plaintiff’s failure to perform was solely due to the fact that it was impossible to do so under the specifications. However, the latter were proposed by the plaintiff after it had reviewed defendant’s specifications and found them unworkable. We held that plaintiff, having promised to perform under its own substituted specifications fully assumed the risk of impossibility of performance. As the Government was responsible for losses due to its own specifications if they were defective, the converse should apply to the plaintiff.

In Bethlehem Corp. v. United States, 462 F.2d 1400, 199 Ct.Cl. 247 (1972), we followed Austin. The Bethlehem Corp. was recognized to have superior expertise. Its technical proposal was made part of the contract and defendant modified the specification, pursuant to its advice. The contract, for an environmental test chamber, was impossible to perform within the then known state of the art. Defendant’s officers who prepared the specifications, did not know this, but there were experts in the National Bureau of Standards who would have. We did not impute their knowledge to the contracting agency. (NOTE: the Bureau of Standards people were only aware of the difficulties, not of possible solutions, as has been incorrectly suggested here in an effort to distinguish the case.) We held that Bethlehem had assumed the risk of nonperformance notwithstanding impossibility.

In Bethlehem, we cited and quoted from the leading decision of Judge Friendly in United States v. Wegematic Corp., 360 F.2d 674 (2d Cir. 1966). There in response to an invitation for proposals for computers, Wegematic submitted a detailed proposal for a machine it characterized as “a truly revolutionary system utilizing all of the latest technical advances.” It proved impossible to deliver because of “basic engineering difficulties.” Judge Friendly dryly says, at p. 676:

* * * We see no basis for thinking that when an electronics system is promoted by its manufacturer as a revolutionary breakthrough, the risk of the revolution’s occurrence falls on the purchaser; the reasonable supposition is that it has already occurred or, at least, that the manufacturer is assuring the purchaser that it will be found to have when the machine is assembled. * * *

In Hol-Gar Mfg. Corp. v. United States, 360 F.2d 634, 175 Ct.Cl. 518 (1966), we enforced the implied warranty that if Government specifications are followed, a satisfactory product will result. We distinguished the Austin case, supra, on the ground that Austin had drafted substitute specifications which it had said would produce the result.

Hoi-Gar thus falls in the line of cases dealing with impossibility of performing under an assertedly defective Government specification. Others are, e.g., Natus Corp. v. United States, 371 F.2d 450, 178 Ct.Cl. 1 (1967); Tecon Corp. v. United States, 411 F.2d 1271, 188 Ct.Cl. 436 (1969); Tombigbee Constructors v. United States, 420 F.2d 1037, 190 Ct.Cl. 615 (1970). In these cases the question has had to be answered: assuming absolute or utter impossibility is not the test, how impracticable, or unfeasible or commercially senseless must performance be, to excuse its not being rendered? It is in this context that Judge Collins in Natus, supra, delivered his much-quoted observation that — “ ‘impossibility’ in its modern context has become a coat of many colors”—371 F.2d at p. 456, 178 Ct.Cl. at p. 9. It may be that the word “impossibility” is somewhat of a semantic trap, but we do not have to fall into it here. As Judge Wright points out in Transatlantic Financing Corp. v. United States, 124 U.S.App.D.C. 183, 363 F.2d 312, 315 (1966), before getting into the question you first have to determine whether risk of the contingency has been allocated either by agreement or by custom. The cases say it has been, here, and therefore the ASBCA was entirely right in not deciding whether it was impossible to perform or not, in a legal sense.

It has recently been stated the Government warranty of its own specifications does not apply to “performance oriented” as distinguished from “design oriented” specifications. Patten, The Implied Warranty That Attaches To Government Furnished Design Specifications, 31 Fed.B.J. 291, 299 (1973). The rule applicable here we believe is, if the contractor, from a stance of superior expertise, asks for and obtains leave to perform according to methods defined and stated by him, he impliedly warrants that he is able to overcome the technical difficulties inherent in the project, whatever they are. As viewed in Austin, the rule is the logical and natural converse of the one respecting Government drafted specifications, the more usual case. Thus it makes no difference whether performance here was actually and literally impossible or so only in the qualified sense sanctioned in our decisions.

The “implied warranty” concept appears frequently in our eases, yet may be objected to as somewhat of a fiction: a semantic step towards a predetermined result. We may, with Judge Wright in Transatlantic Financing Corp., supra, prefer to think in terms of the reasonable expectations of the commercial community, when they have written no express provision for the contingency,, and none is derivable from commercial custom. It is needless to theorize here, when the eases dictate the outcome so clearly.

The trial judge saw some conflict between Austin and Natus both supra. He fails to mention, however, the favorable citation of the former in the Wegematic and Bethlehem cases, the latter more recent than Natus, and the explanation and differentiation of Austin in Hoi-Gar, phrased in a way to raise no doubt upon its correctness. If we held for plaintiff here, we would have to overrule both Austin and Bethlehem. The trial judge’s basic error is, we think, his failure to accept the court’s position plainly stated in Austin, that even if the impossibility of performance was absolute it was no excuse for Austin’s failure to produce under specifications written by itself.

If the parties, with equal expertise, mutually agree on an impossible method of performance, the loss sometimes may be shared on a mutual mistake theory. National Presto Ind. v. United States, 338 F.2d 99, 167 Ct.Cl. 749 (1964), cert. denied, 380 U.S. 962, 85 S.Ct. 1105, 14 L.Ed.2d 153 (1965), (citing and distinguishing Austin). The plight of the contractor here, a small business, invites . sympathy, though it escapes without any liquidated damages or reprocurement charges. Nevertheless, the mistaken business and technical judgment of Dr. Woodson emerges clearly from the ASBCA’s findings as the prime cause of the fiasco, and no comparable errors are imputable to defendant’s officers, with their inferior expertise admitted. We think the commercial community would expect the loss herein to lie where it fell, even assuming, arguendo, they would have gaggéd at any kind of penalty assessment. It makes a difference, as Judge Friendly remarks in Wegematic, supra, who is suing whom for what. In that case liquidated damages and excess re-procurement were awarded, making the decision far more hardhearted than Austin, or ours herein. Our decision, contrary to the trial judge, will deter the making of only R & D contracts wherein the contractor also promises production. On the other hand, his conclusion would deter Government officials from ever relying on the superior expertise of a contractor.

The ASBCA decision is supported by substantial evidence, is not arbitrary or capricious, and embodies no error of law, therefore, by Wunderlich Act standards, it is binding here. Plaintiff’s motion for summary judgment is denied. Defendant’s motion for summary judgment is allowed. The petition is dismissed. Since defendant recovered the progress payment of $22,900 and interest thereon by withholding and setting off payments under another contract, no action with respect to such progress payment is here required.

       We acknowledge the assistance rendered us by Trial Judge C. Murray Bernhardt’s able and thoughtful Buie 166(c) opinion. Agreeing with him in part only, we reach a different end result,


author: KASHIWA, Judge:

text:
    Stephen HORNER and Martin Horner, Executors of the Estate of Dorothy M. Horner, Deceased v. The UNITED STATES.
    No. 175-72.
    United States Court of Claims.
    Oct. 17, 1973.

      Martin D. Cohen, attorney of record, for plaintiff.
    John E. Evans, Washington, D. C., with whom was Asst. Atty. Gen. Scott P. Cranipton, for defendant; Gilbert E. Andrews, Washington, D. C., of counsel.
    Before CO WEN, Chief Judge, and DAVIS, SKELTON, NICHOLS, KASHIWA, KUNZIG and BENNETT, Judges.
    ON DEFENDANT’S MOTION FOR JUDGMENT ON THE PLEADINGS AND PLAINTIFFS’ ORAL MOTION FOR SUMMARY JUDGMENT
   KASHIWA, Judge:

Plaintiffs brought this suit for refund of federal estate taxes and interest assessed thereon, in the amount of $20,758, paid by the plaintiffs on behalf of the Estate of Dorothy M. Horner, deceased, plus statutory interest thereon. The case is presently before us on defendant’s motion for judgment on the pleadings and plaintiffs’ cross motion, made during oral argument, for summary judgment. Reading the plaintiffs’ petition and assuming the truth of the allegations made therein, there are no material issues of fact. We hold for the defendant allowing its motion for judgment on the pleadings.

The facts, as they appear from the pleadings, are as follows: Dorothy M. Horner, the decedent, (sometimes hereinafter referred to as Dorothy), was born on October 24, 1890, and died on September 14, 1969. In about 1920, she married Louis J. Horner, (sometimes hereinafter referred to as Louis), and they had two sons, Stephen and Martin. Louis died testate on May 18, 1928. By his will, Louis’ interest in the partnership of H. J. Horner & Sons was bequeathed to Stephen and Martin in equal shares. Stephen and Martin each were also bequeathed a one-sixth share of Louis’ residuary estate. During the minority of each child, the trustees were to distribute the income to Dorothy who would apply the same toward maintenance, support, and the education of such child. Between the ages of 21 and 25, each child was to receive income from his share directly and at age 25 was to receive an outright distribution of such share. Dorothy was given a life estate in the remaining four-sixths of Louis' residuary estate, with the remainder at her death to pass in equal shares to Stephen and Martin, their heirs and assigns forever.

On May 29, 1928, Dorothy and two of Louis’ brothers, Pierre and Harry, were made co-executors and co-trustees of Louis’ estate. Pierre alone performed virtually all of those duties until his death in 1949. During this period, Dorothy’s life estate was treated as being held in trust and was administered by Pierre for her benefit. After Pierre’s death, Dorothy, Harry, Stephen, and Martin searched for a suitable successor to Pierre as trustee and, on February 28, 1950, Dorothy, Stephen and Martin executed a trust agreement by which each transferred his entire remaining interest under Louis’ will to the National Newark and Essex Banking Company of Newark, New Jersey, as trustee. Under the terms of that agreement, the trustee was empowered as follows:

D. To pay to Dorothy McGregor Horner for the term of her natural life the sum of Five Hundred Dollars ($500.00) monthly providing said principal produces said income and to pay the Federal income taxes of Dorothy McGregor Horner attributable to all the income providing there is sufficient income available for such purposes and to pay the balance of any annual income to Dorothy McGregor Horner at her written request and such annual income as shall not be requested by Dorothy McGregor Horner during the year it is collected shall be added to the principal of the fund; and upon the death of Dorothy Mc-Gregor Horner, to pay, deliver and transfer the principal and undistributed income if any to Stephen Horner and Martin McGregor Horner, 'their heirs and assigns forever in equal shares.

The trust fund was administered according to the terms of the February 28, 1950, agreement until Dorothy’s death in 1969. It distributed to Dorothy $500 each month during that time but did not distribute to her anything in excess of that amount unless she requested such distribution in writing. During that time, the amount of income which was earned by the trust fund but not distributed to Dorothy was $170,809.13. It is accepted as true, for the purposes of the motions, that on numerous occasions, decedent actually made oral requests for additional income, which requests, not being in writing, were refused.

Some confusion has resulted as to the mental state of Dorothy from the time of Louis’ death until her own demise in 1969. The plaintiffs have alleged as follows:

From the time of Louis’ death until her own death on September 14, 1969, decedent was the victim of acute alcoholism. This condition frequently prevented decedent from prudently or adequately managing her own affairs; and it rendered her incapable of undertaking any such responsibility as the administration of the trust created under Louis’ will.

We take this as a true and correct statement of Dorothy Horner’s condition during the years involved. We note, however that the allegations do not constitute a statement that Dorothy Horner was legally incompetent.

As stated above, Dorothy’s failure to make written requests for the excess over her $500 monthly payment caused, during the existence of the inter-vivos trust, a total of $170,809.13 to fall into the principal of the fund. Plaintiffs, as executors of the estate of Dorothy M. Horner, included said $170,809.13 as part of her gross estate and concurrently with the filing of the return and payment of $20,056 in estate taxes attributable to the $170,809.13 inclusion, filed a claim for refund for the $20,056 together with the interest paid in the amount of $702.

The court is faced with the question of whether Dorothy’s failure to make written requests for amounts in excess of $500 per month, which failure automatically caused such amounts to fall into principal, constituted “transfers” of property to a trust under which she retained the right to income for life. The question must be answered in the affirmative for the Government to prevail under section 2036 of the Internal Revenue Code of 1954, which provides, in relevant part:

Sec. 2036. Transfers with retained life estate.
(a) General rule.
The value of the gross estate shall include the value of all property to the extent of any interest therein of which the decedent has at any time made a transfer (except in case of a bona fide sale for an adequate and full consideration in money or money’s worth), by trust or otherwise, under which he has retained for his life or for any period not ascertainable without reference to his death or for any period which does not in fact end before his death—
(1) the possession or enjoyment of, or the right to the income from, the property, or
(2) the right, either alone or in conjunction with any person, to designate the persons who shall possess or enjoy the property or the income therefrom.
-X- -X- * * -X- -X

By way of preface we note our agreement with the Government that Dorothy Horner’s joining with her two sons, the other beneficiaries of her husband’s residuary estate, in the creation of the inter-vivos trust, is not the relevant event for our scrutiny, at least with respect to section 2036. Under the terms of the inter-vivos trust, she retained the right to receive all the trust income each year for the remainder of her life. Certainly, the formal requirement that to receive more than $500 per month a written request had to be made does not mean that Dorothy had surrendered her life estate in the testamentary trust established after her husband’s death.

The 1950 transaction, however, did, in effect, set up a system whereby amounts, otherwise due Dorothy, could, by her failure to make written requests, be automatically transferred to principal. The crucial point, in the context of section 2036, was that the transfer to principal was not absolute. Dorothy’s right to receive the income from the augmented trust continued until her death. Dorothy thus transferred away, but with a retained life interest, $170,809.13 of the trust income which was produced by the trust between 1950 and 1969. These are the “transfers” which are relevant to our section 2036 inquiry. Economically, we see no difference between a “transfer” by means of failure to request as compared with a hypothetical case in which Dorothy requested the money and then transferred it to the principal, retaining an income interest. The latter case would be a textbook example of the operation of section 2036(a)(1). We find that there is no fundamental difference between that case and what actually occurred.

The plaintiff would have us adopt a formal and overly technical view of the “transfer” requirement. We choose instead to adopt a liberal understanding of the term “transfer.” When Dorothy failed to make a written demand for the income otherwise due her and amounts were automatically added to principal, she made a transfer as fully as she would have by requesting the money and later transferring it to principal. From an economic point of view, the loophole resulting from plaintiffs’ view is clear. Had Dorothy not transferred the $170,809.13 to the trust corpus, but instead had received and kept it, it would have been includible in her gross estate by virtue of section 2033. The constructive transfer to the trust, under plaintiffs’ view, would result in removing the $170,809.13 from her gross estate, even though she retained the lifetime right to reap the economic benefits of that amount; that is, the income therefrom.

The case law fully supports the Government’s position. In United States v. O’Malley, 383 U.S. 627, 86 S.Ct. 1123, 16 L.Ed.2d 145 (1966), it is evident that the Supreme Court did not view the “transfer” requirement in a technical or formalistic way. In O’Malley, the decedent was one of three trustees of trusts which he had created. As trustee he had power to pay income to the beneficiary or accumulate the income, in which case it became part of principal. Thus, the issue for resolution was whether that trust income which over the years was added to principal was includible in the decedent’s gross estate as having been transferred by him but with a retained lifetime power to designate who should enjoy the income therefrom. In holding that such income was includible in the decedent’s gross estate, the Supreme Court said:

The dispute in this case relates to the second condition to the applicability of § 811(c) (1) (B) (ii) [the predecessor of section 2036(a) (2)] — whether Fabrice [the decedent] had ever “transferred” the income additions to the trust principal. Contrary to the judgment of the Court of Appeals, we are sure that he had. * * * With respect to each addition to trust principal from accumulated income, Fab-rice had clearly made a “transfer” as required by § 811(c) (1) (B)(ii). Under that section, the power over income retained by Fabrice is sufficient to require the inclusion of the original corpus of the trust in his gross estate. The accumulated income added to the principal is subject to the same power and is likewise includable. [383 U.S. at 632-633, 86 S.Ct. at 1126.] [Emphasis supplied.]

Although O’Malley involved what is now section 2036(a)(2), while the instant case involves section 2036(a)(1), this difference provides no basis for distinguishing the two cases. Both involve transfers of property, which are incomplete because of a retained lifetime right —be it the right to designate the persons who shall enjoy the income under section 2036(a)(2) or the right to income under section 2036(a) (1).

Finally, the fact that Dorothy, unlike the decedent in O’Malley, was not the original owner of the trust corpus is immaterial. The Government does not contend that Dorothy’s life estate under the trust created pursuant to her husband’s will is includible in her gross estate. The Government argues that the income which, had it been accepted and retained by her, would have been includible under section 2033 is includible under section 2036(a)(1) because of income rights retained despite the transfers.

In Estate of Kinney, 39 T.C. 728 (1963), the fact pattern was very similar to the case at bar. There the decedent was, for nearly fifty years, the life income beneficiary of a trust. The remainder was to pass to her heirs at law. During the period of the trust, the trustees received stock dividends, which they held in trust during the decedent’s life. The will, under which the trust was created, contained no provision regarding whether such stock dividends were to be allocated to principal or income.

When the Commissioner of Internal Revenue attempted to include the stock dividends in the decedent’s gross estate, the estate argued that the dividends were received and held by the trust and that the decedent never transferred the shares to the trust as required by section 2036. The Commissioner, on the other hand, argued that since the decedent was entitled to the shares as a matter of law, she made a transfer to the trust when she permitted the shares to become part of the trust corpus. In prior litigation, the local surrogate’s court had determined that the decedent had elected to add the shares to the corpus of the trust. The Tax Court, in addressing itself to the question of whether a “transfer” had been made, held:

The Supreme Court’s opinion in Estate of Sanford v. Commissioner, 308 U.S. 39, 42, 43 [60 S.Ct. 51, 84 L.Ed. 20] (1939), is equally applicable here: “When the gift tax was enacted Congress was aware that the essence of a transfer is the passage of control over the economic benefits of property rather than any technical changes in its title.” Here it is clear that decedent deliberately passed control over the stock dividends in question to the trust for the benefit of the remainder-men, retaining only a life interest in the income. We find that this is a “transfer” within the meaning of section 2036, I.R.C.1954. [39 T.C. at 733.]

Likewise, in the instant case, the decedent had a right to the entire income— $500 per month automatically and the surplus by the mere making of a written request. The Tax Court in Kinney held that the stock dividends were includible under section 2036 because the decedent had transferred them to the principal of a trust fund in which she had the income interest for her lifetime and thereby had reserved to herself the income, for life, of the property she transferred. This is effectively the situation in the instant case. In each year that Dorothy elected to leave a portion of the income in the trust, she thereby elected to, and did, irrevocably transfer that sum to the principal of the trust of which she was the lifetime income beneficiary. Each of those transfers, therefore, was a transfer with a retained life interest, within the meaning of section 2036(a) (1).

Reason and precedent make it clear that, for estate tax purposes, a “transfer” can be made by relinquishment of a right to property which has never actually been received. In Cerf v. Commissioner of Internal Revenue, 141 F.2d 564 (3rd Cir. 1944), a gift tax case, the taxpayer was the life income beneficiary of four trusts established by her husband. The trustees were to pay the net income to her during her life

* * * “if she shall accept it, (the right to accept such income or any part thereof to continue in Camelia I. H. Cerf during the term of her natural life, notwithstanding one or more refusals thereof) * * * * * [141 F.2d at 565.]

The taxpayer later relinquished her right to income in favor of her husband and contended that no transfer had been made because the income was not hers to transfer until, and unless she accepted it. But the court held that, in spite of the taxpayer’s argument that she had only received an option to accept income, in reality the trust deeds vested in the taxpayer the right to receive the income. The effect of the relinquishment of this right was characterized as follows:

* * * By completely abandoning her control over her income rights in the trusts during Louis Cerf’s lifetime, Camelia Cerf effected a transfer thereof, * * *. [141 F.2d at 566.]

The analogy to the instant case is clear. Dorothy had the right to all the income produced by the trust — a portion automatically, the rest by a mere written request. By her periodic relinquishments of the amounts which required written request, Dorothy effected “transfers” to the trust principal.

Still another case in which the relinquishment of a right has been held a “transfer” is Sexton v. United States, 300 F.2d 490 (7th Cir. 1962), cert. denied, 371 U.S. 820, 83 S.Ct. 36, 9 L.Ed.2d 60 (1962). In Sexton, the decedent had been one of seven income beneficiaries of a trust established by her father and was also to share in the corpus upon termination of that trust in 1940. Just prior to the termination date, she and other beneficiaries validly extended the life of the trust. The issue was whether this action constituted a transfer by her of her share of the trust corpus with a retained right to income. The court held that it did.

* * * Since the postponement prevented the beneficiaries from receiving their respective shares of the corpus we conclude that the action of postponement participated in by the decedent was a relinquishment of her property right.
•>:• * -x- -x- -x- -x-
Once it is determined that decedent relinquished a property interest, there can be no doubt that the value of decedent’s equitable share in the trust corpus is taxable at least under Section 2036(a)(1). Decedent affirmatively relinquished her right to receive her share in the corpus and thereby is considered to have made a transfer of her property interest in the corpus. The transfer was with a retained interest — an interest in the income of the trust for her life. This is sufficient to make the transfer includible in decedent’s gross estate under Section 2036. [300 F.2d at 493.]

Plaintiffs suggest that alcoholism “ -x- * * frequently prevented decedent from prudently or adequately managing her own affairs * * * ” and that this factor distinguishes the cases discussed, supra,, in which the decedents could knowledgably and expressly relinquish or waive rights. We find this argument futile for several reasons. In the first place, the plaintiffs have never gone so far as to allege that Dorothy was legally incompetent. In fact, as noted in footnote 5, some written requests were actually made for amounts in excess of the $500 per month automatically provided. Secondly, even if it were established that decedent had been adjudicated an incompetent, her rights would have vested in a guardian. For federal estate tax purposes, the fact that her right to income was in a guardian’s hands, or that her guardian transferred a portion of the income while retaining her right to the income therefrom, would produce the same result as if she were competent and acting for herself. See City Bank Farmers Trust Co. v. McGowan, 323 U.S. 594, 65 S.Ct. 496, 89 L.Ed. 483 (1945); Estate of Inman, 18 T.C. 522 (1952), rev’d on other grounds sub nom., In re Inman’s Estate, 203 F.2d 679 (2d Cir. 1953).

Assuming still another possibility, that the decedent might have been incompetent and not been so adjudicated, there would still be no change in result. This was the very argument of the estate in the case of Hurd v. Commissioner, 160 F.2d 610 (1st Cir. 1947). The court in Hurd disagreed with the estate’s argument that the fact of decedent’s incompeteney extinguished the powers which would in the typical ease cause the trust property to be included in the gross estate. The court stated:

* * * The statute is not concerned with the manner in which the power is exercised, but rather with the existence of the power. The decedent may have been limited in his method by his incapacity, but it is not open to question that the power existed in his behalf, either by the trust instrument itself, or by the general law of Massachusetts; and he could have been removed. * * * [160 F.2d at 613.] [Emphasis in original.]

For the foregoing reasons, we hold that decedent’s failure during the nearly 20-year period to make all the written requests possible for her to make for income in excess of $500 per month produced by the inter-vivos trust constituted “transfers” to the principal of the trust. Since she retained for her life the right to income, the amounts so falling into the principal are includible in decedent’s gross estate pursuant to the provisions of section 2036(a)(1). Defendant’s motion for judgment on the pleadings is granted, plaintiffs’ motion for summary judgment is denied, and the petition is therefore dismissed.

      . Evidently, this 1950 trust agreement was entered into without court sanction. Whether court approval was required prior to the 1950 transaction is a question we need not decide.

      . For purposes of simplicity, we will refer to the $500 as the amount provided without written request. It is not necessary for purposes of this opinion to discuss the problems of a failure of the corpus to produce $500 per month or the requirement that the estate pay the federal income taxes attributable to the income paid Dorothy.

      . All references to statutory tax provisions are to the Internal Revenue Code of 1954, as amended.

      . Under New York law, the stock dividends involved were attributable to the income beneficiary.

      . During oral argument, plaintiffs conceded that the trust accountings show that Dorothy did receive amounts in excess of $500 per month when requests for such amounts were made in writing.

      . See N.J.Stat.Ann. 3A:6-36 (1968) and 3A:6-41 (1953).


text:
    EDWARD LEVY METALS, INC. v. The UNITED STATES.
    No. 35-72.
    United States Court of Claims.
    Oct. 17, 1973.
    Arthur L. Ballin, New Orleans, La., attorney of record, for plaintiff.
    R. W. Koskinen, Washington, D. C., with whom was Acting Asst. Atty. Gen., Irving Jaffe, for defendant.
    Before COWEN, Chief Judge, and DAVIS, SKELTON, NICHOLS, KASHIWA, KUNZIG and BENNETT, Judges.
    ON PLAINTIFF’S MOTION FOR JUDGMENT ON THE PLEADINGS AND DEFENDANT’S CROSS-MOTION FOR JUDGMENT DISMISSING PLAINTIFF’S PETITION
   PER CURIAM:

Plaintiff brought this suit to recover a bid deposit in the amount of $10,446.-34, which it claims the Government has wrongfully withheld as liquidated damages. The case is presently before the court on plaintiff’s motion for judgment on the pleadings. In its response to plaintiff’s motion, the defendant moved for judgment dismissing plaintiff’s petition. There is no genuine issue as to any material fact. We hold for the plaintiff for reasons hereinafter stated and therefore allow its motion for judgment on the pleadings.

Briefly stated, the facts are as follows. Plaintiff submitted bids for two traveling crane gantries, the original offer for each being $35,115.85. Together with its bid, plaintiff submitted a deposit in the sum of $15,000. When the bid was subsequently reduced by $9,000 per gantry, the 20 per cent bid price deposit was accordingly reduced to $10,446.34. Significantly, the contract provided that :

NOTE: Purchaser shall provide all labor and equipment for dismantling and/or loading of property. Purchaser shall make necessary arrangements with the St. Louis-San Francisco Railroad for furnishing cars as needed to deliver and remove equipment required for dismantling and/or loading, and cars for delivery of purchased property. Rail cars will be delivered to the point where Government rail joins Frisco tracks. Switching of cars between that point and the property location will be accomplished by Government owned locomotive and will be limited to the period 8:30 AM to 11:30 AM and 1:00 PM to 3:00 PM with the exception that switching is not to interfere with production requirements of the operating contractor at Gateway Army Ammunition Plant. [Emphasis supplied.]

The Government has admitted that the turning radius of the Government tracks was so narrow that it could not accommodate the switching of rail cars loaded with the crane bridges and, further, that it was necessary to cut the crane bridges into sections in order to transport them over the Government rails.

The plaintiff advised the contracting officer that it was not a practical possibility to remove the gantry cranes. Plaintiff requested that the contract be cancelled and that its deposit be returned. The contracting officer refused to do this and, after the scheduled date of performance, issued a notice of default. More than a year later, in January, 1971, the cranes were readvertised and plaintiff was the successful bidder. Plaintiff was then awarded a second contract at a lower purchase price. With respect to the “switching” problem outlined in the NOTE clause, the only notable difference between the second offering and the first was the addition of the following sentence in the second offering:

* * * It is recommended that each span be cut in half to facilitate removal.

The Government has focused its attention on plaintiff’s alternative warranty argument. We are referred to the contract provisions set forth in the margin and to the case of United States v. Hathaway, 242 F.2d 897 (9th Cir. 1957), for the proposition that in an “as is, where is” sale, together with a disclaimer of warranty, the risk of removal is imposed on the buyer. In Hathaway, the contract involved the sale of steel lock gates which were located under the waters of the lake formed by a dam. Although plaintiff was able to remove two of the lock gates, the salvage operations could not be advanced beyond that stage. One of the lower remaining locks was sprung and this condition, taken together with the depth of the locks as well as accumulated debris, made it both economically unfeasible and dangerous for diving operations to be continued. Thus the project was terminated. Although the Ninth Circuit conceded that neither party was fully cognizant of the true condition of the two sets of locks which could not be removed, the court took special care to point out that

* * * One can hardly envisage contractual terms which could more clearly impose on the purchaser the risk of loss resulting from such contingencies as here occurred. This was the very essence of the bid invitation. The Government’s manifested intention was to shift the burden of responsibility for any fortuitous conditions which might arise upon the bidder. There can be no other interpretation given the plain and unequivocal terms of the bid invitation. [242 F.2d 900.] [Emphasis supplied.]

It is our view that the Government has aimed its argument wide of the mark. Whatever result would obtain under the contract provisions in the absence of the NOTE clause dealing with the “switching” of the railroad cars, there can be no doubt that the presence of the NOTE clause requires a conclusion in favor of the plaintiff. It is clear that the Government here, totally unlike the situation in Hathaway, made an affirmative promise; i.e., to switch railroad cars, loaded with dismantled crane bridges, over Government-owned property to a point where the Government rails join the St. Louis-San Francisco Railroad tracks. However, due to the construction of the switch tracks on Government property, there was no way in which the Government could accomplish its obligation without cutting the crane bridges. Thus, the Government failed to perform its promise that it would make available switch tracks and locomotives capable of delivering the dismantled crane bridges to the point where the Government rails join the Frisco tracks. No such affirmative promise was made by the Government in Hathaway, where the plaintiff clearly assumed the risk. Whatever the breadth of the disclaimer of warranty involved in the fact pattern presented to us, it certainly does not go so far as to excuse the Government’s failure to perform a distinct obligation which, by the contract, it had undertaken.

It is also clear that “dismantled” in the context of the contract must be interpreted as meaning “reduced to the component parts,” and not “cut” or “broken.” It is a basic tenet of contract interpretation that

* * * the language of a contract must be given that meaning that would be derived from the contract by a reasonably intelligent person acquainted with the contemporaneous circumstances. * * * [Kenneth Reed Construction Corp. v. United States, 475 F.2d 583, 586, 201 Ct.Cl. 282, 288, (1973).]

It is obvious to us that so costly a process as cutting and refabricating was not within the contemplation of the parties when it was agreed that the cranes would be “dismantled.” We find additional confirmation in this view by two subsequent events: (1) the award of the contract at a later date for a substantially reduced price; and (2) the explicit reference in the second offering that

* * * It is recommended that each span be cut in half to facilitate removal.

The only reasonable interpretation of the agreement is that the plaintiff was willing to pay the designated price provided that the traveling crane gantries, in a dismantled condition, would be switched by the Government to the point where Government rails join Frisco tracks. When a direct representation, such as this, is made to a prospective purchaser, the purchaser is entitled to act upon the assumption that the representation is one which is correct. Pikesville Home Builders, Inc. v. United States, 160 Ct.Cl. 541 (1963). In light of this holding, the Government, not able to perform to the extent required of it, could not withhold the deposit as liquidated damages.

CONCLUSION

For the foregoing reasons, plaintiff’s motion for judgment on the pleadings is granted. Plaintiff is entitled to recovery of its bid deposit in the amount of $10,446.34 and judgment is entered to that effect. The defendant’s motion for judgment dismissing plaintiff’s petition is denied.

      . On November 17, 1972, this court, by order, denied the defendant’s motion to dismiss. Although the defendant had argued that the plaintiff had failed to exhaust its administrative remedies, the court held that the Government’s course of action constituted an effective waiver of the Government’s contractual right to have the propriety of the default termination reviewed by the Board of Contract Appeals. Edward Levy Metals, Inc v. United States, 199 Ct.Cl. 1019 (1972).

      . “1. INSPECTION. The bidder is invited, urged, and cautioned to inspect the property prior to submitting a bid. Property will be available for inspection at the places and times specified in the Invitation.
      “2. CONDITION AND LOCATION OF PROPERTY. Unless otherwise specifically provided in the Invitation, all property listed therein is offered for sale ‘as is’ and ‘where is’. If it is provided therein that the Government shall load, then ‘where is’ means f. o. b. conveyance at the point(s) specified in the Invitation. The description of the property is based on the best information available to the sales office. However, the Government makes no warranty, express 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. Unless otherwise specifically provided in the Invitation and except as provided in Conditions No. 9 and 11, no request for adjustment in price or for rescission of the sale will be considered. This is not a sale by sample. [Emphasis in original.]
      * * :)•" * *
      “7. DELIVERY, LOADING, AND REMOVAL OF PROPERTY.
      “(a) Unless otherwise provided in the Invitation, the Purchaser shall be entitled to obtain the property upon full payment therefor, with delivery being- made only from the exact place where the property is located within the installation. The Purchaser must make all arrangements necessary for packing, removal, and transportation of property. The Government will not act as liaison in any fashion between the Purchaser and carrier, not will the Government recommend a specific common carrier. Loading will only be performed as set forth in the Invitation, sk ifc sk
      “(b) Where it is provided in the Invitation that the Government will not load or that the Purchaser will load, the Purchaser will make all arrangements and perform all work necessary to effect removal of the property. The Purchaser shall remove the property at his expense within the period of time allowed in the Invitation. * * *
      “27. GUARANTEED DESCRIPTIONS. Except as provided in subparagraphs a and b of this clause, and notwithstanding any other terms and conditions of the Invitation for Bids to the contrary, the Government hereby warrants and guarantees that the property to be delivered to the Purchaser under any contract resulting from the Invitation for Bids will be as described. * * *
      sk sk sk * *
      “b. THE GOVERNMENT DOES NOT WARRANT OR GUARANTEE ANY OF THE FOLLOWING:
      “(2) Stated condition of the property, the total cost of the property, the estimated total weight, the estimated shipping dimensions, suggested uses of the property, and its fitness for any use or purpose are not guaranteed.”
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