B-135762, DEC. 28, 1960

B-135762, DEC. 28, 1960

TO CENTRAL OF GEORGIA RAILWAY COMPANY:

BY LETTER OF SEPTEMBER 2, 1960, FILE N-38369-G-A, YOU REQUEST FURTHER CONSIDERATION OF OUR DECISIONS OF SEPTEMBER 25, 1958, AND JULY 21, 1960, B -135762, IN WHICH WE SUSTAINED THE DISALLOWANCE OF YOUR CLAIM FOR ADDITIONAL FREIGHT CHARGES OF $37.76 BASED UPON FULL COMMERCIAL RATES FOR TRANSPORTING A SHIPMENT OF LUMBER PROCURED UNDER LEND-LEASE REQUISITION NO. UK-BSC-21126 FROM MEMPHIS, TENNESSEE, TO SAVANNAH, GEORGIA, UNDER GOVERNMENT BILL OF LADING NO. DA-TPS-703040, ISSUED JUNE 8, 1945.

FOR THIS SERVICE YOU ORIGINALLY CLAIMED AND WERE PAID FREIGHT CHARGES COMPUTED ON THE NET LAND-GRANT RATE, BUT SUBSEQUENTLY CLAIMED ADDITIONAL CHARGES FIRST ON THE GROUNDS THAT SINCE THE SHIPMENT DID NOT MOVE UNTIL AFTER V-J DAY THE GOVERNMENT WAS NOT ENTITLED TO DEDUCTIONS FOR LAND GRANT, AND THEN ON THE GROUNDS THAT SINCE THE SHIPMENT WAS MADE BY AND UNDER THE CONTROL OF THE FOREIGN ECONOMIC ADMINISTRATION, A CIVILIAN AGENCY OF THE GOVERNMENT, THE COMMODITY TOO, WAS STRICTLY CIVIL IN NATURE. THESE OBJECTIONS WERE DISCUSSED AND THE AUDIT ACTION SUSTAINED IN OUR DECISIONS OF SEPTEMBER 25, 1958, AND JULY 21, 1960, RESPECTIVELY.

YOUR PRESENT REQUEST FOR FURTHER CONSIDERATION OF OUR PREVIOUS DECISIONS IS BASED UPON AN ANALYSIS OF THE STATED USES OF THE COMMODITY SHIPPED AS EXPRESSED IN SECTION 5-C OF THE REQUISITION. SECTION 5-C PROVIDES AS FOLLOWS:

"C. END USE IN PERCENTAGES: THIS TABLE HAS BEEN PREPARED TO SHOW THE BREAKDOWN OF THE TOTAL ESTIMATED REQUIREMENT FOR THE PERIOD. THE PERCENTAGES MAY THEREFORE NOT BE EXACT FOR EACH END USE FOR THE QUANTITY HEREWITH REQUISITIONED.

"A. ARMY VEHICLES, CONSTRUCTION AND MAINTENANCE 54

B. M.W.T. FLEET OF VEHICLES 13

C. ESSENTIAL CIVILIAN TRANSPORT 6

D. RAILWAYS 6

E. BARRACK EQUIPMENT AND STORES 18

F. SHIPYARD PLANT AND CONSTRUCTION -

G. ESSENTIAL HOME INDUSTRIES 3

100"

IN THE SECOND PARAGRAPH OF YOUR LETTER YOU STATE:

"* * * WE FIND NOTHING IN YOUR DECISION (DATED JULY 21, 1960, B 135762) TO SHOW WHY YOU INCLUDED THE SUB-SECTION "B.M.W.T. FLEET OF VEHICLES," IN YOUR MILITARY CHARACTERIZATION. THESE CERTAINLY CANNOT BE CONSIDERED AS MILITARY, INASMUCH AS THE MILITARY VEHICLES ARE IDENTIFIED AND INCLUDED IN SUB-SECTION "A.'"

THE VEHICLES LISTED IN SUB-SECTION A WERE ALLOCATED FOR USE DIRECTLY BY THE ARMY WHILE THOSE LISTED IN SUB-SECTION B WERE INTENDED FOR USE BY THE MINISTRY OF WAR TRANSPORT. HOWEVER, AS STATED IN OUR DECISION OF JULY 21, THE MERE FACT THAT THE VEHICLES WERE PROCURED BY AN AGENCY OTHER THAN THE ARMED FORCES DOES NOT PRECLUDE A MILITARY CHARACTERIZATION, SINCE MILITARY OR NAVAL USE INCLUDES ALL PROPERTY CONSUMED BY ADJUNCTS TO THE ARMED FORCES, AS WELL AS PROPERTY UTILIZED DIRECTLY BY THE ARMED FORCES. NORTHERN PACIFIC RY. V. UNITED STATES, 330 U.S. 248, 252 AND 253. IT HAS BEEN ADMINISTRATIVELY DETERMINED THAT THE SHIPMENT WAS MILITARY, AND NO EVIDENCE HAS BEEN PRESENTED TO INDICATE THE CONTRARY.

IN THE SAME PARAGRAPH OF YOUR LETTER YOU STATED FURTHER:

"* * * NOR HAVE YOU FURNISHED EVIDENCE OF PROOF THAT "F. SHIPYARD PLANT AND CONSTRUCTION" HAD A MILITARY OR NAVAL CHARACTER. TO HAVE BEEN INTENDED FOR NAVAL USE IT WOULD HAVE BEEN DESCRIBED AS "ADMIRALTY.'"

THIS SHIPMENT CONSISTED SOLELY OF THE 4-INCH TIMBER, AND IF YOU REFER TO THE TABLE QUOTED FROM THE REQUISITION YOU WILL NOTE THAT NO PART OF THE 4- INCH TIMBER WAS ALLOCATED TO "SHIPYARD PLANT AND CONSTRUCTION.' CONSEQUENTLY, THIS OBJECTION IS IMMATERIAL TO THE PRESENT CLAIM.

ON THE SECOND PAGE OF YOUR LETTER YOU REFER TO OUR DECISIONS UNDER FILE REFERENCE B-134259, STATING THAT IN THOSE DECISIONS WE "* * * CONSIDERED THE VARIOUS AMOUNTS AND DIMENSIONS REQUISITIONED, TOGETHER WITH THE VARIOUS PERCENTAGES TO WHICH EACH SIZE WAS TO BE ALLOCATED INTO THE VARIOUS CATEGORIES OF END USE, AFTER WHICH YOU (OUR OFFICE) DECIDED THAT "THE REQUISITION CONTAINED INDEFINITE LANGUAGE WHICH DOES NOT LEND ITSELF TO PRECISE APPLICATION FOR THE PURPOSE OF DETERMINING WHAT PROPORTIONS OF THE PROPERTY COVERED THEREBY WERE FOR MILITARY OR CIVIL USE * * " " YOU APPARENTLY CONSIDER THE FACTS IN THE PRESENT CASE TO BE SIMILAR TO THOSE INVOLVED IN B-134259. HOWEVER, THE FILE REFERRED TO CONCERNED LEND-LEASE MATERIALS PROCURED UNDER REQUISITIONS WHICH, CONTRARY TO YOUR ASSERTION, DID NOT SET FORTH PROPORTIONS ALLOCATED FOR DESIGNATED AGENCIES OR USES. FURTHERMORE, IN PARAGRAPH NUMBER 4 OF OUR DECISION OF MAY 14, 1958, B- 134259, WE EXPLAINED THAT THE ALLOWANCE OF FULL COMMERCIAL CHARGES FOR THE TRANSPORTATION OF THE LEND-LEASE MATERIAL PROCURED UNDER THE REQUISITION THERE INVOLVED WAS BASED UPON AN ADMINISTRATIVE DETERMINATION OF 100 PERCENT CIVIL USE GIVEN EFFECT FOR THE REASON THAT THE REQUISITION CONTAINED INDEFINITE LANGUAGE WHICH DID NOT LEND ITSELF TO PRECISE APPLICATION FOR THE PURPOSE OF DETERMINING WHAT PROPORTIONS OF THE PROPERTY COVERED THEREBY WERE FOR MILITARY OR CIVIL USE. THERE IS NOTHING INDEFINITE ABOUT THE LANGUAGE CONTAINED IN THE PRESENT REQUISITION, WHICH SETS FORTH THE PROPORTIONS INTENDED FOR EACH USE. NEITHER IS THERE AN ADMINISTRATIVE DETERMINATION OF CIVIL CHARACTERIZATION. ON THE CONTRARY THE MATERIAL WAS DETERMINED TO BE MILITARY.

IT IS FURTHER ARGUED THAT THE REQUISITION SPECIFIES THAT THE DESIGNATED PROPORTIONS AND USES ARE ONLY ESTIMATES, THAT THE PROGRAM IS MERELY A TARGET, AND, THEREFORE, THAT OUR OFFICE IS UNABLE TO DETERMINE THE END USE OF THE COMMODITY. AS A CONSEQUENCE IT IS ALLEGED THAT OUR DECISION ,COLLIDES" WITH THE DECISION OF THE COURT OF CLAIMS IN CHICAGO, ROCK ISLAND AND PACIFIC R. V. UNITED STATES, 138 CT.CL.849, IN WHICH YOU STATE THAT THE COURT "* * * SPECIFICALLY RULED THAT NOR. PAC. V. U.S., WAS INTENDED TO MEAN THAT THE FACTS OF ULTIMATE USE ARE RETAINED AS AN ACCURATE MEASURE OF THE INTENTION.' YOU GO ON TO STATE THAT "YOU HAVE FURNISHED NO "FACTS OF END USE" TO PROVE ANY AMOUNTS OF THE VARIOUS SIZES OF THIS LUMBER WAS ACTUALLY CONSUMED FOR A MILITARY OR NAVAL PURPOSE.'

THE DECISION OF THE COURT IN THE CHICAGO, ROCK ISLAND AND PACIFIC R. CASE, HOWEVER, DID NOT CHANGE THE RULE THAT IN DETERMINING WHETHER A SHIPMENT CONSISTS OF "MILITARY OR NAVAL PROPERTY OF THE UNITED STATES MOVING FOR MILITARY OR NAVAL USE," THE CONTROLLING TEST UNDER SECTION 321 (A) OF THE TRANSPORTATION ACT OF 1940 IS THE USE INTENDED AT THE TIME THE CONSIGNMENT IS TENDERED FOR SHIPMENT. SEE UNITED STATES V. SPOKANE, PORTLAND AND SEATTLE RY., 261 F.2D 681, IN WHICH THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT STATED, ON PAGES 684 AND 685:

"IT IS A GENERAL PRINCIPLE OF TRANSPORTATION LAW THAT TARIFF RATES MUST BE DETERMINABLE AT THE TIME THE SHIPMENT IS MADE. SONDEN-GALAMBA CORP. V. UNION PACIFIC R. CO., 10 CIR., 145 F.2D 808, 812. THIS PRINCIPLE HAS BEEN GIVEN APPLICATION IN NUMEROUS CASES INVOLVING THE PRECISE LAND-GRANT RATE PROBLEM WITH WHICH WE ARE HERE CONCERNED. IT IS THEREFORE OUR OPINION THAT PROPERTY MOVES "FOR MILITARY OR NAVAL AND NOT FOR CIVIL USE," WITHIN THE MEANING OF SEC. 321 (A), IF THAT WAS THE INTENDED USE AT THE TIME THE SHIPMENT WAS MADE.

"SINCE THE ACTUAL USE TO WHICH SUCH MATERIALS ARE PUT MAY NOT BE THE SAME AS THE INTENDED USE WHEN THEY WERE SHIPPED, PROOF OF THE ONE DOES NOT TEND TO PROVE THE OTHER. IT FOLLOWS THAT THE LACK OF PROOF THAT THE PROPERTY HERE IN QUESTION WAS ACTUALLY PUT TO A MILITARY OR NAVAL USE IS IMMATERIAL, AND SHOULD NOT HAVE BEEN TAKEN INTO CONSIDERATION BY THE TRIAL COURT.'

HOWEVER, WHERE THE INTENDED USE IS NOT DEFINITELY INDICATED, AS IN THE CHICAGO, ROCK ISLAND, AND PACIFIC R. CASE, A DETERMINATION AS TO THE ULTIMATE USE MAY REQUIRE CONSIDERATION OF PERTINENT DEVELOPMENTS AT DESTINATION. FOR ITS FINAL RESULT, HOWEVER, THE COURT IN THE CHICAGO, ROCK ISLAND AND PACIFIC R. CASE RELIED ON THE DECISION IN PENNSYLVANIA R. CO. V. UNITED STATES, 129 CT.CL. 781, IN WHICH THE PROPORTIONS SET FORTH IN THE INVOLVED UNITED KINGDOM LEND-LEASE REQUISITION WERE, AS IN THE PRESENT INSTANCE, APPLIED AS A MEASURE OF THE PROPORTIONS DEVOTED TO MILITARY OR CIVIL USE FOR LAND-GRANT PURPOSES. SINCE THE PROPORTIONS INTENDED FOR MILITARY AND FOR CIVIL USES ARE CLEARLY AND DEFINITELY SET FORTH IN THE COVERING REQUISITION, THE "FACTS OF END USE" APPEAR TO BE IMMATERIAL.

AS YOUR FINAL ARGUMENT YOU STATE THAT "* * * SECTION 5-H, ASSERTS THAT THIS TIMBER WAS INTENDED TO BE DISTRIBUTED IN ITS UNPROCESSED CONDITION, AMONG VARIOUS CIVILIAN FIRMS ON BEHALF OF THE BRITISH MINISTRY OF SUPPLY MISSION, TO BE HELD AND LATER SOLD AT A PROFIT TO UNDISCLOSED CONSUMERS. THUS, AT THE LAST HANDLING INDICATED IN THE REQUISITION, THE TIMBER WAS STILL IN ITS ORIGINAL UNPROCESSED CONDITION AND IN THE HANDS OF CIVILIAN MERCHANTS WHO WERE TO RECEIVE AN ADMITTED PROFIT FOR THE COMMERCIAL HANDLING. NOTHING IN THE REQUISITION NAMES ANY CONSUMERS WHICH YOU (OUR OFFICE) CLAIM TO BE MILITARY IN NATURE.'

SECTION 5-H OF THE COVERING REQUISITION PROVIDES:

"THE TIMBER IS FOR THE MINISTRY OF SUPPLY NATIONAL STOCK WHICH IS HELD IN CUSTODY BY FIRMS ON BEHALF OF THE MINISTRY. ON A LICENSE BEING ISSUED, THE FIRM IS AUTHORIZED TO SELL THE TIMBER TO A CONSUMER AT THE FIXED PRICES LAID DOWN BY THE MINISTRY. THE FIRM THEN PAYS TO THE MINISTRY THE VALUE OF THE TIMBER LESS AN APPROVED SELLING COMMISSION.'

IN OUR DECISION TO YOU UNDER FILE B-142701, DATED JULY 22, 1960, YOUR FILES NOS. N-34111-G-A AND N-28325-G-A, CONCERNING SUBSTANTIALLY THE SAME ARGUMENT WE STATED:

"THIS PROVISION APPEARS TO PERTAIN TO THE MANNER OF DISTRIBUTING THE MATERIALS FOR ULTIMATE USE AND 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 AS APPROVED BY THE MINISTRY.' ACCORDINGLY, THIS PROVISION HAS NO EFFECT UPON THE MILITARY OR CIVIL CHARACTERIZATION OF THE PROPERTY FOR LAND-GRANT PURPOSES, AND FOR THE REASONS STATED ABOVE AND IN OUR PRIOR DECISIONS THE DISALLOWANCE OF YOUR CLAIM FOR FULL COMMERCIAL CHARGES IS AGAIN SUSTAINED. FURTHER CORRESPONDENCE ON SUCH MATTER WOULD APPEAR TO SERVE NO USEFUL PURPOSE.