A-24501, APRIL 1, 1929, 8 COMP. GEN. 509

A-24501: Apr 1, 1929

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

TRANSPORTATION RATES WHETHER A SHIPMENT IS LOCAL OR A PART OF A THROUGH MOVEMENT DEPENDS UPON ITS ESSENTIAL CHARACTER. WHEN A THROUGH JOINT RATE IS EFFECTIVE FROM THE INITIAL POINT OF SHIPMENT THE GOVERNMENT IS ENTITLED TO THE BENEFIT OF SUCH RATE AND PAYMENT TO ANY SEPARATE CARRIER SHOULD NOT EXCEED THE AMOUNT TO WHICH IT IS ENTITLED BY THE APPLICATION OF THE AUTHORIZED DIVISION OF THE THROUGH RATE. ANY AGREEMENT OR ARRANGEMENT RESULTING IN AN EXCESS COST TO THE GOVERNMENT OVER THE LEGALLY AUTHORIZED CHARGES IS NULL AND VOID AS TO SUCH EXCESS. THE CLAIMS WERE FOR TRANSPORTATION FROM ELA. THE SERVICE INVOLVED WAS RENDERED DURING THE FISCAL YEARS 1927 AND 1928 FOR WHICH PAYMENT WAS MADE AS CLAIMED AT THE LOCAL RATES BETWEEN ELA AND CHEROKEE.

A-24501, APRIL 1, 1929, 8 COMP. GEN. 509

TRANSPORTATION RATES WHETHER A SHIPMENT IS LOCAL OR A PART OF A THROUGH MOVEMENT DEPENDS UPON ITS ESSENTIAL CHARACTER, AND THE INTENTION TO MOVE GOODS TO THE ULTIMATE DESTINATION FROM THE INITIAL POINT OF SHIPMENT DETERMINES AS A MATTER OF LAW THE ESSENTIAL NATURE OF THE ENTIRE MOVEMENT. WHEN A THROUGH JOINT RATE IS EFFECTIVE FROM THE INITIAL POINT OF SHIPMENT THE GOVERNMENT IS ENTITLED TO THE BENEFIT OF SUCH RATE AND PAYMENT TO ANY SEPARATE CARRIER SHOULD NOT EXCEED THE AMOUNT TO WHICH IT IS ENTITLED BY THE APPLICATION OF THE AUTHORIZED DIVISION OF THE THROUGH RATE. ANY AGREEMENT OR ARRANGEMENT RESULTING IN AN EXCESS COST TO THE GOVERNMENT OVER THE LEGALLY AUTHORIZED CHARGES IS NULL AND VOID AS TO SUCH EXCESS.

DECISION BY COMPTROLLER GENERAL MCCARL, APRIL 1, 1929:

THE APPALACHIAN RAILWAY CO. APPLIED BY LETTER DATED AUGUST 29, 1928, FOR REVIEW OF SETTLEMENT T-59090, AUGUST 15, 1928, IN DISALLOWING 73 CENTS ON ITS CLAIM FOR $14.58 FOR TRANSPORTATION FURNISHED THE INDIAN SERVICE IN MARCH, 1928, AND OF SETTLEMENT T-58765, JULY 23, 1928, IN DISALLOWING $17.49 AND DEDUCTING $89.02 ON ITS CLAIM FOR $135.58 FOR TRANSPORTATION FURNISHED THE INDIAN SERVICE IN FEBRUARY, 1928.

THE CLAIMS WERE FOR TRANSPORTATION FROM ELA, N.C., TO CHEROKEE, N.C., OF SUPPLIES FOR THE CHEROKEE AGENCY AND SCHOOLS LOCATED ON THE APPALACHIAN RAILWAY, A SHORT ROAD WHICH CONNECTS WITH THE MURPHY BRANCH OF THE SOUTHERN RAILWAY AT ELA, N.C., AND EXTENDS IN A NORTHEASTERLY DIRECTION THROUGH BIRDTOWN 3.3 MILES, CHEROKEE 6.3 MILES, TO RAVENSFORD, N.C., 10 MILES.

THE SERVICE INVOLVED WAS RENDERED DURING THE FISCAL YEARS 1927 AND 1928 FOR WHICH PAYMENT WAS MADE AS CLAIMED AT THE LOCAL RATES BETWEEN ELA AND CHEROKEE, N.C., APPARENTLY IN ACCORDANCE WITH AN ACCEPTANCE BY THE SUPERINTENDENT OF THE CHEROKEE INDIAN SCHOOL AT CHEROKEE, N.C., OF THE BID OF THE APPALACHIAN RAILWAY CO., WHICH PROVIDED THAT---

IN CONSIDERATION OF DIRECT AND PROMPT PAYMENT AT THE END OF EACH MONTH BY THE SUPERINTENDENT OF THE U.S. INDIAN SCHOOL, CHEROKEE, N.C., TO THE APPALACHIAN RAILWAY, ELLA, N.C., OF FREIGHT CHARGES OVER SAID APPALACHIAN RAILWAY ON GOODS AND SUPPLIES FROM ELA, N.C., TO CHEROKEE, N.C., INTENDED FOR USE AT THE SAID U.S. INDIAN SCHOOL, THE SAID APPALACHIAN RAILWAY AGREES TO ALLOW A REDUCTION OF 5 PERCENT FROM ITS REGULAR TARIFF RATES ON ALL GOODS AND SUPPLIES SO TRANSPORTED.

PURSUANT TO THIS AGREEMENT, PROPERTY DESTINED FOR THE CHEROKEE INDIAN SCHOOL HAS BEEN USUALLY CONSIGNED TO ELA, N.C., TO THE SUPERINTENDENT OF INDIAN SCHOOLS, WHO RECEIPTED FOR SUCH PROPERTY AS DELIVERED TO HIM AT ELA, THE TRANSPORTATION OF WHICH THENCE TO CHEROKEE WAS RENDERED BY THE APPALACHIAN RAILWAY CO, WITHOUT THE ISSUANCE OF ANY BILL OF LADING, THE CHARGE FOR THE SERVICE FROM ELA TO CHEROKEE BEING AT THE LOCAL RATE. THIS METHOD DID NOT INCREASE THE COST TO THE GOVERNMENT WHEN THROUGH RATES WERE MADE BY COMBINATION ON ELA. HAD THE PROPERTY BEEN INTENDED TO BE RECEIVED BY THE SUPERINTENDENT AT ELA FOR DISTRIBUTION AS HE MIGHT CHOOSE, AFTER THE RECEIPT, THE CONSIGNMENT TO ELA MIGHT HAVE BEEN PROPER. IT MAY BE STATED INCIDENTALLY THAT THE CARRIER HAD A PERFECT RIGHT TO MAKE A CONCESSION TO THE GOVERNMENT ON ITS CHARGES AND THEREFORE THE 5 PERCENT DISCOUNT, UNDER CONDITIONS NAMED, WAS ENTIRELY PROPER.

WHENEVER THROUGH JOINT RATES ARE EFFECTIVE FROM THE INITIAL POINTS OF SHIPMENT TO CHEROKEE, THE GOVERNMENT IS ENTITLED TO THE BENEFIT OF THE THROUGH RATE AND THE PAYMENT TO SEPARATE CARRIERS SHOULD NOT BE IN EXCESS OF THE AMOUNT TO WHICH EACH IS SEVERALLY ENTITLED ON THE AUTHORIZED DIVISION OF THE THROUGH RATE.

IT HAS BEEN FREQUENTLY HELD THAT A COMBINATION OF AN INTERSTATE RATE WITH AN INTRASTATE RATE TO DEFEAT A PUBLISHED THROUGH RATE IS NOT AUTHORIZED. THE SAME PRINCIPLE IS APPLICABLE WHEN THE COMBINATION RESULTS IN AN INCREASED COST FOR THE SHIPMENT.

ANY AGREEMENT OR ARRANGEMENT RESULTING IN AN EXCESS COST TO THE GOVERNMENT OVER LEGALLY AUTHORIZED CHARGES IS NECESSARILY NULL AND VOID AS TO SUCH EXCESS AS NO GOVERNMENT OFFICER HAS ANY AUTHORITY TO GIVE AWAY GOVERNMENT MONEY WHICH WOULD BE THE CASE IF HE WERE TO CONTRACT TO PAY ANY SUCH EXCESS.

THE SHIPMENTS DESTINED TO CHEROKEE ARE SUBJECT TO THE THROUGH RATES THEREFOR AND THE APPALACHIAN RAILWAY CO. IS ENTITLED ON SUCH SHIPMENTS TO ITS PROPORTION OF THE THROUGH APPLICABLE RATE.

WHETHER A SHIPMENT IS THROUGH OR LOCAL DEPENDS UPON THE ESSENTIAL CHARACTER OF THE MOVEMENT AND THIS CHARACTER IS NOT NECESSARILY DETERMINED BY THE CONTRACT BETWEEN THE SHIPPER AND THE CARRIER, BUT THE INTENTION TO MOVE THE GOODS TO THE ULTIMATE DESTINATION FROM THE INITIAL POINT OF SHIPMENT DETERMINES AS A MATTER OF LAW THE ESSENTIAL NATURE OF THE ENTIRE MOVEMENT. SEE DECISION OF THE SUPREME COURT OF THE UNITED STATES DATED NOVEMBER 13, 1922, IN THE CASE OF BALTIMORE AND OHIO SOUTHWESTERN RAILROAD COMPANY V. SETTLE AND CO., 260 U.S. 166; SEE ALSO TEXAS AND NEW ORLEANS RAILROAD CO. V. SABINE TRAM CO., 227 U.S. 111, 124; ILLINOIS CENTRAL R.R. CO. V. RAILROAD COMMISSION OF LOUISIANA, 236 U.S. 157, 163; WESTERN OIL REFINING CO. V. LIPSCOMB, CLERK OF THE COUNTY COURT OF MAURY CO., TENN., AS SUCCESSORS OF THOMAS, 244 U.S. 346, 349.

IN SETTLEMENT T-58765, JULY 23, 1928, FOR TRANSPORTATION IN FEBRUARY, 1928, THERE WAS $17.49 DISALLOWED AND $89.02 DEDUCTED ON ACCOUNT OF OVERPAYMENT BY JAMES E. HENDERSON PER VOUCHERS 129, DECEMBER, 1926; 1 JANUARY, 1927; 4, MARCH, 1927; 4, MAY, 1927; 42, AUGUST, 1927; 144, NOVEMBER 1927; AND 215, DECEMBER, 1927.

THE $17.49 DISALLOWED CONSISTED OF A DIFFERENCE OF $10.98 FOR SHIPMENTS OF COAL MOVED ON LOCAL WAYBILLS COVERING 296,900 POUNDS OF COAL FROM ELA TO CHEROKEE, N.C., FOR WHICH THE CARRIER CLAIMED CHARGES OF $100.94 AT ITS LOCAL 68-CENT-PER-TON RATE AND FOR WHICH ALLOWANCE WAS MADE ON BASIS OF 20 PERCENT OF THE THROUGH RATE OF $3.03 PER TON FROM APPALACHIA, VA., AMOUNTING TO $89.96.

A DIFFERENCE OF 29 CENTS IN FREIGHT CHARGES ON A SHIPMENT MOVING ON WAYBILL 32, FEBRUARY 11, 1928, FROM ELA TO CHEROKEE, WHERE A SHIPMENT OF PUTTY IN CANS AND 1 CRT. PAINT IN OIL, 125 POUNDS, WAS BILLED AS 1 BOX BUTTER IN CANS AND 1 CRT. PAINT IN OIL AT A MINIMUM CHARGE OF 50 CENTS, AND ALLOWANCE WAS MADE BY RATING THE SHIPMENT AT FOURTH CLASS AND ALLOWING CHARGES BASED ON DIVISION OF THE FOURTH-CLASS RATE FROM CAIRO, ILL., ACCOUNT OF THE SHIPMENT ORIGINATING AT DENVER, COLO., MAKING AN ALLOWANCE OF 21 CENTS INSTEAD OF THE 50 CENTS CLAIMED. THERE WAS ALSO INCLUDED IN THE DISALLOWANCE $6.22 AS 5 PERCENT DISCOUNT ALLOWED FOR DIRECT PAYMENT.

THE DEDUCTION OF $89.02 IS CAUSED BY DIFFERENCES OF $83 ON SHIPMENTS OF COAL AND $6.02 ON OTHER RECLASSIFIED SHIPMENTS.

THE $83 ON COAL APPEARS TO RELATE TO VARIOUS SHIPMENTS IN 1926 AND 1927, AS SHOWN BY THE CERTIFICATE OF SETTLEMENT AND COVERED BY PAYMENTS MADE BY JAMES E. HENDERSON ON HIS VOUCHERS, 1, JANUARY, 1927; 4, MARCH, 1927; 4, MAY, 1927; 42, SEPTEMBER, 1927; AND 129, DECEMBER, 1926, AND REPRESENTS THE DIFFERENCE BETWEEN THE DIVISIONAL PROPORTION 20 PERCENT OF THE THROUGH RATE OF $3.03 PER TON ON COAL AND THE CARRIER'SLOCAL RATE OF 68 CENTS PER TON TO CHEROKEE, N.C., WHICH IS 7.4 CENTS PER TON LESS 5 PERCENT.

THE REMAINING DIFFERENCE OF $6.02 IS CAUSED BY RECLASSIFYING SHIPMENTS COVERED BY LOCAL WAYBILLS 19-10-5-27, 48-10-12-27, AND 23-11 8-27, J. E. HENDERSON'S VOUCHERS 144, NOVEMBER, AND 215, DECEMBER, 1927. THE CHARGES ALLOWED ON THESE SHIPMENTS APPEAR TO BE BASED ON THE FOURTH-CLASS RATE SHOWN BY THE LOCAL TARIFF, AND THE DEDUCTION OF $6.02 IS SUSTAINED.

THE DEDUCTION OF $89.02 WAS THEREFORE CORRECT AND IS SUSTAINED.

THE DISALLOWANCES OF $10.98 AND 29 CENTS AS SET FORTH ABOVE ARE CORRECT; THE DISALLOWANCE OF $6.22 UNDER THE AGREEMENT FOR PROMPT PAYMENT SHOULD BE ALLOWED, AS THE CONDITION THEREFOR WAS NOT COMPLIED WITH. UPON REVIEW OF THIS SETTLEMENT THE SUM OF $6.22 IS THEREFOR CERTIFIED FOR ALLOWANCE.

IN SETTLEMENT T-59090 FOR TRANSPORTATION IN MARCH, 1928, OF 18 SMALL SHIPMENTS FROM ELA TO CHEROKEE, N.C., FOR WHICH NO BILLS OF LADING WERE ISSUED AND UPON WHICH THE CARRIER CLAIMED PAYMENT BASED ON ITS LOCAL TARIFF RATES FROM ELA TO CHEROKEE OF $14.58 AND THE ALLOWANCE BY SETTLEMENT IN AUGUST, 1928, WAS FOR THE AMOUNT CLAIMED LESS 5 PERCENT STATED TO BE "DISCOUNT.'

THE AMOUNT CLAIMED IS PRACTICALLY CORRECT.

THE AGREEMENT FOR A 5 PERCENT ALLOWANCE FOR DIRECT PAYMENT DOES NOT APPEAR APPLICABLE IN THIS CASE WHERE THE PAYMENT WAS NOT MADE DIRECT FOR SERVICES IN MARCH BUT BY A SETTLEMENT OF THIS OFFICE IN AUGUST.

THE SUM OF 73 CENTS DISALLOWED BY THIS SETTLEMENT IS PROPERLY DUE THE CARRIER AND IS THEREFORE CERTIFIED FOR ALLOWANCE.