STANDARD OIL CO., INC., IN KENTUCKY JULY 14, 1939.-Committed to the Committee of the Whole House and ordered to be printed Mr. KEOGH, from the Committee on Claims, submitted the following REPORT [To accompany S. 1467] The Committee on Claims, to whom was referred the bill (S. 1467) for the relief of the Standard Oil Co., Inc., in Kentucky, having considered the same, report favorably thereon without amendment and recommend that the bill do pass. The purpose of the proposed legislation is to pay to the Standard Oil Co., Inc., in Kentucky, the sum of $941.59 alleged to be due by reason of an error in making settlement for gasoline furnished the War Department under contract No. W 535 ac 8868, of June 13, 1936. The payment is to be in full settlement of any claim against the Government by claimant for delivery of gasoline under said contract for the months of July, August, September, and October, 1936. The facts are fully set forth in Senate report No. 364, which is appended hereto and made a part of this report. Your committee concurs in the recommendation of the Senate. [S. Rept. No. 364, 76th Cong., 1st sess. Under the contract mentioned, claimant agreed to deliver for 6 months, commencing July 1, 1936, 48,000 gallons of aircraft engine fuel, grade 92, to Bowman Field, Louisville, Ky., at a top price of 12.6 cents a gallon. Under an option in article 19 of the contract, the quantity of fuel called for was increased by 60,000 gallons at the same maximum price per gallon, in agreement of July 24, 1936. The maximum price of 12.6 cents agreed to was subject to adjustment under article 17, which provided, if claimant's currently quoted net tax excluded posted tank wagon price of the type of gasoline called for in the contract was less than the maximum stipulated on delivery dates, the price to be paid would be said posted tank wagon price less 3 cents a gallon discount. Claimant was to submit certificate with each invoice of the currently quoted net tax excluded posted tank wagon price on delivery dates. Payment for deliveries from July 1 to 15, 1936, was made at the contract rate on the basis of claimant's certification that the posted tank-wagon price on the gasoline at the time and place of delivery was 22 cents, which price, less commodity discount of 3 cents and Federal and State taxes of 6 cents, exceeded the maximum price of 12.6 cents under the contract. At the time of the contract and first deliveries the price on aviation ethyl gasoline made to the Government coincided with the price on a much inferior grade of non-ethyl aviation gas of a lower octane rating being sold to general small trade. July 7, 1936, claimant was instructed by its home office to reduce the posted tank-wagon price on the inferior gasoline, called regular Stanavo, to 20 cents a gallon. In changing the office records accordingly the clerk through error not only reduced regular Stanavo gasoline but also reduced the Stanavo aviation gasoline with ethyl called for in the Government contract. Claimant states the error was purely clerical with no justifying authority, and that it was not based on any reduction in cost or for any competitive reason. Because of the clerical error vouchers submitted for deliveries between July 15 and October 21, 1936, contain certificates that said tank-wagon price, including tax in effect on respective delivery dates, was 20 cents a gallon, from which was deducted taxes of 6 cents a gallon and 3 cents discount a gallon, leaving the net price paid claimant, 11 cents a gallon. Between the above dates a total of 58,849 gallons of gasoline was delivered by claimant to the Government. The difference between the price paid, or 11 cents a gallon, and the price which would have been paid if the tank-wagon price had been certified as 22 cents a gallon, or 12.6 cents a gallon, amounts to $941.59. In response to request of the General Accounting Office for original schedules of posted tank-wagon prices on the contract gasoline at the time and place of deliveries, upon which claim against the Government is based, claimant states that the contract gasoline is only handled and ordered in when required for use of the Government and hence there was no occasion to use a price on it during the life of the contract here for any other customer or for any other purposes. Since the prices to be charged the Government under the contract were peculiarly within claimant's knowledge, not a matter of public or general knowledge, the General Accounting Office under the circumstances held there was no legal basis for further payment to claimant. The Acting Secretary of War concurs with the decision of the Acting Comptroller General and reports adversely on S. 1467. In the only Kentucky case bearing similarity to this one, defendants were bound by the contract to pay prices therein specified for quality and grade of lumber to be delivered. Part of the lumber was misgraded and the court allowed recovery for plaintiff according to the actual grade regardless of whether the misgrading was through fraud, conspiracy, or innocent mistake. In the contract between claimant and the Government provision also was made for delivery of 532,000 gallons of the contract gasoline to the Government at other destinations. Article 17, clause 4, provides for additional discount of 1 percent of the amount stipulated for this volume item and specifies that "in case the contractor does not mail correct and proper invoice until after the delivery to the Government of the supplies or when improper invoices are returned to the contractor for correction the discount period will be computed from the time correct and proper invoice is mailed as evidenced by the envelope in which it is sent and date of mailing check will be considered as the date of payment." Although this provision is not applicable to the part of the contract out of which this claim arises, it indicates the parties did not intend holding one another to incorrect invoices or statements made through error. While claimant company doubtless is financially able to absorb the loss here, there is indication in the record the burden will fall not upon the stockholders but upon the person responsible for the error. As a general principal of law clerical errors are not penalized since they are unavoidably made. The following communications are appended hereto and made a part of this report. Hon. M. M. LOGAN, WAR DEPARTMENT, Washington, March 30, 1939. Chairman, Committee on Claims, United States Senate. DEAR SENATOR LOGAN: Careful consideration has been given to the bill (S. 1467) for the relief of the Standard Oil Co., Inc., in Kentucky, which you transmitted to the War Department under date of February 18, 1939, with request for copies of all papers in the files of the War Department relating to the matter and opinion as to the merits of the bill. The purpose of the bill is to pay the Standard Oil Co., Inc., in Kentucky, the sum of $941.59, in full settlement of a claim arising under contract W 535 ac 8868, dated June 13, 1936, between the contracting officer at the Matériel Division, Air Corps, United States Army, Wright Field, Dayton, Ohio, and the Standard Oil Co. (Kentucky). Under the terms of the contract named the Standard Oil Co. (Kentucky) agreed to deliver during the 6 months commencing July 1, 1936, 48,000 gallons of aircraftengine fuel, grade 92, to Bowman Field, Louisville, Ky., in contractor's tank trucks at a top price of $0.126 per gallon. Under the provisions of an option contained in article 19 of the contract the quantity of aircraft-engine fuel called for was increased by 60,000 gallons at a top price of $0.126 per gallon, by agreement dated July 24, 1936; designated change order No. 1, Serial No. 2083. The top price agreed to was exclusive of any exempted Federal tax and any tax imposed by a State, county, or municipality. The contract further prescribed that each and every invoice submitted by the contractor should contain a certificate as to the currently quoted net tax excluded posted tank wagon price at date of delivery of the fuel and that the actual price charged would be the posted tank-wagon price in effect on date of delivery, less $0.03 per gallon discount, but should not exceed the sum of $0.126 per gallon. Deliveries made during the period July 1-15, 1936, were on the basis of a tank-wagon price, including tax, of 22 cents per gallon and were paid for at the top price stipulated in the contract, namely, $0.126 per gallon. Vouchers submitted for deliveries between July 15 and October 21, 1936, carried a certificate that said tank-wagon price, including tax, in effect on the respective dates of delivery, was 20 cents per gallon, from which was deducted a tax of 6 cents per gallon and 3 cents discount per gallon, leaving the net price paid the contractor at the rate of 11 cents per gallon. The quantity of aircraft-engine fuel delivered between July 15, and October 21, 1936, was 58,849 gallons and the difference between the price paid for same, namely 11 cents per gallon, and the price which would have been paid, namely, $0.126 per gallon, had the tank-wagon price been certified as 22 cents per gallon, amounts to $941.58. On November 25, 1936, the contractor filed a claim for $941.59, alleging that the tank-wagon price of 20 cents per gallon was due to a clerical error wherein the tank-wagon price on another grade of aviation gasoline was applied, instead of the price for the grade supplied to the Air Corps. This claim was forwarded, with approval of the Chief of the Air Corps, to the General Accounting Office for settlement, but was subsequently disallowed by the Acting Comptroller General. There are enclosed photostat copies of claim of the Standard Oil Co. (Kentucky); five endorsements thereon by officials of the War Department, and letter from the Acting Comptroller General to claimant, dated September 26, 1938, stating that the claim was not allowed with reasons therefor. There are also enclosed copy of contract W 535 ac 8868 and change order No. 1, dated July 24, 1936. The War Department is of the opinion that the disallowance of the claim by the Acting Comptroller General was justified, and it is the recommendation of this Department that S. 1467 (76th Cong., 1st sess.), for the relief of the Standard Oil Co., Inc., in Kentucky, be not favorably reported. Sincerely yours, LOUIS JOHNSON, Acting Secretary of War. DECEMBER 5, 1936. (Through Chief of Finance; Finance Officer, Fifth Corps Area; Contracting Officer, Wright Field:) 1. There is enclosed letter of November 25, 1936, from the Standard Oil Co. of Kentucky, claiming $941.59, due to a clerical error which applied tank-wagon market price on gasoline sold to the Government, which was applicable to another grade of gasoline. Voucher is enclosed in amount of $941.59 to cover settlement. Invoices originally submitted carry a posted price certificate of 20 cents per gallon, including taxes and discount as follows: Kentucky State tax... Federal excise tax- Discount (par. 2, art. 17, contract W 535 ac 8868). Cents per gallon 5 1 making a net price of 11 cents per gallon paid. Vendor now claims that posted price should have read 22 cents per gallon for tank-wagon deliveries, which would make a net price per gallon of $0.1260. 2. Payments of 11 cents per gallon for Bowman Field deliveries on invoices submitted were made on voucher 1214, July 1936; voucher 826, August 1936; voucher 458, September 1936; and voucher 74, November 1936 accounts of Capt. John F. Connell, Finance Department. (Signed) JOHN F. CONNELL, (Enclosures: Original claim letter November 25, 1936; voucher in duplicate and supporting invoices totaling $941.59.) STANDARD OIL CO., INC., IN KENTUCKY, Louisville, Ky., November 25, 1936. War Department Contract W 535 ac 8868 (2162); Gasoline Supplies, Bowman Field, Louisville, Ky. FINANCE OFFICER, UNITED STATES ARMY, Wright Field, Dayton, Ohio. GENTLEMEN: Under the above contract, we are to deliver by tank wagon between July 1 and December 31, inclusive, among other things, 108,000 gallons Stanavo aviation gasoline with ethyl to meet United States Army Specifications 2-95 at Bowman Field, Louisville, Ky. The pricing on this material at this particular point as shown on your invitation Circular 36-838 and the subject contract, is 12.60 cents per gallon, exclusive of taxes. The rider which we attached to invitation Circular 36-838 indicated that this material under the subject contract would be sold at our tank-wagon price, less a 3-cent discount, less taxes, with a top price, exclusive of taxes, not to exceed 12.60 cents per gallon. Our tank-wagon price on this material on July 4, 1936, the date of our first delivery under this contract, was and is now 22 cents, including taxes. Your attention is called to the fact that it was necessary to allow you a 3.4-cent per gallon discount to reach your top price. Your purchases up to July 15, 1936, were priced at 22 cents tank-wagon with a net of 12.60 cents. On July 15, 1936. the pricing was changed to 20 cents tank-wagon with a net to you of 11 cents, which pricing prevailed until October 21, 1936. This change in pricing was a clerical error wherein the tank-wagon market on another grade of aviation gasoline was applied instead of the grade which we were selling you. In other words our pricing since July 15, 1936, has not been in accordance with the subject contract. To correct these errors, we are attaching an invoice for the undercharge on each incorrect one rendered, representing a total additional charge of $941.59 and will appreciate their being approved for payment. We are extremely sorry that this has occurred but it was just one of those human things that bob up occasionally in spite of our having, as we thought, adopted every safeguard to prevent it. Thanking you in advance for your cooperation in correcting the error, we are, Yours truly, Re Cont. W 535 AC 8868. GENERAL ACCOUNTING OFFICE, STANDARD OIL Co. (KENTUCKY), (Signed) By L. S. CORBIN. [First endorsement] WAR DEPARTMENT, AIR CORPS, MATÉRIEL DIVISION, Wright Field, Dayton, Ohio, March 18, 1957. Washington, D. C. (Through Finance Officer, Fifth Corps Area, and Chief of Finance): 1. The claim of Standard Oil Co., Inc., in Kentucky, as set forth in the company's letter of November 25, 1936, pertains to item 1 (a) of contract W 535 AC 8868, which provided for delivery of 48,000 gallons of grade 92 aircraft-engine fuel |