B-119991, APR. 3, 1958

B-119991, APR. 3, 1958

TO STATES STEAMSHIP COMPANY:

FURTHER REFERENCE IS MADE TO YOUR ATTORNEY'S BRIEF AND REQUEST FOR RECONSIDERATION CONCERNING CERTAIN DISALLOWANCES BY OUR CLAIMS DIVISION OF REFUND OF ALLEGED EXCESS CHARGES FOR STEVEDORING PERFORMED BY THE ARMY IN JAPANESE AND KOREAN PORTS WITH RESPECT TO SHIPMENTS CARRIED BY THE STATES STEAMSHIP COMPANY AND ITS SUBSIDIARY, PACIFIC-ATLANTIC STEAMSHIP COMPANY, UNDER SPACE-CHARTER AGREEMENTS. SUCH REQUEST FOR RECONSIDERATION ARISES FROM THE FACT THAT ON JANUARY 14, 1957, THE CLAIMS DIVISION OF THIS OFFICE ALLOWED TO EACH OF THE ABOVE CLAIMANTS REFUNDS REPRESENTING THE DIFFERENCE BETWEEN $1.06 AND $0.35 STEVEDORING CHARGE PER TON FOR DISCHARGE OF BERTH- TERM SHIPMENTS IN JAPAN AND KOREA SUBSEQUENT TO AUGUST 1, 1947, BUT DISALLOWED REFUNDS FOR SUCH DIFFERENCES ON DISCHARGE OF SPACE-CHARTER SHIPMENTS IN THOSE PORTS FOR THE ENTIRE PERIOD, AND ON ALL BERTH-TERM SHIPMENTS DISCHARGED PRIOR TO AUGUST 1, 1947. CLAIMS FOR REFUNDS ON BERTH -TERM CARGOES DISCHARGED PRIOR TO AUGUST 1, 1947, WERE DISALLOWED FOR THE REASON THAT SINCE THE DISCHARGE RATE ON SUCH SHIPMENTS WAS NOT REDUCED FROM $1.06 TO $0.35 PER TON UNTIL AUGUST 1, 1947, THERE WAS NO AUTHORITY FOR REFUND ON ANY PART OF THE COLLECTIONS EFFECTED ON SHIPMENTS DISCHARGED PRIOR TO THAT DATE. LIKEWISE, CLAIMS FOR REFUNDS ON SHIPMENTS DISCHARGED UNDER SPACE-CHARTER CONTRACTS WERE DISALLOWED FOR THE REASON THAT SINCE THE CLAIMANTS FAILED TO MAKE OBJECTIONS TO THE COLLECTIONS EFFECTED BY THE DEPARTMENT OF THE ARMY AT THE PRICE PER TON THEN IN EXISTENCE, AND DID NOT PURSUE THEIR REMEDY AS PROVIDED IN ARTICLES 8 (B) AND 28 OF THE SPACE- CHARTER CONTRACTS WITHIN THE LIMIT OF TIME SET FORTH THEREIN, THERE WAS NO AUTHORITY FOR REFUNDS NOW CLAIMED. YOU NOW LIMIT YOUR REQUEST FOR RECONSIDERATION TO THAT PORTION OF OUR CLAIMS DIVISION ACTION IN DENYING REFUND OF THE DIFFERENCE BETWEEN THE COLLECTIONS OF $1.06 AND 30.35 PER TON ON DISCHARGES OF SPACE-CHARTER SHIPMENTS IN JAPAN AND KOREA ON AND AFTER AUGUST 1, 1947.

ON MARCH 22, 1950, THE SECRETARY OF THE ARMY REQUESTED AN OPINION FROM THIS OFFICE CONCERNING THE CREDITS WHICH THE DEPARTMENT OF THE ARMY SHOULD TAKE FOR DISCHARGING BERTH-TERM SHIPMENTS IN JAPAN FOR THE BENEFIT OF COMMERCIAL VESSEL OPERATORS DURING THE PERIOD AUGUST 1, 1947, TO DECEMBER 31, 1948. IN RESPONSE TO THIS INQUIRY, AFTER CONSIDERING ALL OF THE BACKGROUND MATERIAL FURNISHED, WE INFORMED THE SECRETARY ON MAY 4, 1950, THAT, IN OUR OPINION, THERE WAS NO SHOWING THAT THE AMOUNT OF $1.06 PER TON WAS UNREASONABLE OR EXCESSIVE AND, IN FACT, IT WAS IN LINE WITH THE ANTICIPATED COSTS FOR DISCHARGING CARGOES REFLECTED IN THE VOYAGE ACCOUNTS FILED BY SOME OF THE SHIP OPERATORS WITH THE MARITIME COMMISSION. ACCORDINGLY, WE STATED THAT THIS OFFICE WOULD NOT BE REQUIRED TO OBJECT TO AN ADMINISTRATIVE DETERMINATION FOR SETTLEMENT AT THE RATE OF $1.06. HOWEVER, WE ADDED THAT IF SUCH RATE SHOULD BE DISPUTED BY THE SHIP OPERATORS ON THE GROUNDS THAT IT WAS IN EXCESS OF THE AMOUNT ESTIMATED AND INCLUDED IN THEIR CONTRACTS AS COSTS OF UNLOADING, AN ADJUSTMENT TO THE ACTUAL RATE USED WOULD BE PROPER UPON ESTABLISHMENT THEREOF BY COMPETENT EVIDENCE.

IN OUR LETTER DATED FEBRUARY 27, 1953, TO THE ATTORNEY GENERAL OF THE UNITED STATES, CONCERNING A COMPROMISE OFFER BY THE WATERMAN STEAMSHIP CORPORATION, IN SETTLEMENT OF THE GOVERNMENT'S CLAIM COVERING UNLOADING SERVICES FURNISHED THE DEBTOR IN CONNECTION WITH BERTH-TERM CARGOES AT FAR EAST COMMERCIAL PORTS DURING THE YEARS 1946 TO 1948, WE STATED AS FOLLOWS:

"THE OFFER IN COMPROMISE ACCEPTS THE $1.06 PER TON RATE SO ESTABLISHED FOR ALL CARGO THROUGH JULY 31, 1947; AND THE GENERAL CARGO RATE OF 35 CENTS PER TON FOR THE BALANCE OF THE PERIOD. IT CONTENDS, HOWEVER THAT AMMONIUM NITRATE SHOULD BE CONSIDERED AS GENERAL CARGO TAKING PER TON RATES OF $1.06 FROM AUGUST 1, 1947 TO SEPTEMBER 30, 1948, AND 68 CENTS FROM OCTOBER 1, 1948 TO DECEMBER 31, 1948.

"THE RECORDS OF THIS OFFICE DO NOT ESTABLISH WHETHER THE SHIPMENTS OF AMMONIUM NITRATE WERE HANDLED IN THE MANNER DESCRIBED BY WATERMAN STEAMSHIP CORPORATION, THAT IS, AT THE RATES SPECIFIED FOR AMMONIUM NITRATE FERTILIZER RATHER THAN FOR HAZARDOUS CARGO. IF THAT STATEMENT IS FOUND TO BE CORRECT, IT WOULD, IN MY OPINION OFFER SUFFICIENT JUSTIFICATION FOR APPLYING THE DISCHARGE RATE OF 35 CENTS PER TON TO SHIPMENTS OF AMMONIUM NITRATE FROM AUGUST 1, 1947, TO THE END OF THE PERIOD INVOLVED.'

A SUBSTANTIALLY SIMILAR SITUATION AROSE IN CONNECTION WITH THE LYKES BROTHERS STEAMSHIP COMPANY, WHEREIN WE RECOMMENDED TO THE ATTORNEY GENERAL ON JULY 22, 1955, THAT A LIKE OFFER IN COMPROMISE BE ACCEPTED. OUR CLAIMS DIVISION SETTLEMENT CONCERNING THAT PORTION OF YOUR CLAIM PERTAINING TO BERTH-TERM CARGOES DISCHARGED DURING THE PERIOD AUGUST 1, 1947 TO DECEMBER 28, 1948, WAS PREMISED UPON THE THEORY THAT NOTWITHSTANDING THE FACT THAT RECORDS PERTAINING TO YOUR ACTUAL CARGO DISCHARGES WERE DESTROYED ON FEBRUARY 17, 1953, SETTLEMENT OF SUCH BERTH-TERM CLAIMS SHOULD BE ON THE BASIS CONCLUDED IN THE WATERMAN CASE, SINCE IT WAS BELIEVED EQUITABLE TO TREAT ALL BERTH-TERM BILL-OF-LADING CARRIERS EQUALLY. HOWEVER, WITH RESPECT TO YOUR CLAIM IN CONNECTION WITH SHIPMENTS MOVING AS SPACE-CHARTER CARGOES, SUCH CONCLUSIONS COULD NOT BE APPLIED. IN REGARD TO THOSE CLAIMS EACH OF THE CONTRACTS PROVIDES AS FOLLOWS:

"THE CHARTERER MAY ELECT TO HANDLE ITS OWN STEVEDORING IN CONNECTION WITH LOADING OR DISCHARGING OF CARGO AT ANY PORT. IN CASES WHERE THE CHARTERER ELECTS TO DO ITS OWN STEVEDORING, THE CHARTER SHALL BE ENTITLED TO A CREDIT BASED ON A SCHEDULE OF ALLOWANCES IN ACCORDANCE WITH COMMERCIAL COSTS TO BE AGREED UPON FOR LOADING AND DISCHARGING AT THE PORTS OF CALL COVERED BY THE VOYAGES HEREUNDER, SUCH ALLOWANCES TO BE DEDUCTED FROM THE COMPENSATION DUE TO THE OWNER HEREUNDER. FAILURE TO AGREE UPON SUCH SCHEDULE OF COMPENSATION SHALL BE DEEMED TO BE A DISAGREEMENT AS TO A QUESTION OF FACT WHICH SHALL BE DISPOSED OF IN ACCORDANCE WITH ARTICLE 28 (DISPUTES).'

AS YOU KNOW, THE ARMY EXERCISED THIS OPTION AND PERFORMED THE STEVEDORING ON BEHALF OF THE CARRIERS IN BOTH JAPAN AND KOREA FOR BOTH BERTH-TERM AND SPACE-CHARTER CARGOES ALIKE, CHARGING THE CARRIERS' ACCOUNTS AT THE RATE OF $1.06 PER TON, WHICH RATE, AS STATED ABOVE, WAS CONCEDED TO BE NOT UNREASONABLE AND WHICH, UNTIL A FEW YEARS LATER, WAS NEVER CONTESTED BY THE ABOVE CARRIERS AS BEING EXCESSIVE. IN FACT, THROUGHOUT THE CONTRACT PERIOD THE INVOICES SUBMITTED BY THE STATES STEAMSHIP COMPANY CONSISTENTLY CERTIFIED AS TO THE CORRECTNESS OF THE $1.06 STEVEDORING CHARGE TO BE DEDUCTED FROM ITS TRANSPORTATION BILL. FURTHERMORE, IT IS OBSERVED THAT ON OCTOBER 18, 1948, STATES STEAMSHIP COMPANY ADDRESSED A COMMUNICATION TO THE FINANCE OFFICER, TRANSPORTATION DIVISION, U.S. ARMY, COMPLAINING OVER AN ERRONEOUS DEDUCTION OF $3.69 PER TON FOR STEVEDORING CHARGES, IN THE FOLLOWING LANGUAGE:

"KINDLY LET US HAVE YOUR CHECK IN THE AMOUNT OF $9,327.11 COVERING THE DIFFERENCE BETWEEN THE AMOUNT DEDUCTED AND THE CORRECT RATE OF $1.06PER TON.'

THUS, THERE WOULD APPEAR TO HAVE BEEN NO QUESTION AS TO THE CORRECTNESS OR FAIRNESS OF THE RATE SO EMPLOYED, AND THE RECORD CLEARLY INDICATES THAT THE CARRIERS ACQUIESCED IN SUCH RATE.

IN VIEW OF THIS SITUATION, WE ARE CONSTRAINED TO THE VIEW THAT SINCE THERE WAS NO OBJECTION TO THE DEDUCTIONS MADE BY THE ARMY IN THE AMOUNT OF $1.06 PER TON FROM THE INVOICES FOR FREIGHT AS THEY WERE PRESENTED, AND DUE TO THE FURTHER FACT THAT THE CLAIMANTS MADE NO DEFINITE DEMAND FOR AN ADJUSTMENT OF THE SPACE-CHARTER RATE, OUR CLAIMS DIVISION WAS CORRECT IN ITS CONCLUSION THAT A FAILURE TO RESORT TO THE "DISPUTES" CLAUSE IN THE CONTRACT PRECLUDES SUCH AN ADJUSTMENT AT THIS LATE DATE. THE PERTINENT CONTRACT PROVISION IS CLEAR AND UNAMBIGUOUS. IT IS BINDING ON THE PARTIES TO THE CONTRACTS, AND NO OFFICER OR AGENT OF THE GOVERNMENT WOULD BE JUSTIFIED IN DISREGARDING IT. SOLELY ON THE BASIS OF THE PROCEDURE SPECIFIED IN THOSE CONTRACTS COULD THE STEVEDORING CHARGE HAVE BEEN REDETERMINED, AND BY FAILURE OF THE CONTRACTORS TO PURSUE THE REMEDIES AS PROVIDED BY THE AGREEMENTS THEY FORFEITED THEIR LEGAL RIGHT TO THE ADJUSTED RATES NOW CLAIMED.

IT IS A WELL ESTABLISHED RULE THAT WHERE A CONTRACT PROVIDES A SPECIFIC PROCEDURE FOR ADJUSTMENT OF THE CONTRACT PRICE, BUT THE CONTRACTOR FAILS TO PURSUE AND EXHAUST THE PROCEDURE SO PROVIDED, SUCH FAILURE OPERATES AS AN ESTOPPEL AGAINST THE CONTRACTOR WITH RESPECT TO ANY CLAIMS FOR AN AMOUNT IN ADDITION TO THE FIXED CONTRACT PRICE WHICH MIGHT HAVE BEEN MADE AND ADJUDICATED UNDER THE TERMS OF THE CONTRACT. SEE UNITED STATES V. JOSEPH A. HOLPUCH CO., 328 U.S. 234, WHERE THE CONTRACTOR HAD CLAIMED PAYMENT OF CERTAIN INCREASED COSTS, BUT WAS DENIED RELIEF FOR HAVING FAILED TO PURSUE THE PROCEDURES PRESCRIBED FOR RELIEF AS AGREED UPON AND EXPRESSLY SET FORTH IN THE CONTRACT THERE UNDER CONSIDERATION. ALSO SEE UNITED STATES V. CALLAHAN-WALKER CONSTRUCTION COMPANY, 317 U.S. 56; UNITED STATES V. GLEASON, 175 U.S. 588, AND UNITED STATES V. CUNNINGHAM, 125 F.2D 28.

IN THE LIGHT OF THE FOREGOING, AND SINCE THE RECORD ESTABLISHES THAT THE CONTRACTORS FAILED TO FOLLOW THE PROCEDURES OUTLINED IN THE CONTRACT, IT MUST BE CONCLUDED THAT THERE IS NO LEGAL BASIS FOR PAYMENT OF THE AMOUNT NOW CLAIMED.