B-146511, JUN. 2, 1965, 44 COMP. GEN. 769

B-146511, JUN. 2, 1965, 44 COMP. GEN. 769

TRANSPORTATION - OVERCHARGES - DEDUCTION RECLAIMS - PROCEDURE ALTHOUGH A CARRIER MAY RECLAIM TRANSPORTATION OVERCHARGES COLLECTED BY DEDUCTION FROM OTHER AMOUNTS DUE PURSUANT TO 49 U.S.C. 66, UNDER WHICH PROMPT PAYMENT OF CHARGES IS AUTHORIZED, SUBJECT TO AUDIT AND COLLECTION OF OVERCHARGES BY THE GENERAL ACCOUNTING OFFICER, 31 U.S.C. 71, THE RIGHT TO DEDUCT OVERCHARGES RELIEVING THE GOVERNMENT FROM PROVING OVERPAYMENT IN REIMBURSEMENT PROCEEDINGS WHILE RESERVING TO THE CARRIER THE RIGHT TO RE- COLLECT THE RECOVERED OVERCHARGES UPON ESTABLISHING A CLEAR RIGHT TO PAYMENT, OR UPON REJECTION OF THE REPAYMENT CLAIM TO PETITION THE COURT FOR RELIEF, THE CARRIER WHICH FAILS TO ESTABLISH A CLEAR LEGAL RIGHT TO THE DEDUCTION OF AN OVERCHARGE PREDICATED ON A BILL OF LADING NOTATION LIMITING TRANSPORTATION CHARGES TO THE GOVERNMENT TO THE LOWER RATE PUBLISHED IN A STATE TARIFF, IS NOT ENTITLED TO A REFUND, EVEN THOUGH THE STATUTORY PERIOD FOR BRINGING COURT ACTION HAS EXPIRED, THE AUTHORITY IN 49 U.S.C. 22 PERMITTING TRANSPORTATION OF GOVERNMENT PROPERTY AT REDUCED RATES NOT PROVIDING FOR CONTRACTING AT RATES HIGHER THAN THOSE AVAILABLE TO THE GENERAL PUBLIC.

TO THE A. B. JAMES FREIGHT LINES, JUNE 2, 1965:

REFERENCE IS MADE TO YOUR LETTER OF MARCH 31, 1965, FILE N-482/48 UC-150 183515 TK711691 B-146511, IN EFFECT, REQUESTING THAT WE AGAIN RECONSIDER YOUR CLAIM FOR TRANSPORTATION CHARGES OF $20.70 (SHOWN ELSEWHERE AS $20.74 AND $20.76) IN ADDITION TO THOSE ALREADY PAID FOR THE TRANSPORTATION OF GOVERNMENT PROPERTY.

FOR THE TRANSPORTATION SERVICE RENDERED THE DEPARTMENT OF NAVY, PURSUANT TO GOVERNMENT BILL OF LADING N-30532294 DATED MARCH 22, 1948, YOU ORIGINALLY CLAIMED AND WERE PAID BY YOUR BILL N-482 DATED APRIL 7, 1948, THE AMOUNT OF $152.05. UPON AUDIT IN THE GENERAL ACCOUNTING OFFICE OF SUCH BILL, IT WAS CONSIDERED THAT AN OVERCHARGE OF $20.74 HAD BEEN MADE. WHEN YOU FAILED TO REFUND, PURSUANT TO OUR NOTICE OF OVERCHARGE, THE AMOUNT CONSIDERED OVERCHARGED, THE AMOUNT WAS RECOVERED IN NOVEMBER 1951 BY DEDUCTION FROM AMOUNTS OTHERWISE PAYABLE TO YOUR COMPANY, AS AUTHORIZED BY SECTION 322 OF THE TRANSPORTATION ACT OF 1940, 54 STAT. 955, 49 U.S.C. 66. BY YOUR SUPPLEMENTAL BILL OF DECEMBER 16, 1960, NINE YEARS LATER, YOU RECLAIMED THE AMOUNT DEDUCTED AND SUCH CLAIM WAS DISALLOWED BY SETTLEMENT CERTIFICATE DATED JUNE 15, 1961. ON SEVERAL OCCASIONS THEREAFTER, YOU ASKED FOR REVIEW OF THIS DISALLOWANCE AND OUR DECISIONS OF NOVEMBER 22, 1961, AND FEBRUARY 7, 1962, INFORMED YOU IN DETAIL OF THE REASONS SUCH DISALLOWANCE WAS CONSIDERED PROPER. OUR DECISION OF NOVEMBER 24, 1964, ADVISED YOU THAT YOUR LETTER OF AUGUST 14, 1964, RECEIVED HERE MORE THAN THREE YEARS AFTER THE DISALLOWANCE DATED JUNE 15, 1961, AND TWO YEARS AFTER THE DECISIONS SUSTAINING SUCH DISALLOWANCE WERE RENDERED, COULD NOT BE CONSIDERED A TIMELY REQUEST FOR REVIEW AND THAT WE DID NOT VIEW THE DECISION OF THE NINTH CIRCUIT IN UNITED STATES V. FRANCIS, 320 F.2D 191 (1963), CITED BY YOU, WOULD WARRANT ANY CHANGE IN OUR PREVIOUS DECISIONS. YOU CONTEND THAT OUR DISALLOWANCE OF YOUR CLAIM IS IMPROPER IN THAT WE MISCONSTRUED OR FAILED TO APPLY THE DECISION OF THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT IN THE CASE OF UNITED STATES V. FRANCIS, 320 F.2D 191 (1963), A PORTION OF WHICH HELD THAT CERTAIN NOTATIONS ON SEVERAL BILLS OF LADING THERE INVOLVED WHEN TAKEN TOGETHER WITH SPARSE TESTIMONY RELATIVE THERETO DID NOT ESTABLISH THAT THE PARTIES AGREED TO PAY A RATE DIFFERENT (AND HIGHER) THAN THAT OTHERWISE APPLICABLE THERETO.

SINCE YOUR LETTER EVIDENCES SOME MISUNDERSTANDING OF THE NATURE OF OUR AUDIT AND CLAIMS SETTLEMENT FUNCTIONS UNDER SECTION 322 OF THE TRANSPORTATION ACT OF 1940, 49 U.S.C. 66, WE TAKE THIS OPPORTUNITY TO EXPLAIN THEM FOR YOUR BENEFIT AND THAT OF THE TRANSPORTATION INDUSTRY GENERALLY. AS POINTED OUT BY THE SUPREME COURT IN UNITED STATES V. NEW YORK, N.H. AND H.R. CO., 355 U.S. 253, 255, 256 (1957), PRIOR TO 1940,

"* * * THE GOVERNMENT PROTECTED ITSELF AGAINST TRANSPORTATION OVERCHARGES BY NOT PAYING TRANSPORTATION BILLS UNTIL THE RESPONSIBLE GOVERNMENT OFFICERS, AND IN DOUBTFUL CASES, THE GENERAL ACCOUNTING OFFICE, FIRST AUDITED THE BILLS AND FOUND THAT THE CHARGES WERE CORRECT. WHEN CHARGES WERE QUESTIONED THE CARRIER WAS REQUIRED TO JUSTIFY THEM. ADMINISTRATIVE SETTLEMENT WAS NOT REACHED AND THE CARRIER SUED THE UNITED STATES TO RECOVER THE AMOUNT OF THE BILL, NO ONE QUESTIONS THAT IT WAS THE CARRIER'S DUTY TO SUSTAIN THE BURDEN OF PROVING THE CORRECTNESS OF THE CHARGES.'

THE COURT IN SUCH DECISION WENT ON TO POINT OUT THAT IN DIRECT RESPONSE TO A DEMAND FROM THE CARRIERS, PRINCIPALLY THE RAILROADS, THAT PROMPT PAYMENT OF TRANSPORTATION BILLS BE MADE, THE BILLS THEREAFTER TO BE REFERRED TO THE GENERAL ACCOUNTING OFFICE FOR AUDIT, IT WAS CONTEMPLATED THAT IN THE EVENT THIS AUDIT REVEALED AN OVERCHARGE, THE OVERCHARGE WOULD BE PROMPTLY REFUNDED RESERVING THE RIGHT OF THE CARRIER TO MAKE FURTHER EFFORT TO RE-COLLECT IN THE EVENT IT DID NOT BELIEVE THE PROPER CHARGES RESULTED FROM THE GOVERNMENT'S AUDIT. IT POINTS OUT THAT THE RIGHT TO DEDUCT OVERCHARGES WAS THE CARRIER'S OWN PROPOSAL FOR SECURING THE GOVERNMENT AGAINST THE BURDEN OF HAVING TO PROVE THE OVERPAYMENT IN PROCEEDINGS FOR REIMBURSEMENT.

THE COURT WENT ON TO HOLD THAT IT IS INCUMBENT UPON CARRIERS CLAIMING AMOUNTS FROM THE UNITED STATES TO ESTABLISH THEIR CLEAR RIGHT TO PAYMENT AND THIS DESPITE THE FACT THAT THE AMOUNT MAY PREVIOUSLY HAVE BEEN PAID CONDITIONALLY SUBJECT TO LATER AUDIT AND HAVE BEEN RECOVERED BY DEDUCTION UNDER 49 U.S.C. 66. IN OTHER WORDS, THE BURDEN IS UPON CLAIMANTS TO PRESENT EVIDENCE SATISFACTORILY PROVING THEIR CLAIMS AND ALL MATTERS INCIDENTAL THERETO REQUISITE TO ESTABLISH THE CLEAR LEGAL LIABILITY OF THE UNITED STATES AND THE CLAIMANT'S RIGHT TO PAYMENT. OUR OFFICE IN THE DISCHARGE OF THE DUTY IMPOSED UPON IT BY THE BUDGET AND ACCOUNTING ACT OF 1921, 31 U.S.C. 71, IS REQUIRED TO QUESTION AND RECOVER THAT PART OF A PAYMENT TO A CARRIER WHICH IT CONSIDERS REPRESENTS AN OVERCHARGE OR IS NOT SUPPORTED BY EVIDENCE ESTABLISHING A PROPER OBLIGATION OF THE UNITED STATES. ALSO, WHERE SUCH AMOUNT IS RECLAIMED, AND THERE IS SUBSTANTIAL REASON FOR CONSIDERING THAT THE GOVERNMENT IS NOT LEGALLY OBLIGATED FOR ITS PAYMENT, IT IS OUR DUTY TO REJECT THE CLAIM LEAVING THE CARRIER FREE TO PURSUE HIS REMEDY IN COURT TO ESTABLISH THE VALIDITY OF HIS DEMANDS. SEE CHARLES V. UNITED STATES, 19 CT.CL. 316 (1884); LONGWILL V. UNITED STATES, 17 CT.CL. 288 (1881). OUR DEDUCTION ACTION IN THE INSTANT CASE WAS TAKEN PURSUANT TO SUCH STATUTORY AUDIT RESPONSIBILITY AND WE DO NOT FEEL YOU HAVE SATISFACTORILY ESTABLISHED YOUR CLEAR LEGAL RIGHT TO REFUND OF THE AMOUNT COLLECTED.

THE BILL OF LADING INVOLVED IN YOUR CLAIM FOR $20.70 BEARS THE NOTATION:

"SUBJECT TO APPLICABLE TARIFF RATES LAWFULLY ON FILE WITH ICC AND/OR CRC HIGHWAY CARRIERS TARIFF NUMBER 2, AS A MAXIMUM.'

AS EXPLAINED IN OUR DECISIONS OF FEBRUARY 7, 1962, AND NOVEMBER 22, 1961, B-146511, IT IS OUR VIEW THAT BY THIS NOTATION THE APPLICABLE RATES PUBLISHED IN CALIFORNIA RAILROAD COMMISSION TARIFF NO. 2 WERE INCORPORATED BY REFERENCE AND MADE AN INTEGRAL PART OF THE CONTRACT OF CARRIAGE AS THE HIGHEST RATES THE GOVERNMENT LEGALLY COULD BE CALLED UPON TO PAY FOR THE SERVICE. CONTRACTS FOR CARRIAGE OF GOVERNMENT PROPERTY AT REDUCED RATES ARE AUTHORIZED BY 49 U.S.C. 22 AND THE LANGUAGE OF THE NOTATION SEEMS CLEARLY TO LIMIT THE CHARGES PAYABLE TO THOSE IN CALIFORNIA RAILROAD COMMISSION TARIFF NO. 2, WHICH YOU ALREADY HAVE BEEN PAID. A SOMEWHAT SIMILAR NOTATION ON A BILL OF LADING WAS INVOLVED IN BENTON RAPID EXPRESS, INC. V. UNITED STATES, 171 F.SUPP. 868 (1959) AND WAS GIVEN EFFECT BY THE DECISION OF THE COURT OF CLAIMS IN THAT CASE. THE COURT IN THE FRANCIS CASE AGREED WITH THE GOVERNMENT'S CONTENTION THAT THE MERE NOTATION OF "RATE $ .68 CWT. MINIMUM WEIGHT 20,000 LBS. TRUCKLOAD" ON THE BILL OF LADING INVOLVED IN ITEMS 8 AND 8A OF FINDING II, WHICH WAS HIGHER THAN THE RATE OTHERWISE APPLICABLE, DID NOT BIND THE GOVERNMENT TO PAY THAT RATE SO THAT IT COULD BE SAID THAT ANY RATE WAS "AGREED ON.' THE COURT POINTED OUT THAT THE CARRIER-APPELLEE BY THE PROPOSITION IT ATTEMPTED TO PROMOTE "ATTEMPTS TO HAVE THIS COURT SANCTION ITS RECEIPT OF RATES HIGHER THAN EXISTING RATES FOR MOTOR CARRIERS" WHICH ATTEMPT IT REFUSED TO SANCTION. THIS IS IN ACCORD WITH THE PROVISIONS OF 49 U.S.C. 22 WHICH WHILE PERMITTING TRANSPORTATION OF GOVERNMENT PROPERTY AT REDUCED RATES DOES NOT AUTHORIZE OFFICERS OF THE GOVERNMENT TO CONTRACT FOR TRANSPORTATION AT RATES HIGHER THAN THOSE AVAILABLE TO THE GENERAL PUBLIC. SUCH HOLDING WAS IN ACCORD WITH NUMEROUS OTHER DECISIONS OF THE COURTS. SEE, FOR EXAMPLE, UNITED STATES LINES OPERATIONS, INC. V. UNITED STATES, 99 CT.CL. 744 (1943), CERTIORARI DENIED 321 U.S. 775; UNITED STATES LINES CO. V. UNITED STATES, 223 F.SUPP. 838 (1963), AFFIRMED 324 F.2D 97; SOUTHERN PACIFIC CO. V. UNITED STATES, 60 CT.CL. 662 (1925), AFFIRMED 272 U.S. 445; ST. LOUIS SAN FRANCISCO RY. CO. V. UNITED STATES, 150 CT.CL. 610 (1960), AND MISSOURI PACIFIC R.CO. V. UNITED STATES, 71 CT.CL. 650 (1931).

PROPERLY INTERPRETED THE PORTION OF THE FRANCIS DECISION REFERRED TO DOES NOT HOLD THAT ALL NOTATIONS AS TO AGREED RATES ON BILLS OF LADING ARE A NULLITY REGARDLESS OF THE EVIDENCE AND TESTIMONY RELATIVE TO FACTUAL SITUATIONS UNDER WHICH SUCH NOTATIONS WERE MADE. IT MERELY HELD THAT THE PARTICULAR NOTATIONS THERE INVOLVED WHEN CONSIDERED WITH THE SPARSE TESTIMONY AS TO SUCH NOTATION DID NOT ESTABLISH THAT THE PARTIES AGREED TO PAY A HIGHER RATE THAN OTHERWISE APPLICABLE.

IN THIS, AS WELL AS OUR PRIOR DECISIONS, WE HAVE TRIED TO ANSWER ALL POINTS RAISED BY YOU AND HAVE CAREFULLY CONSIDERED ALL ASPECTS OF THE ISSUE. ALTHOUGH WE HAVE REACHED CONTRARY CONCLUSIONS TO THOSE HELD BY YOU AS REGARDS THE INTERPRETATION AND APPLICATION TO BE GIVEN TO LEGAL DECISIONS, AGREEMENTS, QUOTATIONS, AND TARIFFS INVOLVED, SUCH CONCLUSIONS HAVE ONLY BEEN REACHED AFTER CAREFUL CONSIDERATION OF ALL FACTORS, INCLUDING THOSE WHICH YOU HAVE SPECIFICALLY POINTED OUT.

ASIDE FROM THE FRANCIS CASE ISSUE, IN YOUR REQUEST FOR RECONSIDERATION OF YOUR CLAIM FOR $20.70 UNDER OUR FILE B-146511, YOU ALSO MAKE REFERENCE IN YOUR LETTER OF MARCH 31, 1965, TO VARIOUS OTHER DECISIONS OF THIS OFFICE, AND CORRESPONDENCE WHICH AROSE AT VARIOUS STAGES AND LEVELS OF THE AUDIT OF YOUR BILLS. YOU ALSO COMMENT ON SUCH DOCUMENTS AS COPIES OF TESTIMONY BEFORE CONGRESSIONAL COMMITTEES, PUBLIC LAW, COURT DECISIONS, TRAFFIC BULLETINS, AND PRIOR CORRESPONDENCE WITH THIS OFFICE AND OTHER GOVERNMENT AGENCIES. WE ARE FAMILIAR WITH THE SUBJECT MATTER OF THESE ADDITIONAL REFERENCES AND HAVE FULLY CONSIDERED MOST, IF NOT ALL OF THEM AT ONE TIME OR ANOTHER IN THE CONSIDERATION OF THE CLAIMS THAT RESULTED IN THE DECISIONS TO WHICH YOU REFER. WHILE WE UNDERSTAND THAT THE ADDITIONAL REFERENCES RELATIVE TO OUR PREVIOUS DECISIONS AND OTHER MATTERS EXPRESS DISAGREEMENT WITH THE RESULTS, WE BELIEVE YOUR PRIMARY COMPLAINT IS CONCERNED WITH THE FRANCIS CASE AND WE TRUST WE HAVE FULLY EXPLAINED OUR POSITION IN THIS REGARD. ALSO, WE TRUST THAT THE EXPLANATION ABOVE AS TO THE BACKGROUND OF OUR AUDIT AND SETTLEMENT RESPONSIBILITIES UNDER SECTION 322 OF THE TRANSPORTATION ACT OF 1940, AS SET OUT BY THE SUPREME COURT IN THE NEW HAVEN CASE, WILL LEAD YOU TO AN UNDERSTANDING OF THE ACTIONS YOU REFER TO.

WE APPRECIATE THE FACT THAT THE AMOUNTS INVOLVED FOR THE MOST PART ARE RELATIVELY SMALL AND THAT YOU MAY BE BARRED BY STATUTES OF LIMITATIONS FROM PURSUING YOUR CLAIMS IN OTHER FORUMS. HOWEVER, THE DELAY, AS IN THIS CASE, IN YOUR PRESENTING CLAIM FOR APPROXIMATELY NINE YEARS AFTER THE SUM OF $20.74 WAS COLLECTED BY DEDUCTION IN 1951 WAS CERTAINLY NOT DUE TO THE ACTION OF THE GOVERNMENT BUT TO YOUR DELAY. IN ANY EVENT, IN PASSING ON THE MERITS OF CLAIMS FILED IN OUR OFFICE, WE ARE UNDER A DUTY TO REJECT DOUBTFUL CLAIMS LEAVING THE CLAIMANT TO HIS REMEDY AT LAW. IF BECAUSE OF HIS FAILURE TO MAKE CLAIM PROMPTLY, THE STATUTORY PERIOD FOR BRINGING COURT ACTION EXPIRES, HE HAS NO ONE TO BLAME BUT HIMSELF.

YOUR PRESENT LETTER CONTAINS NO INFORMATION, EVIDENCE OR ARGUMENT WHICH YOU HAVE NOT HERETOFORE PRESENTED AND WHICH WE HAVE NOT CONSIDERED IN OUR EARLIER DECISIONS. THEREFORE, WE WOULD NOT BE WARRANTED IN MODIFYING OUR PRIOR DECISIONS.

YOUR LETTER INDICATES YOU MAY HAVE SOME MISUNDERSTANDING OF THE PROCEDURES OF THIS OFFICE AS TO THE AUDIT AND SETTLEMENT OF CARRIERS' CLAIMS AND ACCOUNTS. WHILE OUR REGULATIONS REGARDING THE PRESENTATION AND PROCESSING OF CARRIERS' BILLS AND CLAIMS FOR TRANSPORTATION SERVICE ARE PUBLISHED IN THE CODE OF FEDERAL REGULATIONS, YOU MAY SECURE FOR A NOMINAL FEE BASED ON PRINTING COSTS TITLE 5 OF THE GENERAL ACCOUNTING OFFICE MANUAL FOR GUIDANCE OF FEDERAL AGENCIES FROM THE SUPERINTENDENT OF DOCUMENTS, U.S. GOVERNMENT PRINTING OFFICE, WASHINGTON, D.C. 20402, CONCERNING SUCH PROCEDURES, WHICH CONTAINS CONSIDERABLE MATERIAL THAT MAY BE OF INTEREST AND ASSISTANCE TO YOU IN GETTING PROMPT SETTLEMENT OF YOUR BILLS.