A-86967, MAY 25, 1938, 17 COMP. GEN. 978

A-86967: May 25, 1938

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WHERE THERE IS AN ALTERNATE PROVISION UNDER WHICH IN EFFECT THERE ARISES ANOTHER PRICE FOR DELIVERY AT POINT OF SHIPMENT. IS NOT CONCLUSIVE UPON THE QUESTION OF TITLE TO THE PROPERTY DURING TRANSIT AND WHERE THERE IS AN EXPRESS AVOWAL IN THE CONTRACT THAT TITLE SHALL PASS AT POINT OF SHIPMENT. OR THE ENTIRE TRANSACTION BETWEEN THE PARTIES TO THE PURCHASE ESTABLISHES AN INTENT AND UNDERSTANDING THAT THE RIGHT OF SHIPMENT ON GOVERNMENT BILL OF LADING WAS RESERVED BY THE GOVERNMENT FOR THE SPECIFIC PURPOSE OF EFFECTING DELIVERY BY THE CONTRACTOR AT POINT OF SHIPMENT RATHER THAN AT DESTINATION IN ORDER THAT THE BENEFIT OF LAND-GRANT RATES MIGHT BE OBTAINED. THE GOVERNMENT IS ENTITLED TO DEDUCTION FOR LAND-GRANT FROM TRANSPORTATION CHARGES ON SHIPMENTS INVOLVED UNDER THE STATUTES PROVIDING FOR TRANSPORTATION OF "PROPERTY" OF THE UNITED STATES OVER LAND-GRANT RAILROADS AT REDUCED RATES.

A-86967, MAY 25, 1938, 17 COMP. GEN. 978

TRANSPORTATION - LAND-GRANT DEDUCTIONS - TITLE TO PROPERTY IN TRANSIT THE MERE USE IN A GOVERNMENT CONTRACT FOR THE PURCHASE OF MATERIAL, OF A PROVISION INDICATING A PRICE F.O.B. DESTINATION, WHERE THERE IS AN ALTERNATE PROVISION UNDER WHICH IN EFFECT THERE ARISES ANOTHER PRICE FOR DELIVERY AT POINT OF SHIPMENT, IS NOT CONCLUSIVE UPON THE QUESTION OF TITLE TO THE PROPERTY DURING TRANSIT AND WHERE THERE IS AN EXPRESS AVOWAL IN THE CONTRACT THAT TITLE SHALL PASS AT POINT OF SHIPMENT, OR THE ENTIRE TRANSACTION BETWEEN THE PARTIES TO THE PURCHASE ESTABLISHES AN INTENT AND UNDERSTANDING THAT THE RIGHT OF SHIPMENT ON GOVERNMENT BILL OF LADING WAS RESERVED BY THE GOVERNMENT FOR THE SPECIFIC PURPOSE OF EFFECTING DELIVERY BY THE CONTRACTOR AT POINT OF SHIPMENT RATHER THAN AT DESTINATION IN ORDER THAT THE BENEFIT OF LAND-GRANT RATES MIGHT BE OBTAINED, THE GOVERNMENT IS ENTITLED TO DEDUCTION FOR LAND-GRANT FROM TRANSPORTATION CHARGES ON SHIPMENTS INVOLVED UNDER THE STATUTES PROVIDING FOR TRANSPORTATION OF "PROPERTY" OF THE UNITED STATES OVER LAND-GRANT RAILROADS AT REDUCED RATES.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE CHICAGO, BURLINGTON AND QUINCY RAILROAD CO., MAY 25, 1938:

THERE HAS BEEN CONSIDERED YOUR LETTER OF JANUARY 27, 1938, RELATIVE TO THE MATTER OF DEDUCTION FOR LAND GRANT FROM CHARGES FOR THE TRANSPORTATION OF CERTAIN SHIPMENTS OF PROPERTY MOVING UNDER GOVERNMENT BILLS OF LADING WHICH BORE NOTATIONS NAMING THE DESTINATIONS OF THE SHIPMENTS IN SPACES PROVIDED THEREON FOR SHOWING THE "F.O.B. POINT NAMED IN THE CONTRACT" UNDER WHICH THE PROPERTY WAS ACQUIRED. IN VIEW OF THESE NOTATIONS YOU QUESTION WHETHER THE PROPERTY AS TRANSPORTED WAS PROPERTY OF THE UNITED STATES SO AS TO BE ENTITLED TO THE BENEFIT OF LAND-GRANT DEDUCTIONS FROM CHARGES FOR ITS TRANSPORTATION.

YOU REFER PARTICULARLY TO TWO SHIPMENTS AS PRESENTING THE QUESTION. ONE OF SAID SHIPMENTS CONSISTED OF 75,505 POUNDS OF STEEL BARS SHIPPED FROM MADISON, ILL., TO BALLANTINE, MONT., UNDER BILL OF LADING I 570408, APRIL 15, 1936. SAID BILL OF LADING SHOWS THE LACLEDE STEELCO. AS THE CONSIGNOR OF THE SHIPMENT AND "BUREAU OF RECLAMATION" AS THE CONSIGNEE. IT IS FURTHER SHOWN ON THE FACE OF THE BILL OF LADING THAT THE ISSUING OFFICER WAS A. MCD. BROOKS, PURCHASING AGENT, AND THE ISSUING OFFICE DENVER, COLO. THE CONSIGNEE'S CERTIFICATE OF DELIVERY THEREON WAS ACCOMPLISHED TO SHOW RECEIPT OF THE SHIPMENT AT BALLANTINE, MONT., APRIL 22, 1936, BY E. E. LEWIS, REGIONAL DIRECTOR, AS CONSIGNEE. THE NOTATION ON THE BASIS OF WHICH YOUR QUESTION ARISES IS CONTAINED IN THE SPACE PROVIDED ON THE BILL OF LADING FOR THE CERTIFICATE OF THE ISSUING OFFICER AS FOLLOWS:

CERTIFICATE OF ISSUING OFFICER (TO BE FILLED OUT WHEN THIS BILL OF LADING IS ISSUED FOR USE BY CONTRACTOR IN MAKING SHIPMENT)

CONTRACT NO. ----------, OR PURCHASE ORDER NO. 5,716-A DATED APRIL 1, 1936. BALLANTINE, MONT., WITH SHIPMENT FROM MADISON, ILL. (F.O.B. POINT NAMED IN CONTRACT.)

(SIGNED) A. MCD. BROOKS, PURCHASING AGENT.

(ISSUING OFFICER.)

(CARRIER'S RIGHTS TO SHIPPING CHARGES NOT AFFECTED BY FACTS SET OUT IN THIS CERTIFICATE.)

IN ADDITION TO THE FOREGOING THE BILL OF LADING CONTAINS THE FURTHER TYPED NOTATION IN THE SPACE PROVIDED FOR THE DESCRIPTION OF THE ARTICLES:

"IF MATERIAL IS DAMAGED IN TRANSIT IT WILL BE REJECTED AT DESTINATION AND SPECIAL DAMAGES WILL RESULT.'

CONTRACT ER 12R-ECW-316, UNDER WHICH THE MATERIAL HERE CONCERNED WAS PURCHASED SHOWS THAT UNDER DATE OF FEBRUARY 26, 1936, INVITATION FOR BIDS WAS ISSUED BY THE PURCHASING AGENT, A. MCD. BROOKS, FOR FURNISHING CERTAIN REINFORCING STEEL "FOR DELIVERY AT SHIPPING POINT AND/OR BALLANTINE, MONTANA," SAID INVITATION CONTAINING THE FOLLOWING PROVISION:

THE GOVERNMENT RESERVES THE RIGHT TO HAVE SHIPMENTS MADE ON GOVERNMENT BILLS OF LADING AND TO DEDUCT COMMERCIAL FREIGHT COST ON SUCH SHIPMENTS FROM ANY PAYMENT DUE THE CONTRACTOR. IN EVERY CASE THE SHIPPING POINTS MUST BE STATED IN THE BID. OFFERS TO EQUALIZE THE DIFFERENCE BETWEEN COMMERCIAL AND LAND-GRANT FREIGHT RATES APPLICABLE FROM POINTS OTHER THAN THE SHIPPING POINT OR POINTS NAMED HEREIN TO DESTINATION WILL BE CONSIDERED. OFFERS OF EQUALIZATION ON ANY OTHER BASIS WILL NOT BE CONSIDERED.

FOR DETERMINING THE LOW BID AND MAKING AWARD THE COST OF THE STEEL AND THE FREIGHT CHARGES WILL BE COMPUTED ON THE BASIS OF THE WEIGHT STATED IN THE INVITATION OR ON THE BASIS OF THE THEORETICAL WEIGHTS AS ESTABLISHED IN FEDERAL SPECIFICATIONS SYMBOL QQ-B-71.

* * * THE CONTRACTOR SHALL BE RESPONSIBLE FOR AND MAKE GOOD ANY AND ALL DAMAGE DUE TO IMPROPER PREPARATION OR LOADING FOR SHIPMENT.

THE BID OF THE LACLEDE STEEL CO., UNDER DATE OF MARCH 5, 1936, AGREED "TO FURNISH ANY OR ALL OF THE ITEMS UPON WHICH PRICES ARE QUOTED, AT THE PRICE SET OPPOSITE EACH ITEM, F.O.B., CARS BALLANTINE, MONTANA," THE BIDDER STATING FURTHER:

SHIPMENT OF THE PRODUCT AS COVERED BY THIS BID WILL BE MADE IN ----- -- CARLOAD QUANTITIES OF 75,100 POUNDS OR MORE FROM OUR PLANT AT MADISON, ILLINOIS, TO BALLANTINE, MONTANA.

IN CASE THE GOVERNMENT SHALL SUPPLY GOVERNMENT BILL OF LADING FOR SUCH SHIPMENT BY ALL-RAIL TRANSPORTATION, TITLE TO ALL OF SUCH PRODUCT IN EACH SHIPMENT SHALL BE TAKEN BY THE GOVERNMENT ON DELIVERY THEREOF FOR SUCH TRANSPORTATION IN ACCORDANCE WITH SUCH BILL OF LADING AND SHIPPING ORDER, AND FREIGHT CHARGES WILL BE ALLOWED ON THE INVOICE THEREFOR COMPUTED AT A RATE OF $0.97 PER 100 POUNDS ON CARLOAD MINIMUM OF 80,000 POUNDS.

THE BID WAS ACCEPTED APRIL 1, 1936, AS FOLLOWS:

ITEMS NOS. 1 TO 4 INCLUSIVE, F.O.B. CARS BALLANTINE, MONTANA, WITH LESS COMMERCIAL FREIGHT AND AN ADDITIONAL ALLOWANCE TO EQUALIZE COMMERCIAL-LAND GRANT FREIGHT DIFFERENTIAL FROM SAN FRANCISO, CALIFORNIA, TO BALLANTINE, MONTANA.

THE PROPERTY WAS SHIPPED FROM MADISON TO BALLANTINE ON GOVERNMENT BILL OF LADING. THE CARRIER CLAIMED IN ITS BILL 57025 TRANSPORTATION CHARGES IN THE AMOUNT OF $875.86, ON THE BASIS OF TARIFF RATES WITHOUT DEDUCTION FOR LAND GRANT. PAYMENT WAS MADE BY THE DISBURSING OFFICER, E. C. MORTON, ON VOUCHER NO. 1067 OF HIS OCTOBER 1936 ACCOUNT, IN THE NET AMOUNT OF $561.62 ON THE BASIS OF MAKING DEDUCTION FOR LAND GRANT FROM THE TARIFF CHARGES CLAIMED.

THE SECOND SHIPMENT TO WHICH YOU REFER CONSISTED OF COTTON PIECE GOODS, WEIGHT 384 POUNDS, SHIPPED FROM ST. LOUIS, MO., TO DENVER, COLO., VIA THE CHICAGO, BURLINGTON AND QUINCY RAILROAD, UNDER GOVERNMENT BILL OF LADING I -588409, OCTOBER 22, 1936. THE RICE-STIX DRY GOODS CO., WAS SHOWN AS THE CONSIGNOR ON THE BILL OF LADING AND BUREAU OF RECLAMATION AS THE CONSIGNEE. IT WAS FURTHER SHOWN ON THE FACE OF THE BILL OF LADING THAT VERN H. THOMPSON, ACTING PURCHASING AGENT, DENVER, COLO; WAS THE ISSUING OFFICER, AND THE ISSUING OFFICER'S CERTIFICATE MADE REFERENCE TO PURCHASE ORDER NO. 20573-S, DATED OCTOBER 16, 1936, AND SHOWED "DENVER, COLORADO--- SHIPMENT FROM ST. LOUIS, MISSOURI" IN THE SPACE PROVIDED THEREIN FOR SHOWING "F.O.B. POINT NAMED IN CONTRACT.' CHARGES WERE CLAIMED BY THE CARRIER IN THE AMOUNT OF $6.83 ON ITS BILL 59501 ON THE BASIS OF TARIFF RATES WITHOUT DEDUCTION FOR LAND GRANT AND PAYMENT WAS MADE BY G. F. ALLEN, DISBURSING OFFICER, ON VOUCHER 1568296 OF HIS MARCH 1937 ACCOUNT, SYMBOL 94-900, IN THE AMOUNT OF $4.98 ON THE BASIS OF MAKING DEDUCTION OF $1.85, FOR LAND GRANT, FROM THE TARIFF CHARGES CLAIMED.

THE AGREEMENT UNDER WHICH THIS MATERIAL WAS PURCHASED SHOWS THAT A. MCD. BROOKS, PURCHASING AGENT, DENVER, COLO., INVITED BIDS OCTOBER 7, 1936, FOR FURNISHING THE MATERIAL "FOR DELIVERY AT SHIPPING POINT AND/OR F.O.B. DENVER, COLO.' THE INVITATION CONTAINED ALSO THE FOLLOWING PROVISION:

GUARANTEED SHIPPING WEIGHTS AND METHODS OF COMPUTING DELIVERED COST TO THE GOVERNMENT. (THIS PARAGRAPH APPLICABLE ONLY IF GUARANTEED SHIPPING WEIGHT REQUESTED IN SCHEDULE.) EACH BIDDER SHALL STATE IN THE BLANKS PROVIDED THEREFOR IN THE SCHEDULE, THE TOTAL SHIPPING WEIGHT OF EACH ITEM THAT HE PROPOSES TO FURNISH. THE WEIGHTS STATED WILL BE USED IN COMPUTING THE DELIVERED COST TO THE GOVERNMENT AND IN DETERMINING THE LOW BID. FAILURE TO STATE THE SHIPPING AND DELIVERY POINTS AND THE TOTAL SHIPPING WEIGHT OF EACH ITEM WILL BE CONSIDERED SUFFICIENT CAUSE FOR REJECTING THE BID. ALL EQUIPMENT, MATERIALS, AND SUPPLIES FURNISHED AND DELIVERED F.O.B. CARS AT CONTRACTOR'S SHIPPING POINT SHALL BE SHIPPED ON GOVERNMENT BILLS OF LADING. IN THE CASE OF EQUIPMENT, MATERIALS AND SUPPLIES FURNISHED AND DELIVERED F.O.B CARS AT DESTINATION, THE GOVERNMENT RESERVES THE RIGHT TO HAVE SHIPMENT MADE ON GOVERNMENT BILLS OF LADING AND TO DEDUCT, FROM ANY PAYMENT DUE THE CONTRACTOR, THE COST OF TRANSPORTATION, FROM THE CONTRACTOR'S SHIPPING POINT TO DESTINATION, OF THE TOTAL SHIPPING WEIGHT STATED IN THE SCHEDULE, AT COMMERCIAL FREIGHT RATES. IF THE ACTUAL SHIPPING WEIGHT, INCLUDING PACKING, AS LATER DETERMINED BY THE FREIGHT BILL, EXCEEDS THE SHIPPING WEIGHT STATED IN THE SCHEDULE, IN EITHER SHIPPING POINT OR DESTINATION BIDS, THE GOVERNMENT WILL DEDUCT, FROM ANY PAYMENT DUE THE CONTRACTOR, THE COST OF TRANSPORTATION AT COMMERCIAL FREIGHT RATES, ON ALL EXCESS WEIGHT OVER AND ABOVE THE WEIGHT STATED IN THE SCHEDULE.

THE SCHEDULE CALLED UPON THE BIDDER TO SHOW THE DESIGNATED INFORMATION AND BLANK SPACES THEREFOR WERE FILLED IN APPARENTLY BY THE BIDDER AS FOLLOWS:

STATE GUARANTEED SHIPPING WEIGHT, 450 LBS.

NOTE.--- BID WILL BE CONSIDERED AS INCOMPLETE WITHOUT THIS INFORMATION.

F.O.B. CARS DELIVERY POINT, DENVER, COLO.

SHIPPING POINT, ST. LOUIS, MO.

THE BID OF THE RICE-STIX DRY GOODS CO. SHOWING THE INFORMATION AS ABOVE STATED:

IN COMPLIANCE WITH THE ABOVE INVITATION FOR BIDS, AND SUBJECT TO ALL THE CONDITIONS THEREOF, THE UNDERSIGNED OFFERS, AND AGREES, * * * TO FURNISH ANY OR ALL OF THE ITEMS UPON WHICH PRICES ARE QUOTED, AT THE PRICE SET OPPOSITE EACH ITEM, F.O.B. DENVER, COLO. * * *

THE BID SO SUBMITTED WAS ACCEPTED OCTOBER 16, 1936, AS FOLLOWS:

ACCEPTED AS TO ITEMS NUMBERED--- ITEM NO. 1 AT $0.08 5/8 PER YARD, F.O.B. CARS DENVER, COLORADO, WITH SHIPMENT ON GOVT. B/L FROM ST. LOUIS, MISSOURI, AND LESS COMMERCIAL FREIGHT.

IT IS INDICATED THAT THE QUESTIONING, AT THIS TIME, OF THE RIGHT TO DEDUCTION FOR LAND GRANT ON SHIPMENTS SUCH AS THESE, MERELY BECAUSE THE BILL OF LADING, IN THE SPACE RESERVED THEREON FOR THE CERTIFICATE OF THE ISSUING OFFICER, NAMES THE DESTINATION OF THE SHIPMENT AS THE F.O.B. POINT NAMED IN THE CONTRACT--- AFTER A PRACTICE ON THE PART OF THE CARRIERS TO THE CONTRARY, FOR MANY YEARS, OF ACCEPTING PAYMENT ON THE LAND-GRANT BASIS FOR OTHER SHIPMENTS MOVING UNDER BILLS OF LADING SHOWING SIMILAR INFORMATION--- IS PROBABLY PROMPTED BY THE FACT THAT UNDER DATE OF JANUARY 6, 1936, THE ASSISTANT DIRECTOR OF PROCUREMENT, TREASURY DEPARTMENT, ISSUED PROCUREMENT DIVISION BULLETIN S.P.O. NO. 72, ADDRESSED TO STATE PROCUREMENT OFFICERS, TO WHICH YOU REFER, AND WHICH STATES:

THERE HAS BEEN BROUGHT TO THE ATTENTION OF THE PROCUREMENT DIVISION THE FACT THAT IN NUMEROUS INSTANCES INVITATIONS TO BID ARE ISSUED CALLING FOR DELIVERY F.O.B. DESTINATIONS WITH CLAUSE INSERTED PROVIDING FOR DEDUCTION OF COMMERCIAL FREIGHT CHARGE FROM CONTRACTORS' INVOICES AND THE ISSUANCE OF GOVERNMENT BILLS OF LADING TO COVER THE MOVEMENTS. IN SOME CASES MATERIALS HAVE BEEN PURCHASED F.O.B. DESTINATION, MOVED ON COMMERCIAL BILLS OF LADING AND UPON ARRIVAL AT DESTINATIONS THE COMMERCIAL BILLS OF LADING WERE CONVERTED INTO GOVERNMENT BILLS OF LADING. THE PURPOSE OF THE OFFICES WHICH HAVE FOLLOWED THESE PRACTICES HAS BEEN THE REDUCTION IN TRANSPORTATION COSTS THROUGH THE MEDIUM OF DEDUCTIONS ACCOUNT OF LAND GRANT FROM COMMERCIAL RATES.

EFFORTS OF STATE PROCUREMENT OFFICES TO REDUCE COSTS BY PROPER MEANS ARE COMMENDATORY AND ARE ENCOURAGED, BUT THERE IS SERIOUS DOUBT OF THE PROPRIETY OF THE MEASURES DESCRIBED IN THE PRECEDING PARAGRAPH. DEDUCTIONS ACCOUNT OF LAND GRANT CAN BE MADE ONLY ON TRANSPORTATION CHARGES ON GOVERNMENT PROPERTY. THE TITLE TO PROPERTY PURCHASED BY THE GOVERNMENT UNDER CONTRACTS CALLING FOR DELIVERY F.O.B. DESTINATION DOES NOT PASS TO THE GOVERNMENT UNTIL ARRIVAL OF THE MATERIAL ON CARS AT THE USUAL PLACE OF DELIVERY AT THE DESTINATION NAMED IN THE CONTRACT. ANY ATTEMPT TO CHANGE THE TERMS OF PURCHASE AFTER THE AWARD OF CONTRACT FOR THE PURPOSE OF SECURING BENEFIT OF LAND GRANT DEDUCTIONS ON TRANSPORTATION CHARGES IS SUBJECT TO MISINTERPRETATION AND MUST NOT BE PERMITTED. BEST, THERE IS REASONABLE DOUBT THAT DEDUCTION OF COMMERCIAL FREIGHT CHARGE FROM VENDORS' INVOICES AND THE ISSUANCE OF GOVERNMENT BILLS OF LADING, OR SUBSTITUTION THEREOF FOR COMMERCIAL BILLS OF LADING WHERE INVITATION TO BID AND AWARD OF CONTRACT PROVIDE FOR DELIVERY, F.O.B. DESTINATION, HAS THE EFFECT OF VESTING TITLE IN THE GOVERNMENT AT POINT OF ORIGIN.

THE PRACTICES HERETOFORE FOLLOWED AND DESCRIBED HEREIN WILL BE DISCONTINUED IMMEDIATELY. FOR THE FUTURE, STATE PROCUREMENT OFFICERS WILL MAKE PROVISION FOR AWARD OF CONTRACTS F.O.B. POINT OF ORIGIN IN CASES WHERE ECONOMY CAN BE EFFECTED IN TRANSPORTATION COSTS BY MEANS OF LAND GRANT DEDUCTIONS FROM COMMERCIAL RATES. IN CASES WHERE MATERIAL WILL ORIGINATE AT AND BE DESTINED TO POINTS BETWEEN WHICH NO LAND GRANT IS AVAILABLE, PURCHASES WILL BE MADE F.O.B. DESTINATION, SHIPMENTS TO MOVE ON COMMERCIAL BILLS OF LADING AND TRANSPORTATION CHARGES TO BE PAID BY VENDOR.

IT IS REALIZED THAT THESE DIRECTIONS WILL NECESSITATE THE COMPUTATION OF NET FREIGHT RATES IN MANY INSTANCES IN ORDER TO DETERMINE LOW BIDDER, WHICH WILL OCCASIONALLY RESULT IN SOME DELAY IN AWARDING CONTRACT. THE TRAFFIC SECTION, PROCUREMENT DIVISION, IS, HOWEVER, EQUIPPED TO SUPPLY NECESSARY RATE INFORMATION PROMPTLY, AND IT IS NOT ANTICIPATED THAT THIS FACTOR WILL MATERIALLY RETARD ANY PROJECT. THE QUESTION THUS PRESENTED ARISES BY REASON OF THE PROVISION OF THE LAND-GRANT STATUTES FOR TRANSPORTATION OF PROPERTY AND TROOPS OF THE UNITED STATES OVER LAND-GRANT RAILROADS AT REDUCED RATES. IT HAS BEEN HELD THAT THE REDUCED RATES SO CONTEMPLATED CAN NOT BE REQUIRED FOR APPLICATION IN CONNECTION WITH THE TRANSPORTATION OF THE PERSONAL BAGGAGE AND PRIVATE MOUNTS OF ARMY OFFICERS, EVEN THOUGH SUCH OFFICERS MAY BE ENTITLED TO HAVE THEIR PERSONAL BAGGAGE AND PRIVATE MOUNTS TRANSPORTED AT GOVERNMENT EXPENSE. SEE OREGON WASHINGTON RAILROAD AND NAVIGATION COMPANY V. UNITED STATES, 255 U.S. 339, AND UNITED STATES V. GALVESTON, HARRISBURG AND SAN ANTONIO RAILWAY COMPANY, 279 U.S. 401. THE PRESENT SUBMISSION SEEKS A LIKE AVOIDANCE OF THE APPLICATION OF LAND-GRANT RATES TO THE TRANSPORTATION OF THE SHIPMENTS HERE CONCERNED ON THE THEORY THAT THE MATERIALS TRANSPORTED WERE NOT, DURING THE PERIOD OF TRANSPORTATION, PROPERTY OF THE UNITED STATES.

THE INSISTENCE THAT THESE MATERIALS WERE NOT PROPERTY OF THE UNITED STATES APPEARS TO BE RESTED MAINLY ON THE FACT THAT THE BILLS OF LADING ISSUED FOR THE TRANSPORTATION SERVICE HAVE NOTATIONS INDICATING THAT THE MATERIALS WERE PURCHASED F.O.B. DESTINATION. THE QUESTION, HOWEVER, AS TO WHEN THE TITLE TO THE GOODS IN QUESTION PASSED TO THE UNITED STATES IS GOVERNED BY THE INTENTION OF THE PARTIES TO THE CONTRACT OF PURCHASE AND THE MERE FACT OF A NOTATION ON THE BILLS OF LADING IN THIS CONNECTION IS NOT CONTROLLING ON THAT QUESTION. IN HATCH V. OIL COMPANY, 100 U.S. 124, 135-137, IT WAS SAID:

EVEN WHEN A PLACE OF DELIVERY IS SPECIFIED, IT DOES NOT NECESSARILY FOLLOW THAT THE TITLE DOES NOT PASS BEFORE THEY (I.E. THE GOODS SOLD) REACH THE DESIGNATED PLACE, AS THAT MAY DEPEND UPON THE INTENTION OF THE PARTIES; AND WHETHER THEY DID OR DID NOT INTEND THAT THE TITLE SHOULD VEST BEFORE THAT IS A QUESTION FOR THE JURY, TO BE DETERMINED BY THE WORDS, ACTS, AND CONDUCT OF THE PARTIES AND ALL THE CIRCUMSTANCES.

STIPULATIONS IN RESPECT TO THE FORWARDING AND SHIPPING THE STAVES ARE ALSO CONTAINED IN THE SECOND AGREEMENT; BUT IT IS NOT NECESSARY TO ENTER INTO ANY DISCUSSION OF THAT TOPIC, AS IT APPEARS THAT THE MANUFACTURERS, IF THEY DID ANYTHING IN THAT REGARD, WERE TO ACT AS THE AGENTS OF THE PLAINTIFFS, * * *

THAT IT IS THE INTENTION OF THE PARTIES AS DETERMINED FROM THE ENTIRE TRANSACTION OF PURCHASE RATHER THAN THE EFFECT OF ISOLATED AND INEPT PHRASES OCCURRING IN THE NEGOTIATIONS THAT GOVERNS THE MATTER OF PASSING OF TITLE TO ARTICLES PROCURED THROUGH PURCHASE HAS BEEN GIVEN APPLICATION BY THE COURTS IN CONSIDERING THE RIGHT OF THE GOVERNMENT TO DEDUCTION CONNECTION WITH WHICH THE QUESTION OF TITLE OR OWNERSHIP HAS BEEN RAISED. THUS IN LOUISVILLE AND NASHVILLE RAILROAD COMPANY V. UNITED STATES, 267 U.S. 395, THERE WAS INVOLVED THE TRANSPORTATION OF CERTAIN COAL PURCHASED FROM THE GULF STATES COAL COMPANY UNDER A CONTRACT OF MARCH 15, 1915, WHICH PROVIDED THAT THE CONTRACTOR SHOULD- -

* * * FURNISH AND HAVE DELIVERED ON UNITED STATES BARGES, OR IN BUNKERS, FROM HOISTS, IN CARLOAD LOTS, AT MOBILE, ALABAMA, WHEN REQUESTED, EIGHTEEN THOUSAND SHORT TONS, MORE OR LESS. * * * COAL TO BE SHIPPED ON GOVERNMENT BILL OF LADING, TO BE FURNISHED BY THE CONTRACTING OFFICER, THE UNITED STATES TO PAY RAILROAD FREIGHT CHARGES BETWEEN DIXIANA AND MOBILE AND THE CONTRACTOR TO PROVIDE FOR TRANSFERRING THE COAL FROM CARS TO UNITED STATES BARGES AND TO PAY ALL DEMURRAGE CHARGES THAT MAY ACCRUE. * * *

THE SPECIFICATIONS, MADE A PART OF THE CONTRACT SHOWED, HOWEVER, THAT IN ORDER TO PERMIT THE UNITED STATES TO TAKE ADVANTAGE OF LANDGRANT RATES, THE PROPOSAL CONTEMPLATED EITHER DELIVERY AT THE MINE, WHICH WAS LOCATED AT DIXIANA, FROM WHICH SHIPMENT WOULD BE MADE ON GOVERNMENT BILL OF LADING TO MOBILE, OR DELIVERY AT MOBILE DEPENDING UPON WHICH OPERATED TO THE GREATER ADVANTAGE IN THE MATTER OF DELIVERED COST AT MOBILE. THE COURT SAID:

THE LANGUAGE "SHALL FURNISH AND HAVE DELIVERED ON UNITED STATES BARGES * * *," IF IT STOOD ALONE, MIGHT BE TAKEN TO INDICATE THAT DELIVERY WAS TO BE MADE AFTER TRANSPORTATION. BUT WHEN READ, AS IT MUST BE, WITH THE ADVERTISEMENT AND SPECIFICATIONS, AND IN THE LIGHT OF WHAT WAS DONE, IT APPEARS WITH REASONABLE CERTAINTY THAT DELIVERY AT THE MINES WAS CONTEMPLATED. THE SPECIFICATIONS DISTINCTLY SHOW THAT, IF MINE DELIVERY SHOULD BE SELECTED, THE COAL WOULD BE ORDERED IN CARLOAD LOTS AND SHIPPED ON GOVERNMENT BILLS OF LADING. IN HARMONY WITH THAT PROVISION, THE CONTRACT REQUIRED SHIPMENT IN CARLOAD LOTS ON FORMS OF BILLS OF LADING FURNISHED BY THE CONTRACTING OFFICER, AND BOUND THE UNITED STATES TO PAY FREIGHT CHARGES FROM THE MINE TO MOBILE. THIS MEANT THAT THE CONTRACTOR WAS NOT TO BE CONCERNED WITH OR RESPONSIBLE FOR THE TRANSPORTATION BY RAIL. BUT, IF DELIVERY AT GULF PORTS HAD BEEN SELECTED, THE CONTRACTOR WOULD HAVE BEEN BOUND TO HIRE THE CARRIER AND TO PAY THE FREIGHT. THE PROVISIONS OF THE CONTRACT AND SPECIFICATIONS TOGETHER AMOUNT TO A DECLARATION OF THE PARTIES THAT THERE WAS TO BE DELIVERY OF THE WHOLE QUANTITY AT THE MINE, AND THE CONDUCT OF THE PARTIES WAS IN HARMONY WITH THAT PURPOSE AND INCONSISTENT WITH AN INTENTION THAT DELIVERY TO THE UNITED STATES SHOULD BE MADE AFTER TRANSPORTATION BY RAIL WAS ENDED. THE GENERAL RULE IS THAT TITLE PASSES FROM SELLER TO BUYER WITH THE DELIVERY OF THE GOODS. ALL THE COAL EXCEPT THAT FURNISHED THE TONOPAH WAS DELIVERED BY THE SELLER TO THE UNITED STATES AT THE MINES ON BOARD RAILROAD CARS OF APPELLANT, A COMMON CARRIER DESIGNATED BY THE UNITED STATES BY THE FURNISHING OF GOVERNMENT BILLS OF LADING. IT MUST BE HELD THAT TITLE PASSED AT THE TIME OF SUCH DELIVERIES. SEE UNITED STATES V. ANDREWS, 207 U.S. 229, 240, 243.

THUS, ALTHOUGH THE CONTRACT PROVIDED THAT THE VENDOR SHOULD HAVE THE COAL DELIVERED AT MOBILE THE COURT FOUND THAT THE INTENTION OF THE PARTIES, AS ESTABLISHED FROM THE ENTIRE NEGOTIATIONS AND PERFORMANCE, CONTEMPLATED DELIVERY AND TRANSFER OF TITLE AT THE MINES, WITH THE RESULT THAT THE GOVERNMENT WAS ENTITLED TO DEDUCTION FOR LAND GRANT. RELATIVE TO THE COAL FURNISHED THE TONOPAH, TITLE TO WHICH IT WAS HELD DID NOT PASS AT POINT OF SHIPMENT, IT WILL BE NOTED FROM FINDING XII BY THE COURT OF CLAIMS, 57 CT.CLS. 268, 274, THAT THE NEGOTIATIONS DID NOT CONTAIN ANY INDICATION OF AN INTENTION ON THE PART OF THE GOVERNMENT TO AVAIL ITSELF OF THE BENEFIT OF LAND GRANT THROUGH STIPULATION FOR DELIVERY AT THE MINE. THAT PURCHASE WAS MADE BY THE ASSISTANT PAYMASTER OF THE VESSEL TONOPAH WHO INVITED BIDS FOR FURNISHING THE COAL ALONGSIDE THE VESSEL AT PENSACOLA, FLA. THE PROPOSAL OF THE BIDDER SPECIFIED A PRICE OF $3.59 PER TON, OR IF GOVERNMENT BILLS OF LADING SHOULD BE FURNISHED $2.36 PER TON. THE BID OF $2.36 WAS ACCEPTED AND GOVERNMENT BILLS OF LADING WERE FURNISHED. THE FACTS, AS THUS FOUND, APPARENTLY WERE REGARDED AS AFFORDING NO INDICATION THAT THE GOVERNMENT CONTEMPLATED DELIVERY AT THE MINE. THERE WAS NOTHING TO SHOW THAT THE QUESTION OF LAND GRANT, OR OF ANY BENEFIT WHICH COULD ACCRUE ONLY ON THE BASIS OF A MUTUALLY UNDERSTOOD CONDITION THAT TITLE SHOULD PASS AT TIME OF SHIPMENT, WAS CONSIDERED. SUCH INTENTION WAS MANIFEST, HOWEVER, AS TO THE OTHER CONTRACTS THERE CONCERNED AND IS ALSO MANIFEST FROM THE NEGOTIATIONS INVOLVED IN THE PRESENT MATTER.

SIMILARLY IN THE CASE OF THE ILLINOIS CENTRAL RAILROAD COMPANY V. UNITED STATES, 57 CT.CLS. 277, AFFIRMED 265 U.S. 209, THERE WERE INVOLVED VARIOUS SHIPMENTS OF PROPERTY PURCHASED BY THE GOVERNMENT FOR USE IN IMPROVEMENT OF THE MISSISSIPPI RIVER, UNDER CONTRACTS WHICH CALLED FOR DELIVERY ON BOARD CARS AT POINT OF SHIPMENT, BUT SUBJECT TO INSPECTION AND ACCEPTANCE OR REJECTION AT OR BEYOND DESTINATION. THE INVITATION FOR BIDS, ACCORDING TO THE FINDINGS OF FACTS BY THE COURT OF CLAIMS INCLUDED THE FOLLOWING STATEMENT:

"THE PRICES WILL BE FOR THE ARTICLES DELIVERED F.O.B. CARS AT (PLACE OF SHIPMENT). THE SUCCESSFUL BIDDER WILL PROCURE THE CARS, BUT THE UNITED STATES WILL PAY THE FREIGHT AND FURNISH SHIPPING INSTRUCTIONS AND BILLS OF LADING. THIS ARRANGEMENT IS MADE TO ENABLE THE GOVERNMENT TO TAKE ADVANTAGE OF LAND-GRANT RATES, AND WILL NOT OPERATE TO RELIEVE THE DEALER OF ANY RESPONSIBILITIES AS SHIPPER THAT WOULD ATTACH IF DELIVERY HAD BEEN MADE AT DESTINATION.' * * *

THE SHIPMENTS WERE ALL MADE ON GOVERNMENT BILLS OF LADING, WHICH WERE ACCOMPLISHED, THE ARTICLES INSPECTED, AND ACCEPTED AT POINTS OF USE BY THE PROPER GOVERNMENT OFFICIALS. * * *

UPON CONSIDERATION OF THIS CASE BY THE SUPREME COURT OF THE UNITED STATES IT WAS SAID:

WE AGREE WITH THE COURT OF CLAIMS THAT "THE UNITED STATES AND THE CONTRACTORS WERE PRIVILEGED TO WRITE INTO THEIR CONTRACT SUCH TERMS AS THEY SAW FIT" AND THAT "PROVISIONS FOR A FINAL INSPECTION AT POINT OF DELIVERY OR FOR THE RENDERING OF A FURTHER SERVICE BY THE CONTRACTOR AT THAT POINT WERE NOT INCONSISTENT WITH AND COULD NOT BE INVOKED TO NULLIFY A SPECIFIC PROVISION UNDER WHICH THE TITLE TO THE PROPERTY PASSED TO THE UNITED STATES BY DELIVERY AT THE INITIAL POINT OF SHIPMENT TO THE CARRIER AS AGENT. LAND-GRANT RATES WERE APPLICABLE.' SEE HATCH V. OIL COMPANY, 100 U.S. 124, 134, 135.

THE GOVERNMENT DEALT WITH THE CONSIGNORS AS IF THE PROPERTY WAS ITS -- DEALT WITH THE RAILROAD COMPANY AS IF THE PROPERTY WAS ITS, THE GOVERNMENT -S, AND, AS WE HAVE SEEN, THE RAILROAD COMPANY DEALT WITH THE GOVERNMENT ON THAT ASSUMPTION, AND THE CONTRACTORS DEALT WITH IT ON THAT ASSUMPTION. THE INCIDENTAL REGULATIONS BETWEEN IT AND THE CONTRACTORS CANNOT DIVEST THAT OWNERSHIP IN THE INTEREST OF THE RAILROAD COMPANY. U.S. 505, CITED BY THE CARRIER AS SUPPORTING THE CONCLUSION THAT TITLE DID NOT PASS TO THE UNITED STATES UNTIL ACCEPTANCE OF THE SHIPMENTS AT DESTINATION, THE COURT SAID:

THE CASE DOES NOT SUSTAIN THE CONTENTION. IT WAS DECIDED THAT THE INTENTION OF THE PARTIES WAS DETERMINATIVE, NOT AN ARBITRARY RULE OF CONSTRUCTION. IN THE CASE AT BAR THE FINDINGS OF THE COURT DEMONSTRATE THAT THE GOVERNMENT ESPECIALLY INTENDED TO AVAIL ITSELF OF THE FACT THAT THE SHIPMENTS WERE TO BE TRANSPORTED OVER LAND-GRANT ROADS, AND THAT IT WAS ENTITLED TO DEDUCTIONS FROM THE COMMERCIAL RATES.

THE RIGHT OF THE GOVERNMENT TO THE DEDUCTIONS FOR LAND GRANT WAS ACCORDINGLY UPHELD.

TO THE SAME GENERAL EFFECT SEE CHICAGO, MILWAUKEE AND ST. PAUL RAILWAY CO. V. UNITED STATES. 57 CT.CLS. 569, AFFIRMED IN 267 U.S. 403. IN THIS CASE, IN FINDING V BY COURT OF CLAIMS, IT WAS STATED IN CONNECTION WITH SHIPMENTS UNDER A CONTRACT WITH CRERAR, CLINCH AND CO.:

* * * THE PRICE NAMED APPLIED AT THE MINES, FREE ON BOARD CARS, BUT THE CONTRACT PROVIDED THAT THE COALS SHOULD BE SUBJECT TO "INSPECTION AND ACCEPTANCE OR REJECTION BY RECEIVING QUARTERMASTER AT FINAL DESTINATION.'

IN THE OPINION OF THE COURT IT WAS STATED.

THE GRAVAMEN OF THE PLAINTIFF'S COMPLAINT IS THAT THE PROPERTY WHICH WAS SHIPPED OVER ITS LINES WAS NOT GOVERNMENT PROPERTY, BUT WAS PROPERTY BELONGING TO PRIVATE PERSONS, AND WAS THEREFORE NOT SUBJECT TO LAND-GRANT DEDUCTIONS. THE EVIDENCE IN THE CASE DISCLOSES THAT IN EVERY INSTANCE THE PROPERTY BELONGED TO THE GOVERNMENT, AND THEREFORE THE PLAINTIFF IS NOT ENTITLED TO RECOVER.

THAT THE SUBSTANCE OF A CONTRACT OF PURCHASE RATHER THAN THE FORM IS THE ESSENTIAL MATTER ON A QUESTION SUCH AS HERE FOR CONSIDERATION IS WELL ESTABLISHED IN THE CASE OF R. P. ANDREWS AND CO. V. UNITED STATES, 41 CT.CLS. 48, AFFIRMED, UNITED STATES V. ANDREWS, 207 U.S. 229. IN THAT CASE R. P. ANDREWS AND CO. WAS QUERIED BY THE DIVISION OF INSULAR AFFAIRS, WAR DEPARTMENT, AS TO WHETHER THEY WOULD FURNISH CERTAIN PAPER---

* * * F.O.B., MANILA, AT THE PRICE AT WHICH THE SAME IS NOW FURNISHED TO THE GOVERNMENT PRINTING OFFICE, WASHINGTON, D.C., PLUS FREIGHT FROM NEW YORK; PAYMENT TO BE MADE FROM PHILIPPINE FUNDS ON INVOICE VERIFICATION AT MANILA, P.I.

AND UPON REPLY TO THE EFFECT THAT SUCH PAPER, WITH EXCEPTIONS NOT MATERIAL HERE, WOULD BE FURNISHED---

* * * AT THE PRICES FOR WHICH THE SAME IS NOW BEING FURNISHED TO THE GOVERNMENT PRINTING OFFICE, WASHINGTON, D.C., PLUS FREIGHT RATE FROM NEW YORK TO MANILA, P.I., * * *. PAYMENT TO BE MADE FROM PHILIPPINE FUNDS ON INVOICE VERIFICATION AT MANILA, P.I. * * *

THE COMPANY WAS INSTRUCTED IN LETTER OF AUGUST 28, 1901,

PLEASE DELIVER F.O.B. MANILA, P.I. (VIA SUEZ CANAL), THE FOLLOWING:

ARTICLES CALLED FOR IN INCLOSURES 1 AND 2.

SHIP CARE BARBER AND CO., STEAMSHIP AGENTS, PIER B, PENNSYLVANIA DOCKS JERSEY CITY, N.J. (SEE NOTE INCLOSED).

THE NOTE INCLOSED STATED THAT A SPECIAL ARRANGEMENT HAD BEEN MADE SO THAT AFTER F.O.B. DELIVERY AT JERSEY CITY, N.J. (SUBSEQUENTLY CHANGED TO BROOKLYN, N.Y.) THE FREIGHT RATE WOULD NOT BE HIGHER THAN $11.05 PER TON AND THAT THE "PHILIPPINE GOVERNMENT WILL, UPON INVOICE VERIFICATION AT MANILA, REIMBURSE YOU FOR THE COST OF THIS OCEAN SHIPMENT.' ANDREWS AND CO. MADE THE SHIPMENT AS DIRECTED AND PREPAID THE FREIGHT.

A QUESTION AS TO THE OWNERSHIP OF THE PROPERTY HAVING ARISEN BY REASON OF THE FACT THAT THE PAPER, HAVING BEEN DAMAGED BY WATER IN TRANSIT, WAS PRACTICALLY WORTHLESS UPON DELIVERY AT MANILA, IT WAS DETERMINED THAT TITLE PASSED UPON SHIPMENT FROM NEW YORK. 41 CT.CLS. 48. IN DISPOSING OF THE CASE UPON APPEAL THE SUPREME COURT SAID, WITH RESPECT TO THE TERM "F.O.B. MANILA" AS USED BY THE DIVISION OF INSULAR AFFAIRS IN OPENING THE NEGOTIATIONS: * * * CONSIDERING THAT CONTEXT, IT WOULD SEEM MOST REASONABLE TO CONCLUDE THAT THE WORDS IMPLIED THAT, AS THE GOVERNMENT DESIRED THE FREIGHT TO MANILA TO BE INCLUDED IN THE PURCHASE PRICE, THE FREIGHT THEREFORE TO MANILA WAS TO BE PRIMARILY DEFRAYED BY THE SELLER. * * MOREOVER, WE THINK THE SUBSEQUENT CORRESPONDENCE, WHEN CONSIDERED IN OTHER ASPECTS, MAKES CERTAIN THE CONCLUSION THAT THE WORDS "F.O.B. MANILA," AS USED IN THE PROPOSAL, MEANT PRECISELY WHAT WE HAVE STATED THE CONTEXT OF THE PROPOSAL INDICATED THAT THOSE WORDS WERE INTENDED TO IMPLY. THIS WE THINK RESULTS FROM THE PROVISIONS OF THE LETTER OF AUGUST 28, SELECTING A PARTICULAR FIRM TO WHOM THE GOODS WERE TO BE DELIVERED FOR TRANSPORT TO MANILA, AND OF ALL THE OTHER DIRECTIONS CONTAINED IN THE LETTER, SINCE THEY ARE INCONSISTENT WITH THE THEORY THAT THE WORDS "F.O.B. ANILA" WERE USED AS MEANING THAT THE GOODS SHOULD NOT BE DELIVERED AS DIRECTED, BUT SHOULD REMAIN THE PROPERTY OF ANDREWS AND CO. AND BE UNDER THEIR CONTROL AND SUBJECT TO THEIR RISK UNTIL DELIVERED AT MANILA. * * *

THUS THE COURT DECLINED TO LET THE FORM IN WHICH THE UNDERTAKING WAS STATED, NAMELY TO FURNISH AT A PRICE F.O.B. MANILA, PREVAIL OVER WHAT WAS DETERMINED, UPON CONSIDERATION OF THE ENTIRE TRANSACTION, TO HAVE BEEN THE SUBSTANCE OF THE AGREEMENT AS CONTEMPLATING AND REQUIRING DELIVERY AT NEW YORK.

AND SO IN THE INSTANT MATTER THE MERE USE OF A PROVISION INDICATING A PRICE F.O.B. DESTINATION IN A CONTRACT CONTAINING AN ALTERNATE PROVISION UNDER WHICH IN EFFECT THERE ARISES ANOTHER PRICE FOR DELIVERY AT POINT OF SHIPMENT IS NOT TO BE REGARDED AS CONCLUSIVE UPON THE QUESTION OF TITLE TO THE PROPERTY DURING TRANSIT, SINCE THE ENTIRE TRANSACTION, PARTICULARLY IF VIEWED IN THE LIGHT OF A PRACTICE THAT HAS MAINTAINED FOR YEARS TO THE CONTRARY, ESTABLISHES AN INTENT AND UNDERSTANDING CONTEMPLATING DELIVERY TO THE GOVERNMENT AT POINT OF SHIPMENT.

SOME MISAPPREHENSION IN THIS CONNECTION APPEARS TO HAVE RESULTED FROM THE PRACTICE ON THE PART OF THE GOVERNMENT OF RESERVING THE RIGHT TO DEDUCT FROM PRICES, WHICH INCLUDE COST OF TRANSPORTATION TO DESTINATION, THE AMOUNT OF THE TRANSPORTATION COST SO INCLUDED AND TO REQUIRE SHIPMENT ON GOVERNMENT BILLS OF LADING. THUS IN CONNECTION WITH THE PRESENT MATTER YOU URGE:

* * * THIS MUCH IS PERFECTLY CLEAR, AND ADMITTED BY THE GOVERNMENT, IN CONNECTION WITH BOTH SHIPMENTS:

1. BOTH SHIPMENTS WERE PURCHASED F.O.B. DESTINATION.

2. BOTH BILLS OF LADING BORE A NOTATION "F.O.B. DENVER" OR "F.O.B. BALLANTINE" AS THE CASE MAY BE.

3. IN BOTH CASES, THE VENDOR AND NOT THE GOVERNMENT BORE THE TRANSPORTATION CHARGES.

CONCERNING THE STATEMENT THAT THE VENDOR AND NOT THE GOVERNMENT BORE THE TRANSPORTATION CHARGES, A CAREFUL ANALYSIS OF WHAT ACTUALLY TRANSPIRED WOULD APPEAR TO ESTABLISH THE CONTRARY. BIDS WERE INVITED WHICH INCLUDED COST OF TRANSPORTATION TO DESTINATION. THAT BOTH PARTIES CONTEMPLATED THE INCLUSION OF SUCH COST IN THE BID PRICE IS INDICATED BY THE FACT THAT THE BIDDER WAS REQUIRED TO STATE HIS SHIPPING POINT AND WAS INFORMED IN THE INVITATION FOR BIDS THAT SHOULD THE GOVERNMENT SO ELECT IT WOULD ASSUME THE RESPONSIBILITY FOR TRANSPORTATION, ISSUING GOVERNMENT BILL OF LADING THEREFOR, AND REDUCE THE BID BY THE AMOUNT OF THE COST OF TRANSPORTATION COMPUTED ON THE BASIS OF THE COMMERCIAL FREIGHT RATE, THE COMMERCIAL FREIGHT RATE BEING THE FREIGHT RATE ON THE BASIS OF WHICH THE BIDDER'S DESTINATION BID PRICE OBVIOUSLY WOULD BE COMPUTED. THE FACT, THEREFORE, IS THAT IN ELECTING TO EXERCISE THE RIGHT SO RESERVED THE GOVERNMENT, AND NOT THE CONTRACTOR, ASSUMED THE RESPONSIBILITY FOR TRANSPORTATION, ISSUED THE BILL OF LADING FOR THE SERVICE, AND PAID THE CARRIER'S CHARGES, THE CONTRACTOR BEING RELIEVED OF ALL RESPONSIBILITY IN THAT CONNECTION AFTER DELIVERY ON BOARD CARS AT THE SHIPPING POINT AND HIS BID PRICE BEING ADJUSTED BY REASON THEREOF, IN ACCORDANCE WITH THE TERMS OF THE ARRANGEMENT, TO REFLECT IN EFFECT A PRICE FOR DELIVERY F.O.B. SHIPPING POINT. IN SUBSTANCE, THEREFORE, THE WHOLE ARRANGEMENT AND PERFORMANCE THEREUNDER CONTEMPLATED A PRICE FOR, AND RESULTED IN, A DELIVERY AT THE SHIPPING POINT. AS TO THE FACT THAT THE BILLS OF LADING BORE NOTATIONS INDICATING THE DESTINATIONS OF THE SHIPMENTS AS THE "F.O.B. POINT NAMED IN CONTRACT," IT IS TO BE NOTED THAT THE NOTATIONS ON THE BILLS OF LADING FORM NO PART OF THE CONTRACT BETWEEN THE PARTIES TO THE AGREEMENT OF PURCHASE AND MAY NOT BE RELIED UPON TO DEFEAT AN INTENTION OTHERWISE MANIFEST. MOREOVER, THERE IS FOR CONSIDERATION THE FACT THAT THE NOTATIONS ON THE BILLS OF LADING WERE INTENDED TO SERVE AS NOTICE TO THE GOVERNMENT AUDITORS HANDLING THE BILL FOR TRANSPORTATION THAT THE CONTRACTOR'S PRICE FOR THE MATERIAL SHOULD BE ADJUSTED TO CONFORM WITH DELIVERY AT THE SHIPPING POINTS. OBVIOUSLY THE NECESSITY FOR SUCH ADJUSTMENT IS MORE CLEARLY INDICATED BY SHOWING ON THESE BILLS OF LADING THE DESTINATION POINTS, RATHER THAN THE SHIPPING POINTS, AS THE POINTS ON WHICH THE PRICE STATED IN THE CONTRACT WAS ARRIVED AT.

IT IS WELL SETTLED THAT AS A GENERAL RULE THE DELIVERY OF GOODS BY A CONSIGNOR TO A COMMON CARRIER FOR ACCOUNT OF A CONSIGNEE HAS THE EFFECT OF DELIVERY TO THE CONSIGNEE. UNITED STATES V. ANDREWS, SUPRA. THAT SITUATION MAINTAINS IN THIS CASE. APPARENTLY THE ONLY MATTER RELIED UPON AS ESTABLISHING A DIFFERENT RESULT IS THE CIRCUMSTANCE THAT IN FIXING THE PRICE TO BE PAID SO AS TO INCLUDE THE COST OF TRANSPORTATION TO THE POINTS AT WHICH THE MATERIALS WERE TO BE USED, IN EVENT IT SHOULD BE CONSIDERED TO THE ADVANTAGE OF THE GOVERNMENT TO REQUIRE DELIVERY BY THE CONTRACTOR AT SUCH DESTINATION POINTS, THE CONTRACTS USED THE TERMS "F.O.B. CARS BALLANTINE, MONTANA" AND "F.O.B. CARS DENVER, COLO.' IT IS PARTICULARLY TO BE NOTED, HOWEVER, THAT BOTH CONTRACTS CONTAINED A PROVISION UNDER WHICH AN ALTERNATIVE ARRANGEMENT OR PERFORMANCE WOULD BE EFFECTIVE, IN EVENT THE GOVERNMENT SHOULD SO ELECT, UNDER WHICH THE PRACTICAL EFFECT WAS TO ACCEPT DELIVERY AT POINT OF SHIPMENT, RELIEVE THE CONTRACTOR FROM RESPONSIBILITY FOR THE TRANSPORTATION SERVICE, AND MAKE ADJUSTMENT OF PRICE ACCORDINGLY. SEE IN THIS CONNECTION THE HANS MAERSK, 266 FED. 806, AND POND CREEK MILL AND ELEVATOR COMPANY V. CLARK, 270 FED. 482. IN THE LATTER CASE IT WAS SAID:

THE LAW IS ALSO CLEAR THAT, IF IN A CONTRACT FOR PURCHASE AND SALE OF GOODS TO BE SHIPPED TO A GIVEN POINT NOTHING IS STATED AS TO THE PLACE OF DELIVERY, THE DELIVERY TO THE BUYER IS COMPLETE WHEN IT IS MADE TO THE COMMON CARRIER AT THE PLACE WHERE THE SELLER PRODUCES THEM OR HAS THEM FOR SALE. * * * IF THEREFORE THE CONTRACT CONTAINS NOTHING AS TO DELIVERY, THE LAW WOULD INCLUDE AS PART OF THE CONTRACT THAT THE DELIVERY OF THIS FLOUR WAS TO BE TO THE COMMON CARRIER AT POND CREEK, OKLA., AND THAT THIS WOULD BE DELIVERY TO THE BUYER. * * * AS INDICATED, HAD THIS CONTRACT, IN PLACE OF "* * * BASIS CHICAGO" EMPLOYED THE TERM "F.O.B. CHICAGO" THIS WOULD NOT HAVE CHANGED THE PLACE OF DELIVERY, WHICH WOULD STILL HAVE REMAINED OKLAHOMA, AND FROM THE STIPULATED PURCHASE PRICE THERE WOULD, NO MATTER WHERE THE FLOUR WAS SHIPPED, BE DEDUCTED AN AMOUNT SUFFICIENT TO HAVE PAID THE FREIGHT FROM POND CREEK TO CHICAGO.

CONCERNING THE FACT THAT THE CONTRACT THERE CONCERNED USED THE TERM "BASIS CHICAGO" INSTEAD OF ,DELIVERY CHICAGO" IT IS FOR NOTING THAT UNDER THE HOLDING IN UNITED STATES V. ANDREWS, SUPRA, EVEN THE USE OF THE TERM "DELIVER F.O.B. MANILA, P.I.' IS NOT CONTROLLING WHERE THE INTENTION IS MANIFEST OTHERWISE THAT THERE WAS IN THE CONTEMPLATION OF THE PARTIES MERELY A PRICE F.O.B. MANILA. AND SO IN THE INSTANT MATTER THE REQUESTING OF BIDS ON THE BASIS OF A PRICE AT DESTINATION, WITH A RESERVED RIGHT ON THE PART OF THE GOVERNMENT TO MAKE ITS OWN ARRANGEMENT FOR TRANSPORTATION ON GOVERNMENT BILL OF LADING, PAYING THE CARRIER, AND ADJUSTING THE BID PRICE OF THE CONTRACTOR ACCORDINGLY, WOULD APPEAR INCONSISTENT WITH THE THEORY THAT UNDER SUCH CIRCUMSTANCES THE CONTRACT REQUIRED DELIVERY BY THE VENDOR AT DESTINATION.

THE CASES OF BUCKINGHAM V. DAKE, 112 FED. 258, AND L. AND N. V. SLOSS- SHEFFIELD STEEL AND IRON CO., 295 FED. 53, AFFIRMED IN 269 U.S. 217, TO WHICH YOU REFER AS REQUIRING THE CONCLUSION THAT TITLE TO THE PROPERTY HERE CONCERNED DID NOT VEST IN THE UNITED STATES UNTIL IT REACHED DESTINATION, HAVE BEEN EXAMINED. IN THE FORMER CASE THERE WAS INVOLVED AN ATTEMPTED FRAUD IN WHICH THE VENDOR, WITHOUT THE VENDEE'S KNOWLEDGE OR CONSENT, SOUGHT TO SUBSTITUTE FOR CERTAIN PARTICULAR CATTLE PURCHASED CERTAIN OTHER CATTLE NOT PURCHASED. IT WAS SAID---

* * * HE (BUCKINGHAM) HAD PURCHASED CERTAIN CATTLE POINTED OUT TO HIM, LOCATED AT WOODBINE, AND CERTAIN OTHERS, REPRESENTED TO BE AT COUNCIL GROVE, AND HAD PURCHASED NO OTHER CATTLE. CERTAINLY GILLETT COULD NOT, WITHOUT BUCKINGHAM'S CONSENT, SUBSTITUTE OTHER CATTLE FOR THEM.

THE AUTHORITIES CITED BY COUNSEL RELATING TO THE PASSING OF TITLE TO SPECIFIC CHATTELS WHEN NOTHING REMAINS TO BE DONE IN THE WAY OF SPECIFICALLY APPROPRIATING THE SAME ARE, IN OUR OPINION, INAPPLICABLE TO THE PRESENT CASE. * * *

THUS APPARENTLY THE CONTENTION HAD BEEN THAT TITLE TO THE SUBSTITUTED CATTLE PASSED TO THE VENDEE UPON SHIPMENT, AND THAT CONTENTION WAS REJECTED BY THE COURT. CERTAINLY THE FACTS IN THAT CASE ARE SO MATERIALLY DIFFERENT FROM THE FACTS HERE CONCERNED AS TO MAKE THE DISPOSITION OF THAT CASE NO PRECEDENT IN THE INSTANT MATTER. CONCERNING THE STATEMENT, IN SAID CASE, OF THE GENERAL PRINCIPLE THAT IF A DELIVERY IS TO BE MADE AT A CERTAIN PLACE, THE VENDOR'S TITLE IS NOT DIVESTED UNTIL DELIVERY IS MADE AT THAT PLACE, AND THAT WHEN THE VENDOR BY THE TERMS OF THE CONTRACT IS TO PAY THE FREIGHT TO THE PLACE OF DELIVERY, TITLE IS NOT DIVESTED UNTIL THE TRANSPORTATION IS AT AN END, IT IS TO BE NOTED THAT THE APPLICATION OF THESE RULES PRESUPPOSES AN AGREEMENT FOR DELIVERY AT DESTINATION. HOWEVER, THE QUESTION OF WHETHER THE AGREEMENT IS IN FACT ONE FOR DELIVERY AT DESTINATION IS NOT CONCLUSIVELY ESTABLISHED FROM THE MERE OCCURRENCE IN NEGOTIATIONS OF A REFERENCE TO A PRICE FOR DELIVERY AT DESTINATION, AS CLEARLY SHOWN IN THE CASE OF UNITED STATES V. ANDREWS, SUPRA.

THE CASE OF L. AND N. V. SLOSS-SHEFFELD IRON AND STEEL CO., REFERRED TO ABOVE, INVOLVED A SUIT BASED UPON AN AWARD OF REPARATION BY THE INTERSTATE COMMERCE COMMISSION. THE RIGHT OF THE CONSIGNOR TO MAINTAIN THE SUIT WAS RESTED UPON THE FACT THAT THE CONSIGNOR WAS DAMAGED AS A RESULT OF THE APPLICATION OF AN UNREASONABLE RATE. IN CONSIDERING THAT QUESTION THE SUPREME COURT SAID---

* * * MOREOVER, THE BURDEN OF THE PUBLISHED FREIGHT RATE RESTED UPON THE CONSIGNOR UNDER THE BILL OF LADING, LOUISVILLE AND NASHVILLE R.R. CO. V. CENTRAL IRON AND COAL CO., 265 U.S. 59, 67, AS WELL AS UNDER THE CONTRACT OF SALE. THE PURCHASER WHO PAID THE FREIGHT DID SO SOLELY AS AGENT FOR THE SELLER. THE CARRIER DID NOT KNOW OF THE PROVISION IN THE SALES CONTRACTS. WITH THE RIGHTS OR EQUITIES AS BETWEEN SELLER AND PURCHASER IT HAD AND HAS NO CONCERN, NOR NEED WE CONCERN OURSELVES WITH THEM.

THE CASE, THEREFORE, APPARENTLY DID NOT INVOLVE ANY NECESSITY FOR DETERMINING THE MATTER OF OWNERSHIP OF THE PROPERTY WHILE IN TRANSIT, BUT INSTEAD APPEARS TO HAVE BEEN CONTROLLED, IN THE OPINION OF THE MAJORITY, BY THE FACT THAT THE CONSIGNOR WAS DAMAGED THROUGH THE UNREASONABLE RATE BY REASON OF THE FACT THAT UNDER THE BILL OF LADING AND THE CONTRACT OF SALE THE CONSIGNOR HAD THE BURDEN OF THE PUBLISHED FREIGHT RATE. IN THIS CONNECTION IT IS FOR NOTING PARTICULARLY THAT IN THE DISSENTING OPINION BY MR. JUSTICE STONE, THE TITLE WAS CONSIDERED AS BEING IN THE CONSIGNEE, SAID OPINION BEING AS FOLLOWS:

I DISSENT FROM THE OPINION OF THE MAJORITY OF THE COURT ON THE GROUND THAT THE CONSIGNEES WHO PAID THE FREIGHT TO PROCURE GOODS, THE TITLE TO WHICH WAS IN THEM WHEN SHIPPED, WERE WITHIN THE PROTECTION OF THE STATUTE PROHIBITING UNREASONABLE FREIGHT RATES, AND UPON PAYMENT OF THE ILLEGALLY EXACTED FREIGHT FROM THEIR OWN FUNDS THEY WERE THE PERSONS SUFFERING PROXIMATE DAMAGE AND WERE THEREFORE ENTITLED TO RECOVER THE EXCESS FREIGHT WITHIN THE MEANING OF THE STATUTE AND THE REASONING OF THE OPINION IN SOUTHERN PACIFIC CO. V. DARNELL-TAENZER CO., 245 U.S. 531.

IT IS FOR NOTING THAT THE DIFFERENCE BETWEEN THE CONCLUSION OF MR. JUSTICE STONE AND THE CONCLUSION OF THE MAJORITY GREW OUT OF THE QUESTION OF WHETHER THE CONSIGNOR OR THE CONSIGNEE WAS DAMAGED BY THE PUBLISHED RATE RATHER THAN THE QUESTION OF OWNERSHIP OF THE PROPERTY WHILE IN TRANSIT. THE CASE THEREFORE WOULD APPEAR AUTHORITY, RATHER THAN OTHERWISE, FOR THE PROPOSITION THAT, NOTWITHSTANDING THE ADJUSTMENT BETWEEN THE CONSIGNOR AND CONSIGNEE BY REASON OF FREIGHT CHARGES PAID BY THE CONSIGNEE ON MATERIAL PURCHASED AT A DELIVERED DESTINATION PRICE, THE TITLE TO THE PROPERTY PASSED TO THE CONSIGNEE UPON SHIPMENT.

WHEN CONSIDERATION IS GIVEN THE ENTIRE TRANSACTIONS INVOLVED IN THE PRESENT MATTER, IT WOULD APPEAR THAT THE SITUATION HERE IS IN ESSENCE AND IN FACT SUBSTANTIALLY THE SAME AS WAS INVOLVED IN THE CASES OF THE LOUISVILLE AND NASHVILLE R.R. CO. V. UNITED STATES, 267 U.S. 395 (EXCEPT AS TO THE CONTRACT FOR MATERIAL FURNISHED THE TONOPAH), THE ILLINOIS CENTRAL R.R. V. UNITED STATES, 265 U.S. 209, AND THE CHICAGO, MILWAUKEE AND ST. PAUL RAILWAY CO. V. UNITED STATES, 267 U.S. 403. THE INTENTION OF THE GOVERNMENT, AND THE UNDERSTANDING ACCORDINGLY OF THE BIDDERS CONCERNED, THAT THE RIGHT OF SHIPMENT ON GOVERNMENT BILLS OF LADING WAS RESERVED FOR THE SPECIFIC PURPOSE OF EFFECTING DELIVERY BY THE CONTRACTOR AT POINT OF SHIPMENT RATHER THAN AT DESTINATION IN ORDER THAT THE BENEFIT OF LAND-GRANT RATES MIGHT BE OBTAINED, THOUGH NOT SO EXPRESSLY AVOWED, WAS NEVERTHELESS EQUALLY AS MANIFEST IN THE PRESENT MATTERS AS IN THE CITED CASES. CERTAINLY AN ARBITRARY RULE OF CONSTRUCTION, UNDER WHICH AGREEMENTS FOR DELIVERY F.O.B. DESTINATION ARE CONSIDERED IN THE ABSENCE OF A SHOWING OTHERWISE AS INDICATING AN INTENTION TO PASS TITLE UPON DELIVERY AT DESTINATION, MAY NOT BE RELIED UPON TO DEFEAT AN OBVIOUS INTENTION TO THE CONTRARY AS EVIDENCED BY OTHER INCIDENTS OF THE TRANSACTION CLEARLY INCONSISTENT WITH THE RESULT THAT SUCH AN ARBITRARY CONSTRUCTION WOULD REACH. IN ONE OF THE CONTRACTS HERE CONCERNED NOT ONLY IS THE INFERENCE THAT TITLE WAS INTENDED TO PASS UPON SHIPMENT CLEAR FROM THE NEGOTIATIONS RESERVING THE RIGHT OF SHIPMENT ON A GOVERNMENT BILL OF LADING WITH CORRESPONDING ADJUSTMENT OF THE CONTRACT PRICE, BUT THE PARTIES THEMSELVES EXPRESSLY AVOWED AN INTENTION THAT IF SHIPMENT SHOULD BE MADE ON GOVERNMENT BILLS OF LADING ACCOMPANIED BY THE STIPULATED ADJUSTMENT, TITLE TO THE PROPERTY SHOULD BE TAKEN BY THE GOVERNMENT UPON DELIVERY THEREOF FOR TRANSPORTATION. THE MERE FACT THAT IN THE AGREEMENT FOR THE OTHER, AND MUCH SMALLER, PURCHASE A LIKE EXPRESS AVOWAL MAY NOT HAVE BEEN INCLUDED WOULD SEEM TO AFFORD NO BASIS FOR A CONCLUSION THAT ON THE OTHERWISE SUBSTANTIALLY SIMILAR FACTS A DIFFERENT RESULT WAS INTENDED.

IN THIS CONNECTION IT WOULD APPEAR THAT THE PROCUREMENT DIVISION BULLETIN NO. 72, TO WHICH YOU REFER, DID NOT GIVE CONSIDERATION TO THE EFFECT OF THE DECISIONS CITED SUPRA, AND TO THE LONG-CONTINUED PRACTICE OF THE VARIOUS DEPARTMENTS OF THE GOVERNMENT IN MAKING PURCHASES IN THE MANNER HERE CONCERNED. IN NO EVENT, HOWEVER, MAY THE FACT OF THE ISSUANCE OF SAID BULLETIN BE GIVEN THE EFFECT OF DEPRIVING THE GOVERNMENT OF ITS LEGAL RIGHT TO DEDUCTION FOR LAND-GRANT FROM CHARGES FOR THE TRANSPORTATION OF ITS PROPERTY OR AS REQUIRING A DIFFERENT CONCLUSION AS TO THE VESTING OF TITLE FROM THAT WHICH IT APPEARS OTHERWISE CLEAR THE PARTIES TO THE TRANSACTIONS INTENDED. AS TO INTERSTATE COMMERCE COMMISSION CONFERENCE RULING NO. 36, TO WHICH YOU REFER IN LETTER OF APRIL 23, 1938, AS READING:

RATES ON SHIPMENTS FOR THE FEDERAL GOVERNMENT.--- IF TITLE TO PROPERTY, SUCH AS POSTAL CARDS, PASSES TO THE GOVERNMENT AT THE POINT OF MANUFACTURE, THE CARRIER MAY AGREE UPON A RATE TO BE APPLIED FOR TRANSPORTING IT FOR THE GOVERNMENT TO ANOTHER POINT, WITHOUT FILING A TARIFF WITH THE COMMISSION. BUT IF THE MANUFACTURER UNDER HIS CONTRACT IS REQUIRED TO DELIVER TO THE GOVERNMENT AT SUCH OTHER POINT, THE TRANSPORTATION MUST BE UNDER THE PUBLISHED TARIFF RATE.

IT WILL BE NOTED THAT SAID RULING CONTEMPLATES A REQUIREMENT FOR DELIVERY BY THE VENDOR AT DESTINATION. AS HERETOFORE OBSERVED, HOWEVER, THE TRANSACTIONS HERE CONCERNED ARE VIEWED AS REQUIRING DELIVERY AT POINT OF SHIPMENT RATHER THAN AT DESTINATION.

ACCORDINGLY, UPON FURTHER CONSIDERATION OF THE MATTERS YOU URGE, IT APPEARS THAT DEDUCTION FOR LAND GRANT FROM CHARGES FOR TRANSPORTATION OF THE SHIPMENTS HERE CONCERNED WAS DULY AUTHORIZED AND THE ACTION HERETOFORE TAKEN IS AFFIRMED. THE AMOUNT OF $102.84 FOUND DUE IN DECISION OF JULY 16, 1937, BY REASON OF OVERPAYMENT OF CHARGES FOR THE SHIPMENT FROM MADISON, ILL., TO BALLANTINE, NT., UNDER BILL OF LADING I-570408, SHOULD BE REMITTED WITHOUT FURTHER DELAY.