A-91927, MARCH 15, 1938, 17 COMP. GEN. 741

A-91927: Mar 15, 1938

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GOVERNMENT LOSSES IN SHIPMENT ACT - TRANSPORTATION OF VALUABLES AT HIGHER THAN MINIMUM SHIPPING RATES THE TRUE TEST WHETHER ARTICLES ARE "VALUABLES" WITHIN THE MEANING OF THE "GOVERNMENT LOSSES IN SHIPMENT ACT" OF JULY 8. IS WHETHER THEY ARE OF. NOT WHETHER THEY ARE OF. IS NOT THE PAYMENT OF PREMIUMS OR INSURANCE WITHIN THE PROHIBITION OF THE . THERE IS NO OBJECTION TO PAYMENT OF PROPER AND PRESCRIBED TRANSPORTATION COSTS BASED UPON THE ACTUAL OR REPLACEMENT VALUE OF EXCEPTIONALLY FRAGILE AND COSTLY ARTICLES SUCH AS. IS AS FOLLOWS: YOUR ATTENTION IS RESPECTFULLY DIRECTED TO THE ATTACHED COPY OF A LETTER OF THE PUBLIC HEALTH SERVICE DATED DECEMBER 6. IT IS STATED THEREIN THAT YOUR OFFICE HAS RETURNED TO THE OFFICE OF THE PUBLIC HEALTH SERVICE WITHOUT CERTIFICATION BILLS OF THE RAILWAY EXPRESS AGENCY.

A-91927, MARCH 15, 1938, 17 COMP. GEN. 741

GOVERNMENT LOSSES IN SHIPMENT ACT - TRANSPORTATION OF VALUABLES AT HIGHER THAN MINIMUM SHIPPING RATES THE TRUE TEST WHETHER ARTICLES ARE "VALUABLES" WITHIN THE MEANING OF THE "GOVERNMENT LOSSES IN SHIPMENT ACT" OF JULY 8, 1937, 50 STAT. 479, IS WHETHER THEY ARE OF, OR SIMILAR TO, A CLASS OR KIND OF ARTICLE OR THING OR REPRESENTATIVE OF VALUE WHICH IT HAS BEEN THE PRACTICE OF THE UNITED STATES PRIOR TO PASSAGE OF THE ACT TO INSURE AS THE INSURED PARTY AGAINST LOSS, DESTRUCTION, OR DAMAGE IN SHIPMENT, AND NOT WHETHER THEY ARE OF, OR SIMILAR TO, ANY OF THE SEVERAL TYPES OR CLASSES OF ARTICLES SPECIFICALLY ENUMERATED IN THE STATUTE. THE AMOUNT PAID A CARRIER TO HANDLE A GOVERNMENT SHIPMENT CONSISTING OF ARTICLES OF PECULIAR OR UNUSUAL VALUE, AS DISTINGUISHED FROM ARTICLES OF ORDINARY MERCHANDISE, WITH A CARE COMMENSURATE WITH ITS REAL VALUE, IS NOT THE PAYMENT OF PREMIUMS OR INSURANCE WITHIN THE PROHIBITION OF THE ,GOVERNMENT LOSSES IN SHIPMENT ACT" OF JULY 8, 1937, 50 STAT. 479, AND THERE IS NO OBJECTION TO PAYMENT OF PROPER AND PRESCRIBED TRANSPORTATION COSTS BASED UPON THE ACTUAL OR REPLACEMENT VALUE OF EXCEPTIONALLY FRAGILE AND COSTLY ARTICLES SUCH AS, OR SIMILAR TO, MICROSCOPES, QUARTZ BURNERS, X -RAY FILMS, ETC.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE SECRETARY OF THE TREASURY, MARCH 15, 1938:

YOUR LETTER OF JANUARY 15, 1938, IS AS FOLLOWS:

YOUR ATTENTION IS RESPECTFULLY DIRECTED TO THE ATTACHED COPY OF A LETTER OF THE PUBLIC HEALTH SERVICE DATED DECEMBER 6, 1937, WHICH HAS BEEN RECEIVED IN THIS OFFICE. IT IS STATED THEREIN THAT YOUR OFFICE HAS RETURNED TO THE OFFICE OF THE PUBLIC HEALTH SERVICE WITHOUT CERTIFICATION BILLS OF THE RAILWAY EXPRESS AGENCY, INC., BECAUSE OF VALUATION PLACED ON CERTAIN ARTICLES, AS NAMED IN THE LETTER, IN EXCESS OF THE LOWEST OR RELEASED VALUATION AT WHICH THE ARTICLES MIGHT HAVE BEEN SHIPPED. THE REASON GIVEN FOR THE RETURNED UNCERTIFIED BILLS IS THAT THE EXCESS COST IS NOT A PROPER CHARGE TO THE GOVERNMENT BECAUSE OF THE PROVISIONS OF SECTION 7 OF THE ACT OF JULY 8, 1937, 50 STAT. 479 (GOVERNMENT LOSSES IN SHIPMENT ACT).

YOUR REFERENCE TO THE ACT, IN DEFERRING APPROVAL OF THESE CHARGES, INDICATES THAT YOUR OFFICE CONSIDERS THE ARTICLES NAMED TO BE VALUABLES WITHIN THE MEANING OF THE ACT AND THAT THE CHARGES IN QUESTION REPRESENT PAYMENTS FOR INSURANCE AGAINST THE LOSS OR DESTRUCTION OF, OR DAMAGE TO SUCH ARTICLES DURING SHIPMENT. PAYMENTS FOR INSURANCE ARE, OF COURSE, PROHIBITED UNDER THE TERMS OF THE GOVERNMENT LOSSES IN SHIPMENT ACT, IN THE SHIPMENT OF "VALUABLES," AS THAT TERM IS DEFINED IN SECTION 7 (A) OF THE ACT, UNLESS THE SECRETARY OF THE TREASURY DETERMINES THAT THE SHIPMENT IS ONE WHICH FULFILLS THE CONDITIONS STATED IN SECTION 4 OF THE ACT WHEREBY THE SECRETARY IS AUTHORIZED TO ALLOW THE PAYMENT OF THE COSTS NECESSARY TO INSURE THE SHIPMENT AGAINST LOSS, DESTRUCTION OR DAMAGE IN TRANSIT.

IT IS ASSUMED THAT THE ARTICLES NAMED IN THE LETTER OF THE PUBLIC HEALTH SERVICE ARE OF A TYPE WHICH THE COMPTROLLER GENERAL REFERRED TO IN THE FOLLOWING QUOTATION FROM HIS UNPUBLISHED DECISION UNDER DATE OF JANUARY 5, 1934, NO. A-24222--- "* * * AND ONLY IN CAREFULLY CONSIDERED SHIPMENTS CONTAINING FRAGILE AND/OR COSTLY ITEMS SUCH AS * * *, PRECIOUS METALS, DELICATE SCIENTIFIC INSTRUMENTS, X-RAY TUBES, RADIUM, ETC., REQUIRING THE HIGHEST DEGREE OF CARE IN HANDLING BY THE CARRIER, WHERE THE CARRIER RENDERS ACTUAL SERVICE IN PROTECTING THE SHIPMENTS AGAINST DAMAGE OR LOSS, SHOULD IT BE PERMISSIBLE TO DECLARE ACTUAL OR INCREASED VALUES AND PAY A CONSIDERATION FOR SUCH SPECIAL SERVICE. * * *" IN THE SHIPMENT OF ARTICLES OF THIS TYPE IT IS UNDERSTOOD THAT IN THE PAST, PAYMENT OF THE CHARGES RESULTING FROM DECLARING VALUATION IN EXCESS OF THE LOWEST OR ,RELEASED" VALUATION AT WHICH THE ARTICLES MIGHT BE SHIPPED, IN ORDER TO SECURE SPECIAL SERVICE BY THE CARRIER, WERE CONSIDERED TO BE NOT THE PAYMENT OF INSURANCE COSTS BY THE PAYMENT OF TRANSPORTATION COSTS AND AS SUCH, WERE NOT OBJECTED TO BY YOUR OFFICE.

IT APPEARS THAT THE TERM "INSURE" AS USED IN SECTION 7 (A) OF THE GOVERNMENT LOSSES IN SHIPMENT ACT REFERS TO AN AUTHORIZED PRACTICE OF INSURING AND AS THE CHARGES IN QUESTION HERETOFORE DO NOT APPEAR TO HAVE BEEN CONSTRUED BY YOUR OFFICE AS PAYMENTS FOR INSURANCE, IT IS THE VIEW OF THE TREASURY THAT THE SUBJECT ARTICLES ARE NOT VALUABLES UNDER THE ACT. SIMILARLY, OTHER ARTICLES OF THE TYPE REFERRED TO IN THE ABOVE MENTIONED COMPTROLLER GENERAL'S DECISION WHICH ARE SHIPPED BY THE PUBLIC HEALTH SERVICE OR BY OTHER DEPARTMENTS OR AGENCIES, SOME OF WHICH DEPARTMENTS OR AGENCIES WE UNDERSTAND, ALSO HAVE HAD BILLS OF THE RAILWAY EXPRESS AGENCY RETURNED BY YOUR OFFICE UNCERTIFIED BECAUSE OF THE DECLARATION OF EXCESS VALUATION, ARE NOT VALUABLES UNDER THE GOVERNMENT LOSSES IN SHIPMENT ACT. UNDER THE VIEW HELD BY THE TREASURY, THE SECRETARY WOULD BE UNABLE TO GRANT ANY RELIEF REGARDLESS OF THE FORM OF SUCH RELIEF UNDER SECTION 3 OF THE ACT IN THE EVENT THESE ARTICLES WERE LOST, DESTROYED, OR DAMAGED DURING SHIPMENT. IF PROTECTION TO THESE ARTICLES DURING SHIPMENT IS NECESSARY OR DESIRABLE, IT WOULD APPEAR THAT THE FORMER METHOD USED, THAT OF PURCHASING SPECIAL SERVICE, MUST BE CONTINUED. THE ABOVE-MENTIONED DECISION OF THE COMPTROLLER GENERAL SEEMS TO RECOGNIZE THE VALIDITY OF DECLARING VALUES IN EXCESS OF THE MINIMUM DECLARATION, OR ACTUAL VALUE, IF NECESSARY, TO SECURE SPECIAL SERVICE AND SPECIAL HANDLING.

AN EXPRESSION OF YOUR VIEWS IN THE MATTER IS RESPECTFULLY REQUESTED.

THE DECISION OF THE FORMER COMPTROLLER GENERAL OF THE UNITED STATES TO WHICH YOU REFER ANTEDATED BY SEVERAL YEARS THE "GOVERNMENT LOSSES IN SHIPMENT ACT" OF JULY 8, 1937, 50 STAT. 479, AND, OF COURSE, WOULD NO LONGER BE FOR APPLICATION UNLESS IN HARMONY WITH THE PROVISIONS OF THAT ACT. SAID ACT IS ENTITLED "AN ACT TO DISPENSE WITH THE NECESSITY FOR INSURANCE BY THE GOVERNMENT AGAINST LOSS OR DAMAGE TO VALUABLES IN SHIPMENT, AND FOR OTHER PURPOSES.' IT DEFINES "VALUABLES" AND "SHIPMENT" AND PROVIDES THAT NO EXECUTIVE DEPARTMENT, INDEPENDENT ESTABLISHMENT, AGENCY, ETC., OFFICER, EMPLOYEE, OR REPRESENTATIVE OF THE UNITED STATES SHALL EXPEND ANY MONEY OR INCUR ANY OBLIGATION FOR INSURANCE OR FOR THE PAYMENT OF PREMIUMS ON INSURANCE, AGAINST LOSS, DESTRUCTION, OR DAMAGE IN THE SHIPMENT OF VALUABLES EXCEPT AS SPECIFICALLY AUTHORIZED BY THE SECRETARY OF THE TREASURY, WHO MAY GIVE SUCH AUTHORIZATION IF HE SHALL FIND THAT THE RISK OF LOSS, DESTRUCTION, OR DAMAGE IN SUCH SHIPMENT CANNOT BE ADEQUATELY GUARDED AGAINST BY THE FACILITIES OF THE UNITED STATES, OR THAT THE CIRCUMSTANCES ARE SUCH THAT ADEQUATE REPLACEMENT CANNOT BE PROVIDED UNDER THE ACT. IT AUTHORIZES ANNUAL APPROPRIATIONS, DESIGNATED AS "THE FUND," TO BE USED UNDER THE DIRECTION OF THE SECRETARY OF THE TREASURY FOR REPLACEMENT OF VALUABLES, OR THE VALUE THEREOF, LOST, DESTROYED, OR DAMAGED IN THE COURSE OF SHIPMENT EFFECTED PURSUANT TO THE PRESCRIBED REGULATIONS PROVIDED FOR THEREIN.

THERE IS NOTED YOUR STATEMENT THAT IT IS THE VIEW OF THE TREASURY DEPARTMENT THAT ARTICLES SUCH AS MENTIONED IN THE LETTER FROM THE PUBLIC HEALTH SERVICE, TO WIT: MOTION PICTURE PROJECTORS, MICROSCOPES, QUARTZ BURNERS, X-RAY FILMS, TRIPODS, TRANSITS, ETC., ARE NOT "VALUABLES" UNDER THE ACT. WHILE SECTION 7 (A) OF THE STATUTE PROVIDES THAT THE TERM "VALUABLES" SHALL INCLUDE "BUT IS NOT LIMITED TO" CERTAIN SPECIFIED TYPES OF ARTICLES OR PROPERTY AND THE RULE EJUSDEM GENERIS MIGHT ORDINARILY BE CONSIDERED APPLICABLE, THE SECTION FURTHER PROVIDES THAT THE TERM "VALUABLES" MEANS:

* * * ANY ARTICLE OR THING OR REPRESENTATIVE OF VALUE IN WHICH THE UNITED STATES HAS ANY INTEREST, OR IN CONNECTION WITH WHICH IT HAS ANY OBLIGATION OR RESPONSIBILITY, DIRECT OR INDIRECT, AND WHICH IS OF, OR IS SIMILAR TO, A CLASS OR KIND OF ARTICLE OR THING OR REPRESENTATIVE OF VALUE WHICH IT HAS BEEN THE PRACTICE HERETOFORE OF THE UNITED STATES TO INSURE AS THE INSURED PARTY, AGAINST LOSS, DESTRUCTION, OR DAMAGE IN SHIPMENT. * * *

THEREFORE, THE TRUE TEST WHETHER THE ARTICLE SHIPPED IS A VALUABLE WITHIN THE MEANING OF THE ACT IS WHETHER IT IS OF, OR SIMILAR TO, A CLASS OR KIND OF ARTICLE OR THING OR REPRESENTATIVE OF VALUE WHICH IT HAS BEEN THE PRACTICE OF THE UNITED STATES, PRIOR TO THE PASSAGE OF SAID ACT, TO INSURE AS THE INSURED PARTY, AGAINST LOSS, DESTRUCTION, OR DAMAGE IN SHIPMENT, AND NOT WHETHER IT IS OF, OR SIMILAR TO, ANY OF THE SEVERAL TYPES OR CLASSES OF ARTICLES SPECIFICALLY ENUMERATED IN THE STATUTE.

ALSO THERE IS NOTED YOUR SUGGESTION THAT THE HIGHER THAN MINIMUM SHIPPING RATES ON SUCH ARTICLES AS ENUMERATED WHEN DECLARED AT ACTUAL VALUE RATHER THAN THE MINIMUM OR "RELEASE" VALUE PROVIDED BY TARIFF RATES, ARE FOR CONSIDERATION AS TRANSPORTATION COSTS, AND NOT AS PAYMENT OF PREMIUMS OR COST OF INSURANCE. IT IS THE UNDERSTANDING OF THIS OFFICE THAT IT IS A REGULAR POLICY AND PRACTICE OF PUBLIC CARRIERS TO ACCEPT SHIPMENTS FOR TRANSPORTATION AT WHAT IS KNOWN AS A MINIMUM OR "RELEASE" RATE IN RETURN FOR AGREEMENT BY THE SHIPPER TO RELEASE THE CARRIER FROM ALL LIABILITY IN EXCESS OF A STIPULATED MAXIMUM AMOUNT, WHICH IS DETERMINABLE ON A POUNDAGE BASIS WITHOUT REGARD FOR THE ACTUAL VALUE OF THE SHIPMENT INVOLVED. WHEN THE ACTUAL, PECULIAR, OR REPLACEMENT VALUE OF A SHIPMENT IS IN EXCESS OF SUCH MINIMUM, AND IS SO DECLARED, THE TRANSPORTATION RATE IS HIGHER, AND THE MEASURE OF RESPONSIBILITY ACCEPTED BY THE CARRIER FOR THE PROTECTION OF THE SHIPMENT AGAINST LOSS, DAMAGE OR DESTRUCTION IN TRANSIT IN CORRESPONDINGLY HIGHER AND COMMENSURATE WITH THE ACTUAL VALUE OF THE ARTICLE SHIPPED RATHER THAN A FICTITIOUS AND MINIMIZED VALUATION UNDER THE LOWEST OBTAINABLE RATE. HENCE, IT WOULD APPEAR THAT THE AMOUNT PAID A CARRIER TO HANDLE A GOVERNMENT SHIPMENT CONSISTING OF ARTICLES OF PECULIAR OR UNUSUAL VALUE, AS DISTINGUISHED FROM ARTICLES OF ORDINARY MERCHANDISE, WITH A CARE COMMENSURATE WITH ITS REAL VALUE, SHOULD NOT BE CONSIDERED AS PAYMENT OF PREMIUMS OR INSURANCE WITHIN THE MEANING OF THE ACT, SUPRA, BUT AS FAIR AND JUST COMPENSATION TO THE CARRIER FOR THE CHARACTER OF SERVICE REQUIRED AND RENDERED IN HANDLING AND TRANSPORTING SAFELY SUCH VALUABLE ARTICLE OR ARTICLES. SEE GENERALLY IN THIS CONNECTION HART V. PENNSYLVANIA RAILROAD CO., 112 U.S. 331.

MOREOVER, THE PAYMENT OF A TRANSPORTATION RATE BASED UPON THE REAL WORTH OF "VALUABLES" WOULD APPEAR TO BE IN LINE WITH THE PURPOSE OF THE GOVERNMENT LOSSES IN SHIPMENT ACT, FOR SAID ACT PROVIDES THAT THE REGULATIONS REQUIRED THEREUNDER SHALL BE PRESCRIBED "WITH A VIEW OF MINIMIZING RISKS OF LOSS AND DESTRUCTION OF, AND DAMAGE TO, SUCH VALUABLES IN SHIPMENT.' WHILE THE ACT PROHIBITS THE INSURANCE OF GOVERNMENT SHIPMENTS EXCEPT UNDER CERTAIN CONDITIONS SUBJECT TO SPECIFIC AUTHORIZATION OF THE SECRETARY OF THE TREASURY, IT WOULD NOT APPEAR TO PROHIBIT PAYMENT OF THE TRANSPORTATION RATE CALCULATED TO MINIMIZE THE RISK OF LOSS, DESTRUCTION, OR DAMAGE TO ARTICLES OF SPECIAL AND UNUSUAL VALUE BY PLACING A GREATER MEASURE OF RESPONSIBILITY UPON THE CARRIER, THUS INDUCING THE CARE WHICH WOULD MINIMIZE THE RISK OF LOSS.

IN THE CIRCUMSTANCES THIS OFFICE WILL NOT BE REQUIRED TO OBJECT TO THE PAYMENT OF PROPER AND PRESCRIBED TRANSPORTATION COSTS BASED UPON THE ACTUAL OR REPLACEMENT VALUE OF EXCEPTIONALLY FRAGILE AND COSTLY ARTICLES SUCH AS, OR SIMILAR TO, THOSE MENTIONED IN THE LETTER FROM THE PUBLIC HEALTH SERVICE, AND IN THE LETTER OF JANUARY 5, 1934, OF THE FORMER COMPTROLLER GENERAL OF THE UNITED STATES. AUDIT ACTION BY THIS OFFICE IN SUCH MATTERS HEREAFTER WILL BE ACCORDINGLY.