B-128258, JUL. 8, 1957

B-128258: Jul 8, 1957

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ASSOCIATION OF AMERICAN RAILROADS: REFERENCE IS MADE TO YOUR FILE NO. 215-17. YOU CONTEND THAT LAND-GRANT DEDUCTIONS WERE NOT APPLICABLE FOR THE REASON THAT PRIOR TO THE TIME THE SHIPMENTS WERE MADE. THE MATERIALS FURNISHED TO THE UNITED KINGDOM UNDER LEND LEASE IN THIS CASE WERE NOT FURNISHED FOR MILITARY OR NAVAL USE WITHIN THE MEANING OF SECTION 321 (A) OF THE TRANSPORTATION ACT OF 1940. AFTER VICTORY THE UNITED KINGDOM WAS ENGAGED WITH THE UNITED STATES AND OTHER ALLIES IN THE OCCUPATION OF THE DEFEATED COUNTRIES. THE INVASION AND OCCUPATION OF A TERRITORY BY A HOSTILE ARMY IS AN INCIDENT OF WAR AND A MILITARY OPERATION. IN THEIR OCCUPATION AFTER VICTORY IS WON. * * *" THE LUMBER TRANSPORTED IN THESE SHIPMENTS WAS PROCURED FOR THE UNITED KINGDOM UNDER LEND-LEASE REQUISITION NO.

B-128258, JUL. 8, 1957

TO MR. A. R. SEDER, VICE PRESIDENT, ASSOCIATION OF AMERICAN RAILROADS:

REFERENCE IS MADE TO YOUR FILE NO. 215-17, CONCERNING CERTAIN CLAIMS OF THE UNION PACIFIC RAILROAD COMPANY FOR REFUND OF $5,239.50 ON 52 SUPPLEMENTAL BILLS, REPRESENTING DEDUCTIONS FOR LAND GRANT ON SEVERAL SHIPMENTS OF LUMBER SECURED FOR THE UNITED KINGDOM UNDER LEND-LEASE.

YOU CONTEND THAT LAND-GRANT DEDUCTIONS WERE NOT APPLICABLE FOR THE REASON THAT PRIOR TO THE TIME THE SHIPMENTS WERE MADE, LEND-LEASE HAD BEEN TERMINATED AS A WEAPON FOR THE DEFENSE OF THE UNITED STATES, AND, CONSEQUENTLY, THE MATERIALS FURNISHED TO THE UNITED KINGDOM UNDER LEND LEASE IN THIS CASE WERE NOT FURNISHED FOR MILITARY OR NAVAL USE WITHIN THE MEANING OF SECTION 321 (A) OF THE TRANSPORTATION ACT OF 1940, 49 U.S.C. 65 (A) (1940 EDITION).

THE CONSIDERATIONS INVOLVED IN THIS CASE, AND THE GOVERNING PRINCIPLES, APPEAR TO BE THE SAME AS THOSE INVOLVED IN OUR DECISION B 129000 OF MARCH 28, 1957, TO MR. E. A. REYNOLDS, ASSISTANT TO VICE PRESIDENT, ASSOCIATION OF AMERICAN RAILROADS, IN RESPONSE TO HIS REQUEST UNDER THE INSTANT FILE NUMBER (215-17) ON BEHALF OF THE GULF, MOBILE AND OHIO RAILROAD COMPANY, FOR REFUND OF DEDUCTIONS MADE FOR LAND GRANT ON A SHIPMENT OF HARDWOOD LUMBER SECURED FOR THE UNITED KINGDOM UNDER LEND-LEASE AND TRANSPORTED ON GOVERNMENT BILL OF LADING NO. DA-TPS-1471130 TO MOBILE, ALABAMA, FOR EXPORT. AS REFLECTED IN THAT DECISION THE FACT OF VICTORY IN JAPAN AND THE TERMINATION OF LEND LEASE AS A WEAPON FOR DEFENSE DID NOT PRECLUDE A MILITARY USE OF LEND LEASE MATERIALS WITHIN THE MEANING OF SECTION 321 (A) OF THE TRANSPORTATION ACT OF 1940.

AFTER VICTORY THE UNITED KINGDOM WAS ENGAGED WITH THE UNITED STATES AND OTHER ALLIES IN THE OCCUPATION OF THE DEFEATED COUNTRIES. THE INVASION AND OCCUPATION OF A TERRITORY BY A HOSTILE ARMY IS AN INCIDENT OF WAR AND A MILITARY OPERATION. SEE ARTICLE 42, ET SEQ., HAGUE CONVENTION OF 1907, 36 STAT. 2306; 31 COMP. GEN. 629. IN CONSIDERING THE SCOPE OF SECTION 321 (A) OF THE TRANSPORTATION ACT OF 1940, THE UNITED STATES SUPREME COURT SAID, IN NORTHERN PACIFIC RY.CO. V. UNITED STATES, 330 U.S. 248, 254:

"* * * MILITARY OR NAVAL USE INCLUDES ALL PROPERTY CONSUMED BY THE ARMED FORCES OR BY THEIR ADJUNCTS, ALL PROPERTY WHICH THEY USE TO FURTHER THEIR PROJECTS, ALL PROPERTY WHICH SERVES THEIR MANY NEEDS OR WANTS IN TRAINING OR PREPARATION FOR WAR, IN COMBAT, IN MAINTAINING THEM AT HOME OR ABROAD, IN THEIR OCCUPATION AFTER VICTORY IS WON. * * *"

THE LUMBER TRANSPORTED IN THESE SHIPMENTS WAS PROCURED FOR THE UNITED KINGDOM UNDER LEND-LEASE REQUISITION NO. BSC/24148, WHICH SPECIFIED THE END USE FOR THE MATERIAL, IN PERTINENT PART, AS 11 PERCENT TO THE ADMIRALTY AND MERCANTILE MARINE FOR SHIPBUILDING AND DOCKYARDS; 36 PERCENT TO THE MINISTRY OF SUPPLY FOR PACKING OPERATIONAL STORES AND AMMUNITION, ARMY VEHICLES AND EQUIPMENT; 4 PERCENT TO THE WAR OFFICE FOR PACKING AND GENERAL ARMY REQUIREMENTS; AND 7 PERCENT TO "M.A.P.' FOR AIRCRAFT EQUIPMENT PACKING AND FACTORIES. THUS, A TOTAL OF 58 PERCENT OF THE MATERIAL COVERED BY THE REQUISITION WAS INTENDED FOR USES IDENTIFIABLE AS MILITARY OR NAVAL. ALL OF THOSE AGENCIES APPEAR TO HAVE BEEN ENGAGED EXCLUSIVELY IN AIDING MILITARY OPERATIONS BOTH BEFORE AND AFTER VICTORY IN JAPAN. OUR AUDIT ACTION WAS CONSISTENT WITH THE RECITATIONS IN THE SUBJECT REQUISITION AS TO END USE BY APPLYING LAND-GRANT DEDUCTIONS TO THE CHARGES ON 58 PERCENT OF EACH SHIPMENT COVERED BY THE CARRIER'S BILLS HERE INVOLVED 42 PERCENT OF EACH SHIPMENT WAS VIEWED AS BEING INTENDED FOR CIVILIAN USE AND NOT SUBJECT TO LAND GRANT. THERE IS NOTHING IN OUR RECORD TO ESTABLISH THAT THE PERCENTAGES OF INTENDED END USE WERE CHANGED AS A RESULT OF VJ DAY.

ACCORDINGLY, IT APPEARS THAT SUCH AUDIT ACTION WAS CORRECT, AND MODIFICATION THEREOF IS NOT JUSTIFIED.