B-130331, APR. 26, 1957

B-130331: Apr 26, 1957

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ROCK ISLAND AND PACIFIC RAILROAD COMPANY: REFERENCE IS MADE TO YOUR CLAIM. WHICH WERE RELEASED DURING THE MONTHS OF FEBRUARY THROUGH MAY 1951. THE DEPARTMENT OF THE ARMY REPORTED THAT FOR A PERIOD OF 30 YEARS THE RAILROAD AND THE ARSENAL HAD BEEN AND WERE OPERATING UNDER AN AGREEMENT WHEREBY THE RAILROAD WAS PERMITTED TO STORE CARS ON THE TRACKS OF THE ARSENAL IN ORDER TO AVOID THE DAILY MOVEMENT OF CARS TO SUPPLY THE VARYING NEEDS OF THE ARSENAL. IN ORDER TO HAVE CARS AVAILABLE AT A POINT CONVENIENT TO THE INDUSTRIAL AREAS IN THE CITIES OF DAVENPORT. NO DEMURRAGE CHARGES WERE PLACED AGAINST THE CARS ULTIMATELY PLACED IN SERVICE BY THE ARSENAL. THE AGREEMENT TO EXEMPT THE GOVERNMENT FROM DEMURRAGE CHARGES WAS AUTHORIZED BY LAW.

B-130331, APR. 26, 1957

TO CHICAGO, ROCK ISLAND AND PACIFIC RAILROAD COMPANY:

REFERENCE IS MADE TO YOUR CLAIM, FILE DR-54047, IN THE AMOUNT OF $2,500, REPRESENTING DEMURRAGE CHARGES ALLEGED TO BE OWING FOR THE RETENTION OF CARS ON THE TRUCKS OF THE ROCK ISLAND ARSENAL, WHICH WERE RELEASED DURING THE MONTHS OF FEBRUARY THROUGH MAY 1951, AND AUGUST 1951, UNDER AN AVERAGE AGREEMENT ENTERED INTO ON OCTOBER 21, 1916.

IN TRANSMITTING YOUR CLAIM TO OUR OFFICE, THE DEPARTMENT OF THE ARMY REPORTED THAT FOR A PERIOD OF 30 YEARS THE RAILROAD AND THE ARSENAL HAD BEEN AND WERE OPERATING UNDER AN AGREEMENT WHEREBY THE RAILROAD WAS PERMITTED TO STORE CARS ON THE TRACKS OF THE ARSENAL IN ORDER TO AVOID THE DAILY MOVEMENT OF CARS TO SUPPLY THE VARYING NEEDS OF THE ARSENAL, AND IN ORDER TO HAVE CARS AVAILABLE AT A POINT CONVENIENT TO THE INDUSTRIAL AREAS IN THE CITIES OF DAVENPORT, IOWA, AND ROCK ISLAND AND MOLINE, ILLINOIS. IN OPERATING UNDER THE AGREEMENT FOR THIS USE OF THE ARSENAL'S TRACKS, NO DEMURRAGE CHARGES WERE PLACED AGAINST THE CARS ULTIMATELY PLACED IN SERVICE BY THE ARSENAL.

UNDER SECTION 22 OF THE INTERSTATE COMMERCE ACT, 49 U.S.C. 22, PROVIDING THAT A CARRIER MAY TRANSPORT, STORE, OR HANDLE PROPERTY OF THE UNITED STATES FREE OR AT REDUCED RATES, THE AGREEMENT TO EXEMPT THE GOVERNMENT FROM DEMURRAGE CHARGES WAS AUTHORIZED BY LAW. THIS AGREEMENT APPARENTLY WAS ENTERED INTO SUBSEQUENT TO THE AVERAGE AGREEMENT, AND IS INCONSISTENT WITH ITS TERMS. THEREFORE, THE AGREEMENT TO EXEMPT THE GOVERNMENT FROM DEMURRAGE CHARGES SUPERSEDES THE AVERAGE AGREEMENT RELIED UPON--- SEE 17 CJS CONTRACTS, SECTIONS 387, 388 AND 395; AND 12 AM.JUR. CONTRACTS, SECTION 405--- AND NO DEMURRAGE CHARGES APPEAR TO BE OWING TO YOU.

ACCORDINGLY, THE DISALLOWANCES OF YOUR CLAIM BY OUR TRANSPORTATION DIVISION IS SUSTAINED.