B-198633 L/M, MAY 30, 1980

B-198633 L/M, MAY 30, 1980

ATTENTION: DAVID M. COHEN, DIRECTOR COMMERCIAL LITIGATION BRANCH SUBJECT: COAST COUNTIES EXPRESS, INC. V. UNITED STATES, COURT OF CLAIMS NO. 175- 80C. YOUR REFERENCE: AD:DMC:JCRANNEY:MCW 154-175-80C YOUR LETTER OF APRIL 23, 1980

ALICE DANIEL, DEPARTMENT OF JUSTICE:

YOU ASK FOR A LITIGATION REPORT CONCERNING THE ABOVE REFERENCED CASE IN WHICH THE PLAINTIFF, COAST COUNTIES EXPRESS, INC. (COAST), SEEKS JUDGMENT OF $17,021.42, AN AMOUNT PLAINTIFF ALLEGES WAS WRONGFULLY SET OFF AGAINST ITS REVENUES TO SATISFY THE GOVERNMENT'S LOSS AND DAMAGE CLAIM. THIS OFFICE WAS INVOLVED ONLY THROUGH THE ISSUANCE OF A SETTLEMENT CERTIFICATE ON SEPTEMBER 12, 1978, BY OUR CLAIMS DIVISION, WHICH DENIED THE CLAIM OF HOME INSURANCE COMPANY (HOME), THE APPARENT SUBROGEE OF COAST (AT THAT TIME) FOR THE RETURN OF THE $17,021.42, SET OFF BY THE AIR FORCE FOR DAMAGES TO PROPERTY THAT WAS TRANSPORTED ON GOVERNMENT BILL OF LADING (GBL) K-5962759.

THE SETTLEMENT CERTIFICATE RECITES VARIOUS FACTS. THE AIR FORCE ISSUED THE GBL TO COAST ON NOVEMBER 22, 1974, TO TRANSPORT THREE SEARCHLIGHTS WEIGHING 165 POUNDS. THE NOTATION ON THE GBL WAS "ELECTRICAL INSTRUMENTS, NOI RELEASED VALUATION NOT EXCEEDING $1.50 PER POUND N61700." THE SEARCHLIGHTS ARRIVED AT DESTINATION IN DAMAGED CONDITION. THE AIR FORCE DETERMINED THAT THE TOTAL COST TO REPAIR THE SEARCHLIGHTS WAS $17,268.92 AND AFTER FIRST ATTEMPTING TO SETTLE WITH COAST, IT SET OFF THE DAMAGES FROM REVENUES DUE THE CARRIER. HOME SUBSEQUENTLY REIMBURSED COAST $17,026.92 AND FILED A CLAIM, AS SUBROGEE, AGAINST THE UNITED STATES WITH OUR CLAIMS DIVISION. HOME CONTENDED THAT THE GOVERNMENT ISSUED THE GBL WITH THE NOTATION OF A RELEASED VALUATION NOT EXCEEDING $1.50 PER POUND AND THAT THE INSURED'S TOTAL LIABILITY WAS LIMITED TO $247.50, REPRESENTING 165 POUNDS AT $1.50 PER POUND AND COAST WAS ENTITLED TO A REFUND OF $17,021.42, REPRESENTING THE AMOUNT SET OFF AGAINST COAST IN EXCESS OF THE RELEASED VALUATION STATED ON THE GBL.

IT APPEARS THAT HOME'S CLAIM WAS SETTLED ON THE BASIS OF AN AIR FORCE REPORT WHICH REPRESENTED THAT THE SHIPMENT WAS GOVERNED BY WESTERN MOTOR TARIFF BUREAU, INC., U. S. GOVERNMENT QUOTATION NO. 1, ICC (SECTION 22) NO. 1, AND NATIONAL MOTOR FREIGHT CLASSIFICATION (NMFC) ICC NMF 100. OUR CLAIMS DIVISION DID NOT VERIFY THE VALIDITY OF THIS TECHNICAL INFORMATION. ALTHOUGH THE AIR FORCE IS APPARENTLY CORRECT IN ITS OPINION THAT ITEM 61700 OF THE NMFC DID NOT CONTAIN A RELEASED VALUATION RATING ON ELECTRICAL INSTRUMENTS, NOI, THE GENERAL SERVICES ADMINISTRATION (GSA) ADVISED US BY LETTER OF APRIL 22, 1980, THAT IT WOULD REVIEW THE TRANSACTION TO IDENTIFY ANY APPLICABLE TARIFFS AND DETERMINE WHETHER THEY CONTAINED ANY RELEASED VALUATION PROVISIONS. WE HAVE NOT RECEIVED GSA'S REPORT, AND IN VIEW OF THE DEADLINE SET FOR OUR RESPONSE (JUNE 5, 1980), OUR LEGAL OPINION IS BASED ON THE ASSUMPTION THAT THE CARRIER OFFERED NO RELEASED VALUE RATES TO THE GOVERNMENT FOR APPLICATION TO THE SHIPMENT IN CONTROVERSY.

THE INTERSTATE COMMERCE ACT, 49 U.S.C., SECTION 20(11), (1976) PROVIDES, AMONG OTHER THINGS, THAT A COMMON CARRIER RECEIVING PROPERTY FOR TRANSPORTATION IN INTERSTATE OR FOREIGN COMMERCE SHALL ISSUE A PROPER BILL OF LADING FOR EACH SHIPMENT OF GOODS DELIVERED TO THE CARRIER FOR TRANSPORTATION. 52 COMP.GEN. 211 (1972) AND CASES CITED THEREIN.

THUS THE DUTY FOR ISSUING AN APPROPRIATE BILL OF LADING IS THE RESPONSIBILITY OF THE CARRIER AND NOT THE SHIPPER. SEE UNITED STATES V. SOUTHERN PACIFIC CO., 325 I.C.C. 200, 209 (1965). BECAUSE OF THIS STATUTORY OBLIGATION THE FACT THAT IT IS NOT UNCOMMON FOR SHIPPERS TO PREPARE BILLS OF LADING FOR EXECUTION BY CARRIERS' AGENTS DOES NOT RELIEVE THE CARRIERS OF THEIR DUTY TO ENSURE THAT THE BILL OF LADING PREPARED BY THE SHIPPER IS CORRECT IN ALL RESPECTS. THE INTERSTATE COMMERCE COMMISSION HAS REPEATEDLY FOUND THAT AN OBLIGATION LAWFULLY RESTS ON THE CARRIERS' AGENTS TO REFRAIN FROM EXECUTING BILLS OF LADING THAT CANNOT LAWFULLY BE COMPLIED WITH OR WHICH CONTAIN CONFLICTING OR ERRONEOUS ENTRIES. 52 COMP.GEN., SUPRA, P. 213, AND CASES CITED THEREIN. ON THIS BASIS, IT IS OUR OPINION THAT SINCE COAST APPARENTLY DID NOT OFFER ANY RELEASED VALUE RATES FOR APPLICATION TO THIS SHIPMENT, IT COULD NOT LIMIT ITS LIABILITY BY AN ASSERTION THAT THE RELEASED VALUE WAS PLACED ON THE GBL BY A GOVERNMENT AGENT.

FURTHERMORE, IT IS WELL SETTLED LAW THAT A CARRIER CAN LAWFULLY LIMIT ITS LIABILITY TO AN AMOUNT LESS THAN THE ACTUAL LOSS SUSTAINED, ONLY BY GRANTING ITS CUSTOMERS A FAIR OPPORTUNITY TO CHOOSE BETWEEN A HIGHER OR LOWER LIABILITY BY PAYING A CORRESPONDINGLY GREATER OR LESSER CHARGE. NEW YORK, NEW HAVEN & HARTFORD R.R. V. NOTHNAGLE, 346 U.S. 128, 134 (1953); UNION PACIFIC R.R. V. BURKE, 255 U.S. 317 (1921); 53 COMP.GEN. 747 (1974). THE DECISIONS IN THIS AREA ARE BASED ON THE PREMISE THAT THE SHIPPER SHOULD RECEIVE CONSIDERATION IN THE FORM OF A LOWER RATE FOR THE CORRESPONDINGLY GREATER RISK OF LOSS THAT HE MUST BEAR. HERE THE PARTIES RECEIVED ONE SPECIFIC RATE AND THE GOVERNMENT WAS ENTITLED TO DEDUCT THE FULL AMOUNT OF THE DAMAGES TO THE SHIPMENT. SEE 53 COMP.GEN., SUPRA.

FINALLY, WE POINT OUT THAT IN MORE RECENT CASES, SEE TRUE TRANSPORT, INC., B-190739, MARCH 30, 1978, YOUR REFERENCE AD:DMC:JCRANNEY 154-229 79C, AND BAGGETT TRANSPORTATION COMPANY, B-195482, OCTOBER 16, 1979, YOUR REFERENCE AD:DMC:JCRANNEY 154-138-80C, WE HAVE FOUND THAT NOTATIONS PRESUMABLY MADE BY THE SHIPPER ON THE GBL ARE NOT NECESSARILY DETERMINATIVE OF THE GOVERNMENT'S LEGAL OBLIGATIONS WHEN EXAMINING THE PROPRIETY OF PAYMENTS MADE ON THE CARRIER'S BILLS.

WE NOTE THAT A REVIEW OF OUR CLAIMS DIVISION'S FILES REVEALS NO OUTSTANDING CLAIMS IN THIS OFFICE WHICH MIGHT FORM THE BASIS OF A LEGAL DEFENSE OR COUNTERCLAIM AGAINST COAST. COPIES OF PERTINENT DOCUMENTS FROM OUR FILE ARE ENCLOSED. IF WE CAN BE OF ANY FURTHER ASSISTANCE PLEASE LET US KNOW. MICHAEL GOLDEN IS HANDLING THE CASE FOR OUR OFFICE AND CAN BE REACHED ON (202) 275-5881.