B-131474, JUL. 9, 1957

B-131474, JUL. 9, 1957

TO BLACK DIAMOND STEAMSHIP CORP.:

REFERENCE IS MADE TO YOUR LETTER OF APRIL 10, 1957, AND LATER LETTERS, FILE C-4098 H, REQUESTING REVIEW OF OUR SETTLEMENT DATED MARCH 27, 1957, WHICH DISALLOWED YOUR CLAIM FOR $832.42, REPRESENTING THE VALUE OF SHORTAGES--- PLUS UNEARNED FREIGHT--- IN A SHIPMENT OF WATTLE TANNIN EXTRACT LOADED ABOARD THE S.S. BLACK HERON AT ROTTERDAM, HOLLAND, FOR TRANSPORTATION TO NEW YORK, NEW YORK, UNDER COMMERCIAL BILL OF LADING NO. 88, DATED NOVEMBER 21, 1952. THIS AMOUNT WAS DEDUCTED MORE THAN ONE YEAR AFTER THE SHIPMENT ARRIVED AT NEW YORK FROM MONIES OTHERWISE DUE ON YOUR BILL NO. BB-459.

THE QUESTION INVOLVED HERE--- WHETHER OR NOT THE GOVERNMENT HAS THE RIGHT TO SET OFF AMOUNTS FOR LOSS OR DAMAGE TO CARGO FROM MONIES OTHERWISE DUE A CARRIER AFTER THE EXPIRATION OF ONE YEAR FROM THE TIME A SHIPMENT IS DELIVERED TO THE CONSIGNEE AT THE PORT OF DESTINATION, IN VIEW OF THE PROVISIONS IN THE CARRIAGE OF GOODS BY SEA ACT, 46 U.S.C. 1303 (6), AND SIMILAR CONDITIONS IN THE CARRIER'S COMMERCIAL BILL OF LADING--- WAS THE ISSUE IN GRACE LINE, INC. V. UNITED STATES, 144 F.SUPP. 548. YOU DO NOT DISPUTE THE DETERMINATION OF THE SHORTAGE WHICH GAVE RISE TO THE SETOFF BY THE GOVERNMENT. ALTHOUGH THE NAMED CASE WAS DECIDED IN FAVOR OF THE LIBELANT, OUR OFFICE IS NOT IN ACCORD WITH THE CONCLUSION REACHED BY THE COURT, NOR DO WE BELIEVE THAT THE GOVERNMENT'S RIGHT OF SETOFF IS TIME- BARRED THEREBY. INASMUCH AS THE DEPARTMENT OF JUSTICE HAS INFORMALLY ADVISED US THAT AN APPEAL HAS BEEN TAKEN IN THE GRACE LINE CASE, THAT DECISION CANNOT BE GIVEN EFFECT AS PRECLUDING SETOFF BY THE GOVERNMENT, AND DUE PROTECTION OF THE GOVERNMENT'S INTEREST REQUIRES OUR ADHERENCE TO THE POSITION THAT THE DEDUCTION MADE FROM FUNDS SUBSEQUENTLY DUE YOU TO RECOVER FOR DAMAGE TO GOVERNMENT PROPERTY WAS PROPER.