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Inter-Island Transport Line Inc. v. Government of Virgin Islands

argued: April 28, 1976.

INTER-ISLAND TRANSPORT LINE, INC.
v.
GOVERNMENT OF THE VIRGIN ISLANDS, APPELLANT



Appeal from the District Court of the Virgin Islands Division of St. Thomas and St. John D.C. Civil No. 463-1970.

Van Dusen, Adams and Rosenn, Circuit Judges.

Author: Rosenn

ROSENN, Circuit Judge

A perennial water shortage presents the Virgin Islands with a unique version of a problem which is endemic to governmental bodies today - lack of liquidity. The present case reflects the efforts of the Virgin Islands Government to alleviate its water problem by obtaining the precious liquid from Puerto Rico. Plaintiff Inter-Island Transport Line Co. ("Inter-Island") hauled water for the Government over a period of more than a year. It filed suit in the United States District Court for the District of the Virgin Islands to recover payments allegedly due both under its contract with the Government and for water delivered after the expiration of the contract period, totalling $81,121.56. The district court entered judgment in this amount*fn1 against the Government and dismissed the Government's two counterclaims against Inter-Island. The Government appeals from the judgment for the post-contract period only, a sum of $61,126.98, and from the dismissal of its second counterclaim for all the payments previously made to Inter-Island. We affirm.

I.

The facts as found by the district court are straightforward. The Government, in May 1967, contracted with West Indies Transport Company ("West Indies") to haul water for a year, which contract was renewed in 1968 and 1969. The last contract was executed on June 25, 1969, and was assigned to Inter-Island, one of West Indies' principals. It called for minimum governmental purchases of 30,000 tons of water per month.

After Inter-Island's contract expired on April 30, 1970, it continued to deliver water to the Government for about two and a half months, and the Government continued to accept delivery. Nonetheless, the Government refused to pay for the last month's deliveries, whereupon Inter-Island sued for a sum of $61,126.98. The court entered judgment in that amount for Inter-Island, and the Government appeals.

The Government also appeals from the dismissal of its counterclaim for $2,092,473.92 plus interest, representing the entire amount of its payments to Inter-Island over 1969 and 1970. Alleging that the contracts and purchase orders were ineffective as contrary to law, the Government claims that it is entitled to recover the payments under a statute authorizing such suits. The district court dismissed the counterclaim, holding that the purchases were made pursuant to law.

The Government's appeal brings before this court the issue of its authority to purchase water in the absence of competitive bidding and, during the post-contract period, without approval by the Commissioner of Property and Procurement. If the Government had such authority, it may not recover funds expended under the contract and during the post-contract months; nor may it refuse to pay Inter-Island for the water which it accepted during the latter period.

II.

31 V.I.C. ยง 232 provides that the Commissioner of Property and Procurement ("Commissioner") shall "purchase or contract for all supplies, materials, equipment and contractual services, in the manner described in this chapter. . . ." Sections 235 and 236 mandate competitive bidding before making any purchase, except as provided in section 239. It is uncontroverted that the Government did not follow the competitive bidding procedures set forth in section 236 in making purchases from Inter-Island both under contract and during the post-contract period.

The possibly relevant exceptions to the bidding requirement, as contained in section 239, amended February 20, 1970, are:

(a) Supplies, material and equipment may be purchased and contractual services negotiated for, in the open market without observing the provisions of section 236 of this title provided -

(1) the Governor declares, in the public interest by Proclamation that a State of Emergency exists and specifies in such Proclamation those purchases and/or services which may be obtained without observing the provisions of said section 236;

(2) the public exigency demands such immediate action due to sudden, unexpected, and unforeseen occurrence, happening or condition; And provided further, That all requisitions pursuant to this ...


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