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Allied Paint & Color Works Inc. v. United States

August 29, 1962


Author: Waterman

Before LUMBARD, Chief Judge, and SWAN and WATERMAN, Circuit Judges.

WATERMAN, Circuit Judge.

Appellant, a paint contractor, brought the present action against the United States in the U.S. District Court for the Southern District of New York for breach of contract, alleging that the Government failed to deliver a certain quantity of phosphorescent paint which it was the Government's duty to furnish under the contract. This is an appeal from the order of the district court dismissing appellant's complaint. We affirm the court below.

On June 20, 1952, following an invitation to bid, appellant and the Government entered into contract No. N383s-77428 (hereinafter referred to as contract No. 1), under which appellant agreed to furnish the Government 7,644 paint kits to be delivered to various government depots within 90 days after the date of the contract. Each kit was to contain a quart can of phosphorescent paint which was called component "A," a quart can of white primer, a quart can of thinner, and a quart can of varnish. The contract expressly provided that the 7,644 quarts of phosphorescent paint, totalling 1,911 gallons, were to be Government-furnished, and the Government was to deliver them in one gallon cans to appellant's plant within 30 days from the contract date.

Contract No. 1 then provided that upon request by appellant the dates for appellant's performance would be extended if the Government delayed in supplying the Government-furnished property, and though the Government would not be liable for delays in the delivery of the phosphorescent paint or for failure to deliver, an equitable adjustment in the performance date or the price would be made upon the written request of the contractor. The contract also provided that the Government could increase or decrease the amount of property it was to furnish, and in such event, there was provision for price or date adjustments. Although title to the phosphorescent paint remained in the Government, appellant agreed to assume the risk of loss after the property was delivered by the Government. The contract stated that:

"[The] Contractor, upon delivery to it of any Government-furnished property, assumes the risk of, and shall be responsible for, any loss thereof or damage thereto except for reasonable wear and tear * * *"

The contract also contained a "Disputes" clause, whereby the parties agreed that disputes arising under the contract should be settled by the Contracting Officer, with the right of appeal to the Secretary of Defense or his representative, i.e., the Armed Services Board of Contract Appeals.

Under contract No. 1 the Government was able to deliver to appellant only 3,956 quarts (989 one gallon cans) of phosphorescent paint. All but 240 quarts of the paint were put up by appellant in the specified quart cans, and were combined with the other required products to complete 3,716 kits, which were delivered to, and paid for by, the Government. After delivery of these kits appellant still had the remaining 240 quarts of Government furnished phosphorescent paint on hand.

Negotiations between appellant and the Government during 1953 led to the execution of a second contract, No. 383s-97516, on January 7, 1954 (hereinafter referred to as contract No. 2). In this contract, appellant agreed to furnish the Government 3,688 quarts of phosphorescent paint in one quart cans at a price of $6.17 per quart. This was the exact amount of paint needed to complete contract No. 1 and was paint of the same type of phosphorescent paint called for by contract No. 1.

Contract No. 2, unlike the earlier contract, contained no express words in the schedule, specifications, or elsewhere, stating that "The Government shall furnish to the Contractor for use in connection with this contract, the material set forth below," followed by a description of any "material." Contract No. 2 did provide, however, as follows:


"The Phosphorescent Paint to be furnished under this contract shall be packaged and marked by the contractor so it may be used, without repacking or remarking, as Component 'A' of the Phosphorescent Paint Kits to be furnished by the same contractor under Contract N383s-77428 [No. 1].

"Contract N383s-77428 [No. 1] provides that Component 'A' (Phosphorescent Paint) shall be supplied by the Army as Government Furnished Material in the amount of 1,911 gallons, which amount is sufficient to produce 7,644 Phosphorescent Paint Kits covered by that contract; however, a quantity of 989 gallons only were available from Army stocks as Government Furnished Material. Procurement of 3,688 quarts (922 gals.) under Contract N383s-97516 [No. 2] was, therefore, necessary to effect completion of Contract N383s-77428 [No. 1]."

Notwithstanding the nature of contract No. 2, the standard "Government-Furnished Property" clause, which allocated the risk of loss for such property, was also inserted. Since contract No. 2 was a negotiated contract instead of an advertised one, the risk of loss by fire of the "Government-Furnished Property" was placed upon the Government, see 32 C.F.R. 13.502, but ...

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