A-80371, NOVEMBER 17, 1937, 17 COMP. GEN. 401

A-80371: Nov 17, 1937

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IS PROPERLY FOR DEDUCTION FROM AMOUNT DUE THE TRUSTEE OF THE CARRIER ON ACCOUNT OF TRANSPORTATION FURNISHED AFTER THE CARRIER'S INSOLVENCY. 1937: REFERENCE IS MADE TO LETTER DATED JULY 8. WHICH LETTER IS HERE QUOTED IN FULL. YOU CERTIFIED THAT THERE WAS DUE FROM THE UNITED STATES TO GUY A. THIS AMOUNT WAS ARRIVED AT BY DEDUCTING AS AN ALLEGED OVERPAYMENT THE SUM OF $6. 428.26 WAS DEDUCTED BECAUSE IT WAS CONTENDED THAT RATES IN EFFECT WHEN THE SHIPMENTS IN QUESTION MOVED HAD BEEN FOUND UNREASONABLE BY THE INTERSTATE COMMERCE COMMISSION AND REFERENCE WAS MADE BY C. THE SHIPMENTS AS TO WHICH IT IS CLAIMED AN OVERPAYMENT OF $6. 428.26 EXISTS WERE MADE WHEN THE MISSOURI PACIFIC RAILROAD COMPANY WAS OPERATING ITS OWN PROPERTIES AND PRIOR TO THE APPOINTMENT OF A TRUSTEE.

A-80371, NOVEMBER 17, 1937, 17 COMP. GEN. 401

TRANSPORTATION - TARIFFS SUBSEQUENTLY FOUND UNJUST AND UNREASONABLE - SET -OFF OF EXCESS PAYMENTS TO CARRIER AFTER INSOLVENCY AMOUNT DUE THE UNITED STATES BY A CARRIER AS REPARATION ON ACCOUNT OF FREIGHT TRANSPORTATION PAYMENTS UNDER TARIFFS ON FILE WITH THE INTERSTATE COMMERCE COMMISSION WHICH THE COMMISSION SUBSEQUENTLY FOUND TO BE UNJUST AND UNREASONABLE, IS PROPERLY FOR DEDUCTION FROM AMOUNT DUE THE TRUSTEE OF THE CARRIER ON ACCOUNT OF TRANSPORTATION FURNISHED AFTER THE CARRIER'S INSOLVENCY.

ACTING COMPTROLLER GENERAL ELLIOTT TO GUY A. THOMPSON, TRUSTEE, MISSOURI PACIFIC RAILROAD CO., NOVEMBER 17, 1937:

REFERENCE IS MADE TO LETTER DATED JULY 8, 1937, FROM H. H. LARIMORE, GENERAL ATTORNEY AND INTERSTATE COMMERCE COUNSEL, MISSOURI PACIFIC LINES, REQUESTING REVIEW OF SETTLEMENT NO. T-109450 DATED FEBRUARY 6, 1937, WHICH LETTER IS HERE QUOTED IN FULL, AS FOLLOWS:

UNDER DATE OF FEBRUARY 6, 1937, CERTIFICATE NO. T-109450, CLAIMS NOS. 605201 AND 605202, YOU CERTIFIED THAT THERE WAS DUE FROM THE UNITED STATES TO GUY A. THOMPSON, TRUSTEE, MISSOURI PACIFIC RAILROAD COMPANY, ST. LOUIS, MO., THE SUM OF $2,389.52.

THIS AMOUNT WAS ARRIVED AT BY DEDUCTING AS AN ALLEGED OVERPAYMENT THE SUM OF $6,428.26, AND ALSO BY A DISALLOWANCE OF $252.91, THE LATTER ITEM NOT BEING MATERIAL TO THE QUESTION PRESENTED.

THE ITEM OF $6,428.26 WAS DEDUCTED BECAUSE IT WAS CONTENDED THAT RATES IN EFFECT WHEN THE SHIPMENTS IN QUESTION MOVED HAD BEEN FOUND UNREASONABLE BY THE INTERSTATE COMMERCE COMMISSION AND REFERENCE WAS MADE BY C. R. SMITH, 1ST LIEUT., CORPS OF ENGINEERS, MILITARY ASSISTANT, TO ORDERS OF THE COMMISSION DATED FEBRUARY 5, 1934, AND MAY 14, 1934, IN DOCKET NO. 23424 DENYING THE PETITION OF THE CARRIERS FOR REHEARING AND RECONSIDERATION.

THE SHIPMENTS AS TO WHICH IT IS CLAIMED AN OVERPAYMENT OF $6,428.26 EXISTS WERE MADE WHEN THE MISSOURI PACIFIC RAILROAD COMPANY WAS OPERATING ITS OWN PROPERTIES AND PRIOR TO THE APPOINTMENT OF A TRUSTEE. MR. GUY A. THOMPSON WAS APPOINTED TRUSTEE OF THE MISSOURI PACIFIC PROPERTIES JULY 1, 1933, AND THE EFFECT OF THE DEDUCTION OF THE ALLEGED OVERPAYMENT IS TO REQUIRE THE TRUSTEE TO PAY A CLAIM GROWING OUT OF THE OPERATIONS OF THE COMPANY PRIOR TO TRUSTEESHIP. THIS UNDER THE RULING OF THE COURT HAVING JURISDICTION OF THE TRUST ESTATE OF THE MISSOURI PACIFIC CANNOT BE DONE. CLAIMS OF THE UNITED STATES ARE NOT PRIOR TO THE CLAIMS OF THE BONDHOLDERS.

IT SEEMS CLEAR THAT THE UNITED STATES CANNOT REDUCE THE AMOUNT OWED BY IT TO GUY A. THOMPSON, TRUSTEE, BY DEDUCTING FROM SUCH AMOUNT SUMS CLAIMED TO BE OWED TO THE UNITED STATES BY THE MISSOURI PACIFIC RAILROAD COMPANY.

THE SETTLEMENT IS, THEREFORE, BELIEVED TO BE INCORRECT, AND IT IS REQUESTED THAT SUCH SETTLEMENT BE REVIEWED BY THE COMPTROLLER OF THE UNITED STATES.

IN THE SAID SETTLEMENT THERE WAS FOUND DUE TO GUY A. THOMPSON, TRUSTEE, THE SUM OF $8,817.78 FOR FREIGHT TRANSPORTATION FURNISHED TO THE WAR DEPARTMENT DURING FEBRUARY, MARCH, APRIL, AND MAY 1936. FROM THAT SUM WAS DEDUCTED THE SUM OF $6,428.26 FOUND DUE THE GOVERNMENT REPRESENTING REPARATION FOR EXCESS PAYMENTS EXACTED BY THE MISSOURI PACIFIC RAILROAD CO. ON 54 VOUCHERS DURING 1928, 1929, 1930, AND 1931, ON SHIPMENTS OF COAL FROM ILLINOIS POINTS TO MISSOURI, SUCH EXCESS PAYMENTS BEING COMPUTED ON THE BASIS OF THE REVISED SCALE OF RATES PRESCRIBED IN 161 I.C.C. 337. THE OBJECTION ASSERTED IN THE ABOVE QUOTED LETTER IS, IN SUBSTANCE, THAT, YOU HAVING BEEN APPOINTED TRUSTEE OF THE SAID RAILROAD COMPANY JULY 1, 1933, THE UNITED STATES IS NOT AUTHORIZED TO DEDUCT FROM THE AMOUNT DUE THE TRUSTEE AN AMOUNT GROWING OUT OF OPERATIONS OF THE COMPANY PRIOR TO THE TRUSTEESHIP.

IT IS THE VIEW OF THIS OFFICE THAT THE SAID AMOUNT OF $6,428.26, REPRESENTING REPARATION FOR EXCESS PAYMENTS, IS A TRUST FOUND IN YOUR POSSESSION BELONGING TO THE UNITED STATES AND NOT A PART OF THE ASSETS OF THE COMPANY CHARGEABLE WITH PAYMENT OF GENERAL OBLIGATIONS WHETHER INCURRED PRIOR OR SUBSEQUENT TO JULY 1, 1933. THE INTERSTATE COMMERCE ACT PROVIDES IN PART (SEC. 1 (5), TITLE 49, U.S. CODE):

ALL CHARGES MADE FOR ANY SERVICE RENDERED OR TO BE RENDERED IN THE TRANSPORTATION OF PASSENGERS OR PROPERTY OR IN THE TRANSMISSION OF INTELLIGENCE BY WIRE OR WIRELESS AS AFORESAID, OR IN CONNECTION THEREWITH, SHALL BE JUST AND REASONABLE, AND EVERY UNJUST AND UNREASONABLE CHARGE FOR SUCH SERVICE OR ANY PART THEREOF IS PROHIBITED AND DECLARED TO BE UNLAWFUL: * * *

UNJUST AND UNREASONABLE CHARGES BEING THUS DECLARED UNLAWFUL, THE EXCESS OF SUCH CHARGES BEYOND JUST AND REASONABLE CHARGES IS THE PROPERTY OF THE SHIPPER AND, UNDER SECTION 1 OF THE INTERSTATE COMMERCE ACT, IS RECOVERABLE AS REPARATION WITH INTEREST AND WITHOUT PROOF OF DAMAGES.

ATTENTION IS INVITED TO THE FACT THAT THE SUM OF $6,428.26 DEDUCTED IN THE INSTANT MATTER IS REPARATION AND DOES NOT REPRESENT AN "OVERCHARGE," AN OVERCHARGE BEING DEFINED IN SECTION 16 (3) (G), TITLE 49, U.S. CODE, AS FOLLOWS:

THE TERM "OVERCHARGES" AS USED IN THIS SECTION SHALL BE DEEMED TO MEAN CHARGES FOR TRANSPORTATION SERVICES IN EXCESS OF THOSE APPLICABLE THERETO UNDER THE TARIFFS LAWFULLY ON FILE WITH THE COMMISSION.

IN THE INSTANT CASE, THE INVOLVED CHARGES APPEAR TO HAVE BEEN IN CONFORMITY WITH THE "TARIFFS LAWFULLY ON FILE WITH THE COMMISSION," BUT, AS HEREINBEFORE STATED, THOSE TARIFFS WERE SUBSEQUENTLY HELD BY THE INTERSTATE COMMERCE COMMISSION TO BE UNJUST AND UNREASONABLE.

THE INTERSTATE COMMERCE COMMISSION HAS CONSISTENTLY HELD THAT THE INSOLVENCY OF A CARRIER WILL NOT PREVENT ISSUANCE OF A REPARATION ORDER COVERING SHIPMENTS HANDLED PRIOR TO INSOLVENCY. IN F. W. AND F. G. STANDT V. SEABOARD AIR LINE RAILWAY CO., 195 I.C.C. 645, THE RECEIVERS OF THE DEFENDANT RAILWAY COMPANY CONTENDED THAT THEY WERE NOT PROPER PARTIES DEFENDANT, INASMUCH AS THE SHIPMENTS UPON WHICH REPARATION WAS SOUGHT MOVED PRIOR TO THE DATE OF RECEIVERSHIP. THE COMMISSION, IN DENYING SUCH CONTENTION, SAID (P. 646):

"A SIMILAR CONTENTION WAS MADE AND FOUND UNTENABLE IN ROOT GLASS CO. V. EVANSVILLE, I. AND T.H.RY.CO., 178 I.C.C. 783.' TO THE SAME EFFECT ARE DECISIONS IN 125 I.C.C. 575 AND 222 I.C.C. 184.

ACCORDINGLY, ON REVIEW OF THIS MATTER, THE SAID SETTLEMENT NO. T 109450, DATED FEBRUARY 6, 1937, MUST BE, AND HEREBY IS, SUSTAINED.