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UNITED STATES v. AMTRACO COMMODITY CORP.

December 30, 1974

UNITED STATES OF AMERICA, Plaintiff, against AMTRACO COMMODITY CORPORATION, Defendant


The opinion of the court was delivered by: BRIEANT

MEMORANDUM AND ORDER

 Brieant, J.

 Plaintiff here sues for breach of contract to recover price adjustments allegedly due the Commodity Credit Corporation ("CCC") under four contracts with the defendant, Amtraco Commodity Corporation ("Amtraco"). These contracts govern four purchases by Amtraco from CCC of butter for export re-sale. Amtraco moved to dismiss the complaint on the ground that the Government had failed to exhaust the contracts' administrative remedies.

 On November 24, 1971, CCC and Amtraco entered into contract number MP (FS) 49079, whereby Amtraco purchased for export 321,118 pounds of butter at 50.955 cents per pound. On December 14, 1971, contract number MP (FS) 49092 was entered into for 1,584,762 pounds of butter, of which 984,769 pounds were provided at 52.8773 cents per pound. A third contract, number MP (FS) 49093, was entered into on December 23, 1971, which provided for the sale for export of 1,701,116 pounds of butter; 599,760 pounds were provided at 52.0765 cents per pound. These contracts permitted Amtraco to purchase the offered butter and export an equivalent amount of butter within 90 days. The contracts provided further that if Amtraco certified that its contract with the foreign importer specified butter having 82% milkfat content, the volume of such butter for export would be adjusted by 1.025 to satisfy the terms of the CCC sales contracts; Amtraco availed itself of this provision.

 The contracts provided for a price adjustment if Amtraco failed to export the butter or if it was re-imported. On November 15, 1972, all of the butter under contract number MP (FS) 49079 re-entered the United States. The Government alleges in its complaint that portions of the butter under the other 1971 contracts re-entered the United States on November 15 and December 7, 1972. On March 1, 1973, Amtraco paid the Government $270,000.00 as a price adjustment. The first cause of action seeks an additional payment of $14,114.48, plus interest of 6% per annum from March 7, 1973.

 The terms of the 1972 contract, entered into on January 6, 1972, provided for Amtraco's purchase for export of 1,000,216 pounds of butter at 52.7954 cents per pound. Section 10(B) of Department of Agriculture Announcement MP-23, dated January 11, 1968, which was made part of each of the four contracts, provided:

 
" Export Period and Products : Within 90 days after date of contract, or within such extension of time as may be granted by the Director of the Minneapolis ASCA Commodity Office upon a determination by CCC that the buyer has been, or will be, delayed, in exporting the products by causes without the fault or negligence of the buyer , shall export, or cause to be exported [the butter covered by the contract]."

 In accordance with this provision, Amtraco applied for and received five extensions of time, in all extending until December 21, 1972 the time in which Amtraco had to export the butter. On December 15, 1972, Amtraco requested an additional 180 days within which to export its butter. On December 18, 1972 this request was denied and, subsequently, reconsideration was denied. As its second cause of action, the Government seeks $176,678.01 as a price adjustment for Amtraco's failure to export, plus interest at 6% per annum from January 6, 1972.

 Amtraco bases its motion on Section 16 of MP-23, which contains a standard disputes provision reading in relevant part as follows:

 
"A. Any dispute concerning a question of fact arising out of this contract, including any breach thereof, which is not disposed of by agreement shall be decided by the contracting officer, who shall reduce his decision to writing and mail or otherwise furnish a copy thereof to the buyer. The decision of the contracting officer shall be final and conclusive unless within 30 days from the date of receipt of such copy, the buyer mails or otherwise furnishes a written appeal to the Contract Disputes Board for CCC. The decision of the Contract Disputes Board shall be final and conclusive unless determined by a court of competent jurisdiction to have been fraudulent, or capricious, or arbitrary, or so grossly erroneous as necessarily to imply bad faith or not supported by substantial evidence.
 
* * *
 
B. This 'Disputes' provision does not preclude consideration of law questions in connection with decisions provided for in the above paragraph: Provided, however, That nothing in the contract shall be construed as making final the decision of any administrative official, representative or board on a question of law."

 The four contracts were signed by George N. Lynch of the Minneapolis office of the Agricultural Stabilization and Conservation Service of the Department of Agriculture ("Minneapolis office") on behalf of CCC. Amtraco's motion is directed at the fact that this matter was not submitted in the first instance to Lynch, as the contracting officer, for adjustment.

 The controversy regarding the 1971 contracts began in December 1972 when Amtraco was informed that CCC considered a price adjustment necessary because the butter had been re-imported and Amtraco was advised of the amounts due by invoices 8848, 8849 and 8850. Amtraco responded to the invoices with a request for more specific computations of the price adjustment. This request was addressed to John C. Ebert, Deputy Director of the Minneapolis office. In January, February and March 1973, there followed an exchange of communications between Joseph S. Silver, Hayden J. Bennett and Ricardo Jove on behalf of Amtraco and Director Donald L. Gillis, Acting Director ...


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