A-93326, JULY 21, 1939, 19 COMP. GEN. 81

A-93326: Jul 21, 1939

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RETROACTIVE DIVISIONAL BASIS EFFECT WHERE THERE IS A DIVERGENCE OF OPINION ON THE PART OF THE INTERESTED CARRIERS AS TO WHICH OF SEVERAL DIVISION SHEETS SHOULD BE FOR APPLICATION. OR THERE IS URGED AS APPLICABLE CONFLICTING BASES. YOU URGE THAT THERE SHOULD HAVE BEEN APPLIED INSTEAD THE BASIS PRESCRIBED IN SOUTHERN PACIFIC CO. WE DID NOT URGE THAT DIVISION SHEET 125 WAS APPLICABLE. WHICH WAS AGREED TO AS OF JAN. 1. WAS APPLICABLE. IN VIEW OF THE FACT THAT THERE WERE NO PUBLISHED DIVISIONS. THE INTERIM DIVISION BASIS COULD NOT HAVE BEEN APPLIED. AS IT MAY ONLY BE USED WHEN NO DIVISIONS ARE AGREED UPON. WE HAVE A RATE APPLYING VIA AN AUTHORIZED RATE ROUTE. THERE IS NO REFUSAL OF LINES INVOLVED TO AGREE UPON DIVISIONS.

A-93326, JULY 21, 1939, 19 COMP. GEN. 81

TRANSPORTATION - RATES - DIVISIONS - CARRIERS' DISAGREEMENTS, AND RETROACTIVE DIVISIONAL BASIS EFFECT WHERE THERE IS A DIVERGENCE OF OPINION ON THE PART OF THE INTERESTED CARRIERS AS TO WHICH OF SEVERAL DIVISION SHEETS SHOULD BE FOR APPLICATION, OR THERE IS URGED AS APPLICABLE CONFLICTING BASES, THE RULE OF THE GOVERNMENT ACCOUNTING OFFICERS HAS BEEN THAT THE BASIS RESULTING IN THE LOWER NET CHARGE WOULD BE APPLIED IN DETERMINING THE PROPER PAYMENT FOR GOVERNMENT TRANSPORTATION, AND THE PUBLICATION, SUBSEQUENT TO THE TIME OF THE INVOLVED SHIPMENT, OF A BASIS INDICATED AS FOR APPLICATION RETROACTIVELY BETWEEN THE CARRIERS, MAY NOT BE GIVEN THE EFFECT OF INCREASING THE CHARGES OVER AND ABOVE THOSE APPLICABLE THROUGH THE USE OF PUBLISHED BASES PREVIOUSLY URGED AS BEING APPLICABLE BY THE CARRIER OR CARRIERS CONCERNED.

ASSISTANT COMPTROLLER GENERAL ELLIOTT TO THE SOUTHERN PACIFIC CO., JULY 21, 1939:

THERE HAS BEEN CONSIDERED YOUR REQUEST FOR RECONSIDERATION OF DECISION OF MARCH 14, 1938, WHICH SUSTAINED A DISALLOWANCE, IN SETTLEMENT 106464 1/2, OF $9.71 UPON YOUR BILL F-982 FOR THE TRANSPORTATION OF THREE PASSENGER AUTOMOBILES FROM SPRINGFIELD, OHIO, TO FRIANT, CALIF., UNDER BILL OF LADING I-527035, JANUARY 18, 1936. IN THE DIVISION OF THE REVENUE ACCRUING WEST OF SUPERIOR, WIS., BETWEEN THE NORTHERN PACIFIC RAILWAY AND THE SOUTHERN PACIFIC CO., THIS OFFICE APPLIED THE PROVISIONS OF INTERIM DIVISION BASIS NO. 3. YOU URGE THAT THERE SHOULD HAVE BEEN APPLIED INSTEAD THE BASIS PRESCRIBED IN SOUTHERN PACIFIC CO. DIVISION SHEET NO. 125, PUBLISHED JUNE 27, 1936.

IN THE REQUEST FOR FURTHER CONSIDERATION YOU STATE:

IT APPEARS THAT THE POINT OF OUR ARGUMENT HAS BEEN OVERLOOKED. WE DID NOT URGE THAT DIVISION SHEET 125 WAS APPLICABLE, BUT THAT THE BASIS OF DIVISIONS CONTAINED THEREIN, WHICH WAS AGREED TO AS OF JAN. 1, 1936, WAS APPLICABLE, IN VIEW OF THE FACT THAT THERE WERE NO PUBLISHED DIVISIONS.

THE INTERIM DIVISION BASIS COULD NOT HAVE BEEN APPLIED, AS IT MAY ONLY BE USED WHEN NO DIVISIONS ARE AGREED UPON, THE PUBLICATION OF AGREED DIVISIONS NOT BEING ESSENTIAL.

FOR MANY YEARS IT HAS BEEN THE PRACTICE OF THE ACCOUNTING OFFICERS OF THE U.S. GOVERNMENT TO USE IN ARBITRARY BASIS OF DIVISIONS, WHEN THE LINES AT INTEREST REFUSE TO AGREE UPON DIVISIONS TO COVER MOVEMENTS VIA AUTHORIZED RATE ROUTES, NOT COVERED BY DIVISION SHEETS OR UNPUBLISHED AGREED BASES.

IN THIS CASE, WE HAVE A RATE APPLYING VIA AN AUTHORIZED RATE ROUTE, WITHOUT PUBLISHED DIVISIONS, BUT THERE IS NO REFUSAL OF LINES INVOLVED TO AGREE UPON DIVISIONS. THE DIVISIONS AS CARRIED IN SOUTHERN PACIFIC DIVISION SHEET 125 WERE AGREED TO AS OF JAN. 1, 1936, WHICH FACT IS ATTESTED BY THE PUBLICATION ITSELF.

INTERIM DIVISION BASIS NO. 3, BEING CAPTIONED " BASIS FOR INTERIM DIVISIONS PENDING FINAL DIVISION DETERMINATION ON ALL TRAFFIC FROM AND TO ALL POINTS IN THE UNITED STATES FOR WHICH NO AGREED DIVISIONS HAVE BEEN PROVIDED," PROVIDES IN ITEM 40:

THE INTERIM DIVISION BASIS APPLIES CURRENTLY EFFECTIVE WITH JUNE, 1934, INTERLINE ACCOUNTS AND THEREAFTER UNTIL PERMANENT DIVISIONS ARE AGREED UPON, ON TRAFFIC FOR WHICH NO AGREED DIVISIONAL BASES, TEMPORARY OR OTHERWISE, ARE IN EFFECT.

SOUTHERN PACIFIC CO. DIVISION SHEET NO. 125 CAPTIONED AS " CONTAINING BASES FOR DIVIDING JOINT THROUGH RATES * * * BETWEEN POINTS ON LINES OF SOUTHERN PACIFIC CO. ( PACIFIC LINES) AND CONNECTIONS IN CALIFORNIA AND OREGON AND TRANS-CONTINENTAL POINTS ON LINES OF GREAT NORTHERN RAILWAY CO., NORTHERN PACIFIC RAILWAY CO., AND CONNECTIONS," SHOWED DATE OF ISSUE AS JUNE 27, 1936, AND BORE THE STATEMENT: " EFFECTIVE WITH JANUARY 1936 ACCOUNTS.' SAID DIVISION SHEET IS SHOWN AS CANCELING ALL CONFLICTING DIVISION SHEETS. THE ISSUANCE, HOWEVER, IN JUNE 1936 OF A DIVISION BASIS INDICATED AS HAVING RETROEFFECTIVE APPLICATION TO JANUARY 1936 DOES NOT ESTABLISH THE EXISTENCE IN JANUARY 1936 OF ANY SUCH AGREED BASIS, EVEN IF THIS CIRCUMSTANCE WERE OTHERWISE FOR CONSIDERATION.

THE RECORD SHOWS THAT PRIOR TO THE ISSUANCE OF DIVISION SHEET NO. 125, THERE HAD BEEN ISSUED IN JANUARY 1925 SOUTHERN PACIFIC CO. DIVISION SHEET NO. 101-E PUBLISHING " BASES FOR DIVISIONS BETWEEN POINTS ON LINES OF SOUTHERN PACIFIC CO. IN CALIFORNIA AND OREGON," NAMED THEREIN, ON THE ONE HAND, AND POINTS ON THE GREAT NORTHERN PACIFIC RAILWAY EAST OF MINOT, N.1DAK., AND POINTS ON THE NORTHERN PACIFIC RAILWAY CO. EAST OF BISMARCK, N.1DAK., TO AND INCLUDING IN BOTH INSTANCES ST. PAUL AND DULUTH, MINN., AND SUPERIOR, WIS., ON THE OTHER HAND.

THEREAFTER SOUTHERN PACIFIC CO. DIVISION SHEET NO. 101-F WAS ISSUED JULY 12, 1934, PUBLISHING BASES OF DIVISIONS BETWEEN POINTS ON LINES OF THE SOUTHERN PACIFIC CO.'AND CONNECTIONS" IN CALIFORNIA AND OREGON AND "1TRANS -1CONTINENTAL POINTS" ON LINES OF THE GREAT NORTHERN RAILWAY CO. AND NORTHERN PACIFIC RAILWAY CO.'AND CONNECTIONS.' SAID DIVISION SHEET PURPORTED TO CANCEL DIVISION SHEET 101-E TO THE EXTENT (SEE SUPPLEMENT NO. 1 ISSUED JULY 31, 1934) THAT DIVISION SHEET 101-F "APPLIES AND CONFLICTS THEREWITH.' IT DEVELOPED, HOWEVER, THAT THE APPLICATION OF DIVISION SHEET 101-F WAS NOT ACCEPTABLE TO THE NORTHERN PACIFIC RAILWAY OR THE GREAT NORTHERN RAILWAY AND THE FREIGHT TRAFFIC MANAGERS FOR SAID CARRIERS, IN A JOINT LETTER DATED JULY 6, 1935, ADDRESSED " TO ALL FREIGHT TRAFFIC OFFICERS IN CHARGE OF DISTRIBUTION OF DIVISION SHEETS," STATED WITH REFERENCE TO SAID DIVISION SHEET:

OWING TO THE FACT THAT THE UNDERSIGNED LINES HAVE NOT AGREED TO APPLY THE BASIS OF DIVISIONS SHOWN IN ABOVE DESCRIBED DIVISION SHEET UNTIL CERTAIN OTHER UNSETTLED MATTERS HAVE BEEN SATISFACTORILY DISPOSED OF, WE ARE HEREBY SERVING NOTICE ON OUR VARIOUS CONNECTIONS THAT SOUTHERN PACIFIC DIVISION SHEET NL. 101-F HAS NOT BEEN APPROVED BY OUR LINES AND SAME SHOULD NOT BE USED IN THE ALLOCATION OF FREIGHT REVENUE. UNTIL YOU ARE FURTHER ADVISED IN THE MATTER, INTERLINE SETTLEMENTS SHOULD BE MADE IN CONFORMITY WITH SOUTHERN PACIFIC DIVISION SHEET NO. 101-E AND EFFECTIVE SUPPLEMENTS THERETO AND IN THE EVENT THAT THIS ISSUE DOES NOT PROVIDE FOR SUBDIVISION OF REVENUE IN CONNECTION WITH THE THRU RATES NOW IN EFFECT, THE "INTERIM" BASIS OF DIVISION AS OUTLINED IN MR. R. H. AISHTON-S, CHAIRMAN OF EXECUTIVE COMMITTEE, LETTER OF MAY 24, 1934, TO MR. E. R. WOODSON, CHAIRMAN OF JOINT COMMITTEE OF TRAFFIC AND ACCOUNTING OFFICERS, SHOULD BE APPLIED.

AGAIN IN LETTER DATED SEPTEMBER 10, 1935, FILE NO. X, ADDRESSED TO THIS OFFICE, THE GENERAL FREIGHT AGENT, NORTHERN PACIFIC RAILWAY, STATED WITH REFERENCE TO THE SUGGESTED POSSIBLE APPLICATION OF DIVISION SHEET 101-F:

* * * AS FAR AS THIS COMPANY IS CONCERNED WE MUST INSIST UPON SETTLEMENTS BEING MADE IN CONFORMITY WITH THE BASIS OF DIVISIONS OUTLINED IN OUR JOINT CIRCULAR LETTER DATED JULY 6, FILE X-29575-1. IN OTHER WORDS, IN CASES WHERE SOUTHERN PACIFIC DIVISION SHEET 101-E DOES NOT PROVIDE A SPECIFIC BASIS OF DIVISIONS TO COVER, IT WILL BE NECESSARY TO INVOKE PROVISIONS OF THE INTERIM DIVISION BASIS.

THUS THE RECORD CLEARLY ESTABLISHES THAT AT LEAST AS LATE AS SEPTEMBER 1935 THERE WAS A POSITIVE DECLARATION OF A LACK OF AGREEMENT ON THE PART OF THE NORTHERN PACIFIC RAILWAY TO THE APPLICATION, WITH RESPECT TO TRAFFIC BETWEEN POINTS ON THE SOUTHERN PACIFIC IN CALIFORNIA AND OREGON AND POINTS EAST OF MINOT, N.1DAK., ON THE NORTHERN PACIFIC RAILWAY AND CONNECTIONS, OF ANY BASIS OTHER THAN THOSE SHOWN IN SOUTHERN PACIFIC DIVISION SHEET 101-E OR, IN THE ABSENCE OF A BASIS THEREIN, AS PROVIDED IN THE INTERIM BASIS. SUBSEQUENT THERETO THE RECORD DOES NOT SHOW ANY DECLARATION OF AGREEMENT, SUCH AS THAT SHOWN IN SOUTHERN PACIFIC DIVISION SHEET NO. 125, PRIOR TO THE DATE OF ISSUANCE OF SAID DIVISION SHEET JUNE 27, 1936.

THE ACCOUNTING OFFICERS OF THE GOVERNMENT HAVE CONSISTENTLY HELD THAT WHILE THE QUESTION OF THE DIVISION OF REVENUE BETWEEN PARTICIPATING CARRIERS MAY BE WITHOUT EFFECT UPON THE AMOUNT OF COMMERCIAL CHARGES AND CONSEQUENTLY OF NO INTEREST OR CONCERN TO COMMERCIAL SHIPPERS, THE SITUATION IS DIFFERENT WITH RESPECT TO SHIPMENTS OF GOVERNMENT PROPERTY FOR THE REASON THAT THE AMOUNT OF THE DEDUCTION FOR LAND GRANT--- AND THEREFORE THE AMOUNT OF THE NET CHARGE PAYABLE BY THE GOVERNMENT--- ARE MATTERS THAT ARE DIRECTLY AFFECTED BY THE BASIS UPON WHICH THE GROSS REVENUE IS DIVIDED BETWEEN LAND-GRANT AND NONLAND-GRANT PARTICIPATING CARRIERS.

ACCORDINGLY, IT HAS BEEN SAID THAT THE GOVERNMENT HAVING MADE SHIPMENTS IN RELIANCE UPON DIVISIONS OF REVENUE IN ACCORDANCE WITH PUBLISHED DIVISIONS HAS AN INTEREST IN THE MATTER OF SAID DIVISIONS WHICH MAY NOT BE ADVERSELY AFFECTED BY ANY AGREEMENT BETWEEN SAID CARRIERS TO APPLY RETROACTIVELY A DIFFERENT BASIS. THUS THE COMPTROLLER OF THE TREASURY IN A LETTER DATED APRIL 22, 1914, TO THE SECRETARY OF WAR IN APPEAL NO. 23441 STATED:

THE SERVICE UNDER CONSIDERATION WAS RENDERED AUGUST 26, 1912, AND THE RATE THEREFOR WAS NAMED IN TARIFF 3 J EFFECTIVE AUGUST 19, 1912.

NO QUESTION IS RAISED IN CONNECTION WITH THE RATE APPLICABLE FOR THE SHIPMENT BUT MERELY IN THE DIVISIONS THEREOF WHICH WOULD NOT CONCERN THE ORDINARY SHIPPER; BUT ON ACCOUNT OF LAND-GRANT DEDUCTIONS TO WHICH THE GOVERNMENT IS ENTITLED ON THE PROPORTION ACCRUING EAST OF EL PASO, TEX., THE NET RATE PAYABLE BY THE GOVERNMENT IS AFFECTED BY ANY CHANGE IN THE SAID PROPORTION.

THE DIVISION SHEET NO. 209-C REFERRED TO WAS PUBLISHED JANUARY 2, 1913, AND PURPORTS TO BE EFFECTIVE FROM JANUARY 2, 1911. THE SAID DIVISION SHEET BECOMES EFFECTIVE FROM THE DATE OF ITS PUBLICATION AND MAY BY AGREEMENT AMONG THE ROADS INTERESTED AFFECT ANY ADJUSTMENTS BETWEEN THEMSELVES FOR TRANSACTION PRIOR TO SAID DATE. BUT SUCH AN AGREEMENT CANNOT BE EFFECTIVE AGAINST THIRD PARTIES AS TO TRANSACTIONS OCCURRING PRIOR TO ITS PUBLICATION, AND CANNOT BE OPERATIVE TO INCREASE THE COST OF TRANSPORTATION TO THE UNITED STATES FOR SERVICE ALREADY RENDERED.

SEE ALSO IN THIS CONNECTION 15 COMP. GEN. 568, INVOLVING A SOMEWHAT SIMILAR SITUATION.

IN THE INSTANT CASE THE RECORD SHOWS THAT AT THE TIME OF THIS SHIPMENT THERE WERE IN EXISTENCE THREE PUBLISHED DIVISION BASES, NAMELY SOUTHERN PACIFIC 101-E, SOUTHERN PACIFIC 101-F, AND INTERIM DIVISION BASIS NO. 3, THE FIRST TWO NAMING DIVISIONS BETWEEN THE SOUTHERN PACIFIC AND THE NORTHERN PACIFIC OVER PORTLAND, OREG., AND THE THIRD PROVIDING A BASIS OF DIVISIONS WHERE NO AGREED DIVISION HAVE BEEN PROVIDED. FOR SOME TIME PRIOR TO THE SHIPMENT HERE CONCERNED AND CONTINUING AT LEAST UNTIL SEPTEMBER 1935, THERE WAS NO UNANIMITY OF OPINION ON THE PART OF SAID CARRIERS AS TO WHICH OF SAID DIVISION SHEETS SHOULD BE FOR APPLICATION, BUT, ON THE CONTRARY, THERE WAS A DIVERGENCE OF OPINION BETWEEN THEM IN THIS RESPECT, OR A SITUATION IN WHICH THERE WERE URGED AS APPLICABLE CONFLICTING BASES. IN SUCH SITUATIONS THE RULE OF THE ACCOUNTING OFFICERS HAS BEEN THAT THE BASIS RESULTING IN THE LOWER NET CHARGE WOULD BE APPLIED IN DETERMINING THE PROPER PAYMENT FOR GOVERNMENT TRANSPORTATION. THAT RULE WAS FOLLOWED IN THE INSTANT MATTER IN CONFORMITY WITH THE PRIOR INSISTENCE OF ONE OF THE CARRIERS CONCERNED THAT THE INTERIM DIVISION BASIS WAS FOR APPLICATION.

IF, PRIOR TO THE DATE OF THE SHIPMENT HERE CONCERNED, THERE WAS ADOPTED BY THE CARRIERS A DIFFERENT AND AGREED BASIS, NO PUBLICATION THEREOF PRIOR TO THE DATE OF THIS SHIPMENT HAS BEEN FOUND, AND THE PUBLICATION, IN JUNE 1936, OF A BASIS INDICATED AS FOR APPLICATION BETWEEN THE CARRIERS " EFFECTIVE WITH JANUARY 1936 ACCOUNTS" MAY NOT BE GIVEN THE EFFECT OF INCREASING THE CHARGES TO THE UNITED STATES OVER AND ABOVE THOSE APPLICABLE THROUGH THE USE OF PUBLISHED BASES PREVIOUSLY URGED BY THE CARRIER OR CARRIERS CONCERNED AS FOR APPLICATION.

ACCORDINGLY, UPON FURTHER CONSIDERATION THE ACTION HERETOFORE TAKEN IS AFFIRMED.