B-136768, SEPTEMBER 21, 1960, 40 COMP. GEN. 178

B-136768: Sep 21, 1960

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WHICH WAS DEMOLISHED WHILE BEING TRANSPORTED UNDER A GOVERNMENT BILL OF LADING. AN AMOUNT DETERMINED BY THE ADMINISTRATIVE AGENCY BASED ON THE RECONDITIONING PROCESS WHICH IS SHOWN TO HAVE EXTENDED THE USEFUL LIFE OF THE EQUIPMENT WILL BE ACCEPTED AS CORRECT. 1960: REFERENCE IS MADE TO YOUR LETTER OF APRIL 21. WAS TRANSPORTING THE CRANE ON A MARTIN LOW BOY TRAILER PULLED BY A 1955 INTERNATIONAL TRUCK TRAILER. TOPPLED FROM THE TRAILER BED AND WAS DEMOLISHED. THAT IS. THIS OFFER IS BASED ON THE CRANE HAVING A LIFE EXPECTANCY OF 12 YEARS WITH A DEPRECIATION RATE OF 8.33 PERCENT PER YEAR AND A TOTAL DEPRECIATION OF 44.44 PERCENT OVER A PERIOD OF FIVE YEARS AND FOUR MONTHS. YOU HAVE CITED COURT CASES WHICH HAVE APPLIED THE "MARKET VALUE OF GOODS AT DESTINATION" RULE AND HAVE FURNISHED AFFIDAVITS AS TO THE MARKET VALUE OF THE TYPE OF CRANE HERE INVOLVED FROM SEVERAL PEOPLE ENGAGED IN THE SELLING OF SIMILAR MACHINERY AND HEAVY EQUIPMENT.

B-136768, SEPTEMBER 21, 1960, 40 COMP. GEN. 178

PROPERTY - PUBLIC - DAMAGE, LOSS, ETC. - MEASURE OF DAMAGES - RECONDITIONED EQUIPMENT IN THE DETERMINATION OF THE VALUE OF A PIECE OF RECONDITIONED EQUIPMENT, WHICH WAS DEMOLISHED WHILE BEING TRANSPORTED UNDER A GOVERNMENT BILL OF LADING, A SETTLEMENT BASED ON THE MARKET VALUE OF THE EQUIPMENT AT DESTINATION, LESS A DEPRECIATION ALLOWANCE FOR THE PERIOD OF THE LIFE EXPECTANCY OF THE EQUIPMENT, WITHOUT CONSIDERATION FOR THE FACT THAT THE EQUIPMENT IMMEDIATELY PRIOR TO THE SHIPMENT HAD BEEN RECONDITIONED AND EXTENSIVELY OVERHAULED WOULD NOT BE PROPER; THEREFORE, AN AMOUNT DETERMINED BY THE ADMINISTRATIVE AGENCY BASED ON THE RECONDITIONING PROCESS WHICH IS SHOWN TO HAVE EXTENDED THE USEFUL LIFE OF THE EQUIPMENT WILL BE ACCEPTED AS CORRECT.

TO JOHNSON, GUTHRIE AND STANFIELD, SEPTEMBER 21, 1960:

REFERENCE IS MADE TO YOUR LETTER OF APRIL 21, 1960, WITH ENCLOSURES, AND TO YOUR LETTER OF JULY 18, 1960, REQUESTING REVIEW OF THE ACTION TAKEN ON DECEMBER 1, 1959, IN DEDUCTING $32,774 FROM FREIGHT CHARGES OTHERWISE DUE YOUR CLIENT, C AND H TRANSPORTATION CO., INC.

THE DEDUCTION ACTION ARISES FROM THE GOVERNMENT'S CLAIM FOR DAMAGE TO A TRUCK-MOUNTED THEW LORAIN CRANE (MODEL E-6620, SERIAL NO. 22364), MOVING FROM THE LEWIS MOTOR COMPANY, MARSHALL, TEXAS TO THE TRANSPORTATION OFFICER, FORT POLK, LOUISIANA, UNDER GOVERNMENT BILL OF LADING WY- 7206808.

THE RECORD SHOWS THAT THE C AND H TRANSPORTATION CO., INC. WAS TRANSPORTING THE CRANE ON A MARTIN LOW BOY TRAILER PULLED BY A 1955 INTERNATIONAL TRUCK TRAILER. WHILE EN ROUTE TO DESTINATION ON MARCH 25, 1957, THE TRACTOR STRUCK A CULVERT ABUTMENT, CAUSING THE DRIVER TO LOSE STEERING CONTROL OF THE TRACTOR WHICH LEFT THE ROAD AND CRASHED INTO A STAND OF TREES. AS A RESULT OF THE CRASH, THE CRANE, WEIGHING 55,300 POUNDS, TOPPLED FROM THE TRAILER BED AND WAS DEMOLISHED. THE CRANE HAD BEEN RECONDITIONED BY THE SHIPPER, LEWIS MOTOR COMPANY, MARSHALL, TEXAS, JUST PRIOR TO SHIPMENT. THE C AND H TRANSPORTATION CO., INC., ADMITTED LIABILITY FOR THE DAMAGED CRANE IN ITS LETTER OF MAY 9, 1957, AND RETAINED THE DAMAGED CRANE FOR SALVAGE.

YOU CONTEND THAT THE CARRIER BELIEVES A FAIR SETTLEMENT OF OUR CLAIM FOR $32,774 WOULD BE $17,856.44, THAT IS, $32,744 LESS A TOTAL CREDIT OF $14.917.56 ($311 FOR STORAGE CHARGES AND A DEPRECIATION ALLOWANCE OF $14,606.56). THIS OFFER IS BASED ON THE CRANE HAVING A LIFE EXPECTANCY OF 12 YEARS WITH A DEPRECIATION RATE OF 8.33 PERCENT PER YEAR AND A TOTAL DEPRECIATION OF 44.44 PERCENT OVER A PERIOD OF FIVE YEARS AND FOUR MONTHS. IN SUPPORT OF THE CARRIER'S CONTENTION, YOU HAVE CITED COURT CASES WHICH HAVE APPLIED THE "MARKET VALUE OF GOODS AT DESTINATION" RULE AND HAVE FURNISHED AFFIDAVITS AS TO THE MARKET VALUE OF THE TYPE OF CRANE HERE INVOLVED FROM SEVERAL PEOPLE ENGAGED IN THE SELLING OF SIMILAR MACHINERY AND HEAVY EQUIPMENT.

YOUR OFFER TO SETTLE THE CLAIM FOR $17,856.44 IS ON A BASIS SIMILAR TO THAT URGED IN A LETTER OF APRIL 16, 1958, FROM THE C AND H TRANSPORTATION CO., INC., WHEREIN THE CARRIER OFFERED TO COMPROMISE THE CLAIM BY PAYMENT OF $18,036.44, SOME $180 MORE THAN THE AMOUNT OF YOUR CURRENT OFFER. SUCH OFFER WAS SUBMITTED TO AND REJECTED BY THE ATTORNEY GENERAL BECAUSE THE OFFER FAILED TO MAKE ANY ALLOWANCE FOR THE FACT THAT THE CRANE IMMEDIATELY PRIOR TO THE ACCIDENT HAD BEEN THOROUGHLY RECONDITIONED AND WAS THEN ADMINISTRATIVELY CONSIDERED TO BE VALUED AT APPROXIMATELY ITS COST AT ACQUISITION.

AT THE TIME OF THE ACCIDENT, THE CRANE HAD JUST BEEN COMPLETELY OVERHAULED BY THE LEWIS MOTOR COMPANY. THE C AND H TRANSPORTATION COMPANY WAS ENGAGED TO TRANSPORT THE RECONDITIONED MACHINE TO FORT POLK, LOUISIANA, FOR USE IN MILITARY EXERCISES. THE DESTRUCTION OF THE CRANE OCCURRED APPROXIMATELY ONE HOUR AFTER THE CARRIER RECEIVED THE RECONDITIONED MACHINE FROM THE LEWIS MOTOR COMPANY AT MARSHALL, TEXAS. THE RECORD REFLECTS THAT THE RECONDITIONING PROCESS OF THE CRANE WAS EXTENSIVE AND IT SEEMS THAT THE CRANE WAS VIRTUALLY REBUILT. THIS FACT IS SUPPORTED BY JOB ORDER ENG. FORM 1752, A COPY OF WHICH WAS SUBMITTED WITH YOUR LETTER OF APRIL 21, 1960.

THE ADMINISTRATIVE AGENCY CONTENDS THAT THE PROPER MEASURE OF DAMAGES FOR THE DESTRUCTION OF THE RECONDITIONED CRANE IS THE SAME AS THE COST OF ACQUISITION, $32,463, SINCE THE COST OF RESTORING THE CRANE TO ITS FORMER RECONDITIONED OPERATIVE STATE WAS ESTIMATED TO BE $32,750. THIS CONTENTION AS TO THE VALUE OF THE RECONDITIONED CRANE IS SUBSTANTIALLY SUPPORTED BY THE QUOTATION FURNISHED BY THE CARRIER'S APPOINTED REPRESENTATIVE. IT IS SPECIFICALLY NOTED THAT THE SHAW EQUIPMENT COMPANY OF DALLAS, TEXAS, IN ADVISING THE CARRIER'S INSURER OF THE ESTIMATED COST OF RESTORATION OF THE CRANE, ASSERTED ON PAGE 3 OF AN ITEMIZED LIST ACCOMPANYING A LETTER OF MAY 20, 1957, THAT---

WE RECENTLY REBUILT A USED MACHINE OF THIS MODEL AND MAKE AND SOLD IT FOR APPROXIMATELY $30,000, FULLY EQUIPPED. (ITALICS SUPPLIED.)

THE IMPORT OF THIS EVALUATION BY THE CARRIER'S OWN REPRESENTATIVE SUGGESTS THAT THE CRANE, A WELL-KNOWN MAKE AND MODEL, WAS WORTH CONSIDERABLY MORE IN THE RECONDITIONED STATE THAN THE AMOUNT OF MONEY NOW PROFFERED.

MOREOVER, IT SEEMS THAT THE CARRIER'S OFFER, BASED ON A STRAIGHT LINE DEPRECIATION FORMULA OVER A TWELVE-YEAR PERIOD, IS NOT FOR APPLICATION HERE, SINCE THE OFFER FAILS TO GIVE CONSIDERATION TO THE FACT THAT THE CRANE HAD BEEN RECONDITIONED AND EXTENSIVELY OVERHAULED IMMEDIATELY PRIOR TO MOVEMENT. HAD ANY CONSIDERATION BEEN GIVEN TO THE RECONDITIONED STATE OF THE CRANE IT FOLLOWS THAT AN ADJUSTMENT FOR AN INCREASE IN THE VALUE OF THE MACHINE WOULD HAVE BEEN MADE, SINCE THE RECONDITIONING PROCESS, EXCEPT FOR THE ACCIDENT, WOULD DEFINITELY HAVE EXTENDED THE USEFUL LIFE OF THE CRANE FOR A CONSIDERABLE PERIOD OF TIME.

ON THE BASIS OF THE RECORD BEFORE US, WE MUST HOLD THAT THE PROPER MEASURE OF DAMAGE FOR THE RECONDITIONED MACHINE IS $32,463, THE AMOUNT REPORTED BY THE ADMINISTRATIVE AGENCY, SINCE WE HAVE CONSISTENTLY HELD THAT WHERE THERE IS A DISPUTE BETWEEN THE ADMINISTRATIVE OFFICE AND THE CLAIMANT INVOLVING A QUESTION OF FACT--- IN THIS INSTANCE THE VALUE OF THE RECONDITIONED MACHINE--- THE ADMINISTRATIVE REPORT WILL BE ACCEPTED AS CORRECT IN THE ABSENCE OF SUBSTANTIAL EVIDENCE TO THE CONTRARY. 11 COMP. GEN. 473; 16 ID. 1105. ACCORDINGLY, THE DEDUCTION OF DECEMBER 1, 1959, FOR $32,774 IS DEEMED PROPER AND IS SUSTAINED, EXCEPT THAT THE CARRIER WILL BE REIMBURSED FOR THE STORAGE CHARGE OF $311, SINCE THE CARRIER SETTLED THIS CHARGE WITH THE LEWIS MOTOR COMPANY. CHECK FOR SUCH AMOUNT, $311, SHOULD BE RECEIVED IN DUE COURSE.