A-2432, JULY 25, 1924, 4 COMP. GEN. 108

A-2432: Jul 25, 1924

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CONTRACTS WHEN PURCHASES ARE MADE BY THE UNITED STATES UNDER A "C.I.F.'. TITLE TO THE THING PURCHASED PASSES TO THE GOVERNMENT WHEN THE ARTICLES OR THINGS PURCHASED ARE PLACED ON BOARD THE VESSEL AND THE VENDOR DELIVERS TO THE GOVERNMENT A BILL OF LADING THEREFOR. ARE ASSUMED BY THE UNITED STATES. WHICH DISALLOWANCE WAS HERETOFORE SUSTAINED BY THIS OFFICE ON REVIEW BY DECISIONS OF MARCH 13. - EMPLOYED IN THE ORDER UNDER WHICH THE PURCHASE OF THE COAL WAS MADE. THE COMPANY WAS AUTHORIZED TO MAKE IMMEDIATE DELIVERY OF APPROXIMATELY 8. THE COAL WAS PLACED ABOARD THE STEAMSHIP OSTERIC AT NORFOLK. THERE WERE FOUND TO BE ON BOARD ONLY 9. IT WAS FOR PAYMENT FOR THIS DIFFERENCE IN TONNAGE THAT THE CLAIM WAS ORIGINALLY MADE AND DISALLOWED.

A-2432, JULY 25, 1924, 4 COMP. GEN. 108

"C.I.F.' CONTRACTS WHEN PURCHASES ARE MADE BY THE UNITED STATES UNDER A "C.I.F.' CONTRACT, TITLE TO THE THING PURCHASED PASSES TO THE GOVERNMENT WHEN THE ARTICLES OR THINGS PURCHASED ARE PLACED ON BOARD THE VESSEL AND THE VENDOR DELIVERS TO THE GOVERNMENT A BILL OF LADING THEREFOR, TOGETHER WITH INSURANCE POLICIES COVERING THE VALUE OF THE SHIPMENT, AND RECEIPTS FOR FREIGHT, AND ALL FURTHER RISKS, LIABILITY, ETC., ARE ASSUMED BY THE UNITED STATES, INCLUDING ANY SHORTAGE IN WEIGHT DISCOVERED AT DESTINATION.

DECISION BY COMPTROLLER GENERAL MCCARL, JULY 25, 1924:

THE EMMONS COAL MINING CO., PHILADELPHIA, PA., BY LETTER DATED JUNE 9, 1924, REQUESTED FURTHER CONSIDERATION OF ITS CLAIM FOR $7,264.10, THE VALUE OF 427 425/2000 TONS OF COAL DISALLOWED BY SETTLEMENT NO. W 781460, DATED FEBRUARY 7, 1923, WHICH DISALLOWANCE WAS HERETOFORE SUSTAINED BY THIS OFFICE ON REVIEW BY DECISIONS OF MARCH 13, 1923, 19 MS. COMP. GEN. 617, OCTOBER 3, 1923, 26 ID. 80, AND APRIL 23, 1924, 32 ID. 1018. THE COMPANY URGES AS A BASIS FOR ITS REQUEST THE INTERPRETATION THAT SHOULD BE PLACED ON THE TERM C.I.F.--- MEANING COST, INSURANCE, AND FREIGHT--- EMPLOYED IN THE ORDER UNDER WHICH THE PURCHASE OF THE COAL WAS MADE.

BY PURCHASE ORDER NO. 2-21-11323 OF MARCH 16, 1921, THE COMPANY WAS AUTHORIZED TO MAKE IMMEDIATE DELIVERY OF APPROXIMATELY 8,000 NET TONS (ONE CARGO) BITUMINOUS RUN-OF-MINE COAL, POOL 1, C.I.F. MANILA, P.I., AT $17 PER TON, INSPECTION AT ORIGIN BEING WAIVED WITH THE UNDERSTANDING THAT THE SHIPPERS GUARANTEE THE COAL TO BE OF THE KIND AND QUALITY CALLED FOR AND HAD RECEIVED THE USUAL MINE INSPECTION.

THE COAL WAS PLACED ABOARD THE STEAMSHIP OSTERIC AT NORFOLK, VA., IN APRIL, 1921, AND ACCORDING TO THE EVIDENCE THE SHIPMENT CONTAINED A TOTAL OF 9,559.8 TONS OF 2,000 POUNDS, AS SHOWN BY RAILROAD WEIGHTS, WHEN LOADED ON THE VESSEL, BUT WHEN THE VESSEL COMPLETED ITS UNLOADING AT MANILA ON JUNE 6, 1921, THERE WERE FOUND TO BE ON BOARD ONLY 9,132 1175/2000 NET TONS, OR A SHORTAGE OF 427 425/2000 TONS, AS DETERMINED BY THE BASKET SYSTEM OF WEIGHING USED AT THAT PORT. IT WAS FOR PAYMENT FOR THIS DIFFERENCE IN TONNAGE THAT THE CLAIM WAS ORIGINALLY MADE AND DISALLOWED.

THE MATTER AS HERETOFORE PRESENTED WAS ON THE QUESTION OF THE VARIATION IN WEIGHTS AND WAS CONSIDERED ON THE VIEW THAT THE TERM "C.I.F., " WHILE NOT MEANING THE SAME AS THE TERM "F.0.B., " AS USED IN CONTRACTS OR PURCHASE ORDERS, WAS SYNONYMOUS WITH THAT TERM IN SO FAR AS DELIVERY WAS CONCERNED, AND ACCORDING TO THAT VIEW TITLE TO THE COAL DID NOT PASS TO THE UNITED STATES UNTIL DELIVERY AT MANILA, AND THEREFORE THE VENDOR WAS RESPONSIBLE FOR ANY SHORTAGE EXISTING IN THE CARGO AS FOUND WHEN THE VESSEL WAS UNLOADED AT DESTINATION.

THE RIGHT OF THE PARTIES TO THE TRANSACTION BEING DEPENDENT UPON A CORRECT INTERPRETATION AND APPLICATION OF THE STIPULATION "C.I.F., " AS USED IN THE PURCHASE ORDER, SOME OF THE CASES THAT HAVE BEEN ADJUDICATED BY THE COURTS WHEREIN SIMILAR TRANSACTIONS WERE INVOLVED AND IN WHICH THE COURT FOUND IT NECESSARY TO DEFINE THE MEANING OF C.I.F. AS USED IN CONTRACTS OF PURCHASE WILL HERE BE REFERRED TO.

IN THE CASE OF THAMES AND MERSEY MARINE INSURANCE COMPANY, LTD., V. UNITED STATES, 237 U.S. 19, WHERE THE QUESTION OF TAX ON MARINE INSURANCE ON EXPORTS WAS DECIDED, MR. JUSTICE HUGHES IN DELIVERING THE OPINION OF THE COURT SAID:

THE REQUIREMENTS OF EXPORTATION ARE REFLECTED IN THE FAMILIAR "C.I.F.' CONTRACT (THAT IS, AT A PRICE TO COVER COST, INSURANCE, AND FREIGHT), WHICH HAS "ITS RECOGNIZED LEGAL INCIDENTS, ONE OF WHICH IS THAT THE SHIPPER FULFILLS HIS OBLIGATION WHEN HE HAS PUT THE CARGO ON BOARD AND FORWARDED TO THE PURCHASER A BILL OF LADING AND POLICY OF INSURANCE WITH A CREDIT NOTE FOR THE FREIGHT, AS EXPLAINED BY LORD BLACKBURN IN IRELAND V. LIVINGSTON" (L.R. 5 H.L. 395, 406). STROMS BRUKS AKTIE BOLAG V. HUTCHISON (1905) A.C. 515, 528. SEE ALSO MEE V. MCNIDER, 109 N.Y. 500.

IN KLIPSTEIN AND CO. V. DILSIZIAN, 273 FED. REP. 473, THE COURT SAID, RELATIVE TO THE DUTIES OF THE SELLER UNDER CONTRACTS OF THIS CHARACTER, THAT---

THE C.I.F. CONTRACT IS AN EXPRESSION WHICH INDICATES THAT THE PRICE FIXED COVERS THE COST OF THE GOODS AND INSURANCE AND FREIGHT ON THEM TO THE PLACE OF DESTINATION. UNDER SUCH A CONTRACT, THE SELLER MUST SHIP THE GOODS, ARRANGE THE CONTRACT OF AFFREIGHTMENT TO THE PLACE OF DESTINATION, PAY ITS COST AND ALLOW IT FROM THE PURCHASE PRICE, AND PROCURE INSURANCE FOR THE BUYER'S BENEFIT FOR THE SAFE ARRIVAL OF THE GOODS AND PAY THEREFOR. WHEN THE SELLER HAS DONE THIS, AND FORWARDED THE PAPERS TO THE BUYER, HE HAS FULFILLED HIS CONTRACT, AND DELIVERY IS COMPLETE. THERE IS NO OBLIGATION BY THE SELLER TO DELIVER THE GOODS AT PLACE OF DESTINATION. BUT THE LIABILITY OF THE PARTIES HERE MUST BE CONTROLLED BY THE TERMS OF THE CONTRACT INTO WHICH THEY ENTERED. LIKE DEFINITIONS WERE GIVEN TO THE MEANING OF C.I.F. CONTRACTS IN SEAVER V. LINDSAY LIGHT CO., 233 N.Y. 273; 135 N.E. 329, AND IN SMITH CO. (LTD.) V. MARANO, 267 PA. 107.

THE COURTS IN THESE DECISIONS HAVE CONSISTENTLY HELD THAT WHEN PURCHASES ARE MADE UNDER C.I.F. AGREEMENTS TITLE TO THE THING PURCHASED DOES, IN FACT, PASS TO THE VENDEE WHEN THE ARTICLES OR THINGS PURCHASED ARE PLACED ON BOARD THE VESSEL AND THE VENDOR DELIVERS TO THE VENDEE A BILL OF LADING THEREFOR, TOGETHER WITH INSURANCE POLICIES COVERING THE VALUE OF THE SHIPMENT AND RECEIPTS FOR FREIGHT, AFTER WHICH TIME THE VENDOR NO LONGER HAS ANY OWNERSHIP, LIABILITY, OR INTEREST THEREIN, BUT ALL FURTHER RISKS, LIABILITY, ETC., ARE THEREUPON ASSUMED BY THE VENDEE.

THE LEGAL MEANING OF THE TERM "C.I.F.' AS USED IN CONTRACTUAL AGREEMENTS AS DETERMINED BY THE CASES CITED WILL BE ACCEPTED AND, APPLYING SUCH MEANING TO THE INSTANT CASE, ANY LOSS CLAIMED THROUGH THE WEIGHING IN UNLOADING THE COAL AT DESTINATION IS NOT CHARGEABLE TO THE VENDOR, IT BEING SHOWN THAT THE VENDOR FORWARDED TO AN OFFICER OF THE QUARTERMASTER CORPS THE NECESSARY DOCUMENTS, INCLUDING BILL OF LADING, INSURANCE CERTIFICATE, INVOICE FOR CARGO, ETC. THE AMOUNT PLACED ON BOARD THE VESSEL AT PLACE OF LOADING, AS CLAIMED BY THE VENDOR, HAVING BEEN CERTIFIED TO BY SWORN WEIGHMASTERS, THAT WEIGHT WILL BE ACCEPTED AND PAYMENT THEREFOR WILL ACCORDINGLY BE MADE.

UPON RECONSIDERATION THERE IS HEREBY CERTIFIED THE SUM OF $7,264.10 AS BEING DUE THE CLAIMANT COMPANY.