B-142697, JUL. 28, 1960

B-142697, JUL. 28, 1960

TO CENTRAL OF GEORGIA RAILWAY COMPANY:

REFERENCE IS MADE TO YOUR LETTER OF APRIL 20, 1960, FILE NO. N-42348 G-A, IN WHICH YOU REQUEST A REVIEW OF THE SETTLEMENT ACTION OF OUR TRANSPORTATION DIVISION WHICH BY LETTER OF MARCH 10, 1960, DISALLOWED YOUR CLAIM FOR ADDITIONAL FREIGHT CHARGES IN THE AMOUNT OF $35.70 ON SUPPLEMENTAL BILL NO. N-42348-B-G-R-1219. YOUR CLAIM ARISES FROM SHIPMENTS MOVING UNDER GOVERNMENT BILLS OF LADING WHICH COVERED MATERIAL PURCHASED BY THE UNITED STATES TREASURY DEPARTMENT FOR EXPORT TO GREAT BRITAIN UNDER THE LEND-LEASE ACT OF MARCH 1, 1941, 55 STAT. 31, 22 U.S.C. 411. EACH BILL OF LADING CONTAINS REFERENCE TO EITHER REQUISITION NO. BSC/22899 OR REQUISITION NO. BSC/24555, WHICH WERE THE SERIAL NUMBERS ASSIGNED TO THE REQUISITIONS FOR DEFENSE ARTICLES UNDER WHICH THE LUMBER SHIPPED WAS PROCURED BY THE BRITISH MINISTRY OF SUPPLY MISSION. THE ONLY QUESTION INVOLVED IS AS TO WHAT PERCENTAGES OF THE LUMBER SHIPPED CONSISTED OF "MILITARY OR NAVAL PROPERTY OF THE UNITED STATES MOVING FOR MILITARY OR NAVAL AND NOT FOR CIVIL USE" TO WHICH, UNDER SECTION 321 (A) OF THE TRANSPORTATION ACT OF 1940, 54 STAT. 898, 954, 49 U.S.C. 1940 ED., 65, LAND-GRANT RATES ARE APPLICABLE. SETTLEMENT OF THE TRANSPORTATION CHARGES WAS MADE ON THE BASIS THAT 68.7 PERCENT OF THE PROPERTY ACQUIRED UNDER REQUISITION NO. BSC/22899 WAS FOR MILITARY USE AND THAT 40 PERCENT OF THE PROPERTY ACQUIRED UNDER REQUISITION NO. BSC/24555 WAS FOR MILITARY USE.

YOU CONTEND THAT THE PROPERTY ACQUIRED UNDER BOTH REQUISITIONS WAS MOVING FOR 100 PERCENT CIVIL USE AND THEREFORE THE FULL COMMERCIAL RATES ARE PROPERLY APPLICABLE. YOU BASE THIS CONTENTION ON THE ALLEGATION THAT "THE MATERIAL WAS DEDICATED TO THE FEDERAL ECONOMICS ADMINISTRATION WITH DISTRIBUTION THROUGH NORMAL AND ORDINARY COMMERCIAL CHANNELS WITH A PROFIT FOR THE MERCHANTS HANDLING THE SALES.'

THE FACT THAT SECTION 5-G OF REQUISITION NO. BSC/22899 AND SECTION 5I OF REQUISITION NO. BSC/24555 INDICATES THAT THE DISTRIBUTION OF THE LUMBER WAS TO BE MADE THROUGH NORMAL AND ORDINARY COMMERCIAL CHANNELS DOES NOT, OF ITSELF, INDICATE THAT THE LUMBER WAS NECESSARILY FOR CIVIL USE. THE MANNER OF DISTRIBUTING THE MATERIALS TO THE CONSUMERS AS INDICATED MERELY DESCRIBES THE MEANS SELECTED BY THE MINISTRY OF SUPPLY TO EFFECT THE USE OF THE PROPERTY FOR THE MILITARY NEEDS SHOWN ELSEWHERE IN THE REQUISITIONS. THE FIRMS HOLDING CUSTODY OF THE PROPERTY WERE SIMPLY ACTING AS AGENTS FOR THE MINISTRY AND, FOR SUCH SERVICES, WERE TO RECEIVE COMPENSATION BY THE MINISTRY.

THE FOREIGN ECONOMIC ADMINISTRATION TO WHICH YOU APPARENTLY REFER, WAS ESTABLISHED WITHIN THE OFFICE OF EMERGENCY MANAGEMENT BY EXECUTIVE ORDER TO UNIFY AND CONSOLIDATE GOVERNMENTAL ACTIVITIES RELATING TO FOREIGN ECONOMIC AFFAIRS. E.O. 9380, SEPTEMBER 25, 1943, 8 F.R. 13081. THIS ORDER TRANSFERRED TO AND CONSOLIDATED IN THE ADMINISTRATION ALL THE FUNCTIONS, POWERS AND DUTIES OF THE OFFICE OF LEND-LEASE ADMINISTRATOR. IT SEEMS OBVIOUS THAT THE FOREIGN ECONOMIC ADMINISTRATION HANDLED BOTH MILITARY AND CIVIL LEND-LEASE PROPERTY AND THAT THE MERE REFERENCE THERETO IN THE REQUISITION DOES NOT ESTABLISH THAT THE MATERIALS HERE COVERED WERE NOT FOR MILITARY USE AS OTHERWISE SHOWN IN THE REQUISITIONS.

THE EFFECT OF CIVILIAN AGENCIES MAKING THE PURCHASES WAS SPECIFICALLY CONSIDERED BY THE UNITED STATES SUPREME COURT IN NORTHERN PACIFIC RAILWAY CO. V. UNITED STATES, 330 U.S. 248, 252 AND 253, WHERE THE COURT STATED:

"THERE IS A SUGGESTION THAT SINCE THE SHIPMENT OF ASPHALT WAS TO A CIVILIAN AGENCY, THE CIVIL AERONAUTICS AUTHORITY, IT WAS NOT "MILITARY OR NAVAL" PROPERTY. THE THEORY IS THAT "MILITARY OR NAVAL" PROPERTY MEANS ONLY PROPERTY SHIPPED BY OR UNDER CONTROL OF THE ARMY OR NAVY.

"WE SEE NO MERIT IN THAT SUGGESTION. * * * THE FACT THAT THE WAR OR NAVY DEPARTMENT DOES THE PROCUREMENT MIGHT, OF COURSE, CARRY SPECIAL WEIGHT OR BE DECISIVE IN CLOSE CASES. BUT MATERIAL IS OFTEN HANDLED BY AGENCIES OTHER THAN THE WAR AND NAVY DEPARTMENTS * * *.AS WE HAVE HELD IN UNITED STATES V. POWELL, SUPRA, (330 U.S. 238) NOT EVERY PURCHASE WHICH FURTHERS THE NATIONAL DEFENSE IS FOR "MILITARY OR NAVAL" USE WITHIN THE MEANING OF 321 (A). BUT PROPERTY MAY FALL WITHIN THAT CATEGORY THOUGH IT IS PROCURED BY DEPARTMENTS OTHER THAN WAR OR NAVY.'

IT IS THE USE INTENDED AT THE TIME THE SHIPMENTS MOVED THAT IS THE CONTROLLING FACTOR IN DETERMINING THE MILITARY OR CIVIL CHARACTERIZATION OF THE COMMODITY. SEE UNITED STATES V. SPOKANE, PORTLAND AND SEATTLE RY.CO., 261 F.2D 681, 684, 685.

ACCORDINGLY AND SINCE THE FREIGHT CHARGES AS NOW PAID ARE CONSISTENT WITH THE INTENDED USE INDICATED ON THE REQUISITIONS UNDER WHICH THE MATERIALS SHIPPED WERE PROCURED, THE SETTLEMENT ACTION OF OUR TRANSPORTATION DIVISION APPEARS PROPER AND THE DISALLOWANCE IS SUSTAINED.