B-137940, JAN 12, 1959

B-137940: Jan 12, 1959

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CONKLIN & SCHRODER: FURTHER REFERENCE IS MADE TO YOUR LETTER OF DECEMBER 1. AETNA INSURANCE COMPANY ARE LIABLE FOR $1. WAS DELIVERED TO CAROLINA MOTOR EXPRESS AT RICHMOND QUARTERMASTER DEPOT. IT WAS COVERED BY THE CARRIER'S PRO NO. 832830 AND. 000 YARDS AT 7 CENTS A YARD) WAS THE VALUE OF THE LOST PROPERTY. THE CARRIER IS LEGALLY LIABLE FOR THE LOSS OF THIS PROPERTY. THIS POLICY WAS AMENDED BY THE ATTACHMENT OF INTERSTATE COMMERCE COMMISSION FORM BMC. 32. THE CARRIER WAS ADJUDICATED A BANKRUPT ON NOVEMBER 14. 400 REPORTEDLY WAS NOT AMONG THOSE FILED WITH THE COURT AND. WAS NOT COVERED BY THE PLAN OF ARRANGEMENT SUBSEQUENTLY CONSUMMATED IN THE BANKRUPTCY PROCEEDINGS. THE INSURER'S LIABILITY IS LIMITED TO $1.

B-137940, JAN 12, 1959

PRECIS-UNAVAILABLE

HEINEKE, CONKLIN & SCHRODER:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF DECEMBER 1, 1958, YOUR FILE NO. 5937, IN WHICH YOU QUESTION THE PROPRIETY OF OUR CERTIFICATE OF INDEBTEDNESS OF NOVEMBER 7, 1958 (TK-171257), CERTIFYING THAT CAROLINA MOTOR EXPRESS LINES, INC., AND AETNA INSURANCE COMPANY ARE LIABLE FOR $1,400, THE VALUE OF GOVERNMENT PROPERTY LOST FROM A SHIPMENT TRANSPORTED BY THE CARRIER, NOW BANKRUPT, UNDER GOVERNMENT BILL OF LADING WV-3356432, IN FEBRUARY 1951.

THE SHIPMENT, WHICH CONSISTED OF ONE BOX AND 30 CARTONS OF COTTON WEBBING AND 42 ROLLS OF WATERPROOFED COTTON CLOTH, ON FEBRUARY 19, 1951, WAS DELIVERED TO CAROLINA MOTOR EXPRESS AT RICHMOND QUARTERMASTER DEPOT, BELLBLUFF, VIRGINIA, FOR TRANSPORTATION TO THE C. H. ELLIS CO., INC., INDIANAPOLIS, INDIANA. IT WAS COVERED BY THE CARRIER'S PRO NO. 832830 AND, UPON ARRIVAL AT DESTINATION, TWO CARTONS, WHICH HAD CONTAINED 20,000 YARDS OF 3/4" COTTON WEBBING, CHECKED SHORT. THE CARRIER COULD NOT ACCOUNT FOR THE LOSS AND, AFTER AN INVESTIGATION, THE DEPARTMENT OF THE ARMY DETERMINED THAT $1,400 (20,000 YARDS AT 7 CENTS A YARD) WAS THE VALUE OF THE LOST PROPERTY. UNDER SECTIONS 219 AND 20(11) OF THE INTERSTATE COMMERCE ACT, AS AMENDED, 49 U.S.C. 319 AND 20(11), THE CARRIER IS LEGALLY LIABLE FOR THE LOSS OF THIS PROPERTY. SECRETARY OF AGRICULTURE V. UNITED STATES, 350 U. S. 162, 165 (FOOTNOTE 9) (1956); CHESAPEAKE & OHIO RAILWAY CO. V. THOMPSON MANUFACTURING CO., 270 U. S. 416, 421-422 (1926).

DURING THE TIME THE LOSS OCCURRED, THE AETNA INSURANCE COMPANY PROVIDED LIABILITY INSURANCE COVERAGE ON THE CARRIER UNDER ITS POLICY NO. MTM 205251. THIS POLICY WAS AMENDED BY THE ATTACHMENT OF INTERSTATE COMMERCE COMMISSION FORM BMC. 32, ENDORSEMENT FOR MOTOR COMMON CARRIER POLICIES OF INSURANCE FOR CARGO LIABILITY. SECTION 215 OF THE INTERSTATE COMMERCE ACT, AS AMENDED, 49 U.S.C. 315.

THE CARRIER WAS ADJUDICATED A BANKRUPT ON NOVEMBER 14, 1951, IN THE MATTER OF CAROLINA MOTOR EXPRESS LINES, INC., UNITED STATES DISTRICT COURT, SOUTHERN DISTRICT OF INDIANA, INDIANAPOLIS DIVISION, NO. 9711, IN PROCEEDINGS FOR AN ARRANGEMENT. HOWEVER, THIS CLAIM FOR $1,400 REPORTEDLY WAS NOT AMONG THOSE FILED WITH THE COURT AND, CONSEQUENTLY, WAS NOT COVERED BY THE PLAN OF ARRANGEMENT SUBSEQUENTLY CONSUMMATED IN THE BANKRUPTCY PROCEEDINGS.

IN DEFENSE TO OUR DEMANDS ON THE AETNA INSURANCE COMPANY FOR PAYMENT OF THIS CLAIM, YOU STATE THAT BECAUSE THE GOVERNMENT DID NOT FILE THIS CLAIM IN THE BANKRUPTCY PROCEEDINGS, IT NOW HAS NO CLAIM AGAINST EITHER THE CARRIER OR THE INSURER. IN ANY EVENT, YOU STATE, UNDER THE TERMS OF THE FORM BMC. 32 ENDORSEMENT, THE INSURER'S LIABILITY IS LIMITED TO $1,000.

THE FORM BMC. 32 ENDORSEMENT TO POLICY NO. MTM 205251, BY ITS TERMS, IS AN UNCONDITIONAL AND ABSOLUTE PROMISE OF THE INSURER TO PAY FOR ALL LOSS OF AND DAMAGE TO PROPERTY BELONGING TO SHIPPERS OR CONSIGNEES WHICH COMES INTO THE POSSESSION OF THE INSURED IN CONNECTION WITH ITS TRANSPORTATION SERVICES AND FOR WHICH THE INSURED MAY BE HELD LEGALLY LIABLE. WILLIAM ATKIN CO. V. NATIONAL LIBERTY INSURANCE CO., 5 N. Y. S. 2D 863 (1938); I. ZUCKER'S SONS V. AUTOMBILE INS. CO., 23 N. Y. S. 2D 83 (1938). THE LIABILITY OF THE INSURER IS LIMITED TO $1,000 FOR THE LOSS OF OR DAMAGE TO PROPERTY CARRIED ON ANY ONE MOTOR VEHICLE. THE ENDORSEMENT GIVES TO THE SHIPPER A DIRECT RIGHT OF ACTION AGAINST THE INSURER (CHAPIN OWEN CO. V. NEWMAN, 107 N.Y.S. 2D 941, 945 (1951); CF. DAVE LEVINE & CO. V. WOLF'S PACKAGE DEPOT, 138 N. Y. S. 2D 427, 432 (1955); HUDDLESTON V. MANHATTAN FIRE & MARINE INS. CO., 148 S.W. 2D 74 (1941)) IRRESPECTIVE OF THE BANKRUPTCY OF THE INSURED. SEE, ALSO, SORENSON V. BOSTON INS. CO., 4 CIR., 20 F. 2D 640 (1927), WHERE THE COURT, IN CONSTRUING POLICY PROVISIONS SIMILAR TO THOSE IN THE FORM BMC. 32 ENDORSEMENT, SAID THAT THE BANKRUPTCY OF THE CARRIER COULD NOT DEFEAT A RECOVERY UNDER THE POLICY. FURTHERMORE, THE FAILURE OF THE GOVERNMENT TO FILE THIS CLAIM IN THE BANKRUPTCY PROCEEDING DID NOT EXTINGUISH THE CLAIM, IT MERELY RESULTED IN A POSTPONEMENT OF THE GOVERNMENT'S RIGHT TO ENFORCEMENT OF ITS CLAIM. IN RE NICHOLS, 53 F. SUPP. 609 (1943); IN RE STEIN, 111 F. SUPP. 327 (1953); OF. UNITED STATES V. AMERICAN SURETY CO. OF NEW YORK, 2 CIR., 56 F. 2D 734 (1932); SECTION 57(N) OF THE BANKRUPTCY ACT, AS AMENDED, 11 U.S.C. 93(N).

SINCE AETNA'S POLICY NO. MTM 205251 APPARENTLY DID NOT FULLY COVER THE VALUE OF THE PROPERTY LOST, WE ARE AMENDING OUR CLAIM TO $1,000, THE LIMIT OF LIABILITY SPECIFIED IN THE AMENDMENT TO THAT POLICY, THE FORM BMC. ENDORSEMENT. THE INSURANCE COMPANY'S REMITTANCE IN THAT AMOUNT, MADE PAYABLE TO THE "U. S. GENERAL ACCOUNTING OFFICE," SHOULD BE SENT HERE PROMPTLY TO AVOID FORMAL COLLECTION PROCEEDINGS.