B-141175, APR. 13, 1961

B-141175, APR. 13, 1961

TO DIRECTOR, INTERNATIONAL COOPERATION ADMINISTRATION:

WE HAVE A LETTER OF NOVEMBER 4, 1959, WITH ENCLOSURES, FROM THE THEN ACTING ASSISTANT DEPUTY DIRECTOR CONTROLLER, REQUESTING OUR DECISION AS TO THE PROPRIETY OF CERTAIN CHARGES AGAINST A TRUST ACCOUNT SET UP ON BEHALF OF THE GOVERNMENT OF INDIA AS A SOURCE OF FUNDS TO BE DRAWN AGAINST IN PAYMENT OF CHARTER PARTY CHARGES ON GRAIN SHIPMENTS FROM THE UNITED STATES TO INDIA. AS WE ADVISED YOUR PREDECESSOR BY LETTER OF APRIL 28, 1960, WE REQUESTED APPROPRIATE INFORMATION AND COMMENTS FROM THE MARITIME ADMINISTRATION UPON RECEIPT OF THE LETTER OF NOVEMBER 4, 1959. THE REPLY FROM THE MARITIME ADMINISTRATION WAS RECEIVED ON MARCH 8, 1961.

WE ARE ADVISED THAT IN 1951 THE GOVERNMENT OF INDIA, ACTING THROUGH THE INDIA SUPPLY MISSION, AND THE PREDECESSOR AGENCY TO THE ICA ENTERED INTO AN AGREEMENT FOR THE USE OF VESSELS OF THE UNITED STATES RESERVE FLEET TO MOVE AGRICULTURAL COMMODITIES FROM PORTS IN THE UNITED STATES TO INDIA. PURSUANT TO THE AGREEMENT THE GOVERNMENT OF INDIA DEPOSITED $56,961,664 TO A TRUST ACCOUNT, OF WHICH ICA'S PREDECESSOR WAS PRESUMABLY TRUSTEE, WHICH WAS TO BE DRAWN AGAINST TO COMPENSATE THE NATIONAL SHIPPING AUTHORITY, AN AGENCY OF THE MARITIME ADMINISTRATION, FOR THE COSTS OF SHIPPING THE GRAIN. UPON COMPLETION OF THE PROGRAM DISBURSEMENTS FROM THE TRUST FUND ON BEHALF OF THE GOVERNMENT OF INDIA WERE FOUND TO HAVE EXCEEDED DEPOSITS BY $61,437.69, SUBSEQUENTLY ADJUSTED TO $68,099.51. CLAIM WAS MADE UPON THE GOVERNMENT OF INDIA FOR THAT AMOUNT. INDIA REMITTED THE SUM OF $9,775.39. OF THE REMAINDER $3,030.44 IS MADE UP OF MISCELLANEOUS SMALL ADJUSTMENTS BASED ON INCIDENTS WHICH OCCURRED SEVERAL YEARS AGO AT PORT OF DISCHARGE IN INDIA. IT IS STATED THAT SUCH EVIDENCE AS IS AVAILABLE APPEARS TO SUPPORT THE INDIAN CLAIM THAT THE CHARGES SHOULD NOT HAVE BEEN LEVIED. UNDER THE CIRCUMSTANCES WE HAVE NO OBJECTION TO ACCEPTING THE POSITION OF THE GOVERNMENT OF INDIA WITH RESPECT TO THAT AMOUNT AS RECOMMENDED IN THE LETTER OF NOVEMBER 4, 1959.

THE REMAINING AMOUNT OF $55,293.68 CONSTITUTES CLAIMS FOR TWO PORT LOADING CHARGES ON THE GRAIN SHIPMENTS AS MORE FULLY SET OUT BELOW. IT IS OUR UNDERSTANDING THAT WHILE DENYING LEGAL LIABILITY FOR THIS AMOUNT THE INDIAN GOVERNMENT IS WILLING TO ABIDE BY THE DETERMINATION OF OUR OFFICE.

FOR THE GRAIN IN QUESTION, WHICH WAS TO BE LOADED IN THE COLUMBIA RIVER AREA, 12 SHIPS WERE ACTIVATED AND ALLOCATED BY THE NSA TO SEVEN LOCAL SHIPPING COMPANIES WHO WERE TO OPERATE THE SHIPS AS GENERAL AGENTS OF THE NSA. AN AGENCY AGREEMENT WAS ENTERED INTO WITH EACH SUCH COMPANY PROVIDING THAT THE SHIPPING FIRM, ACTING SOLELY AS AGENT OF THE UNITED STATES, WOULD OPERATE THE SHIP OR SHIPS IN ACCORDANCE WITH "SUCH DIRECTIONS, ORDERS, REGULATIONS, FORMS AND METHODS OF SUPERVISION AND INSPECTION" AS THE GOVERNMENT MIGHT DIRECT. IT WAS PROVIDED FURTHER THAT IN THE ABSENCE OF SUCH DIRECTIONS, ORDERS, ETC., OPERATIONS WOULD BE IN ACCORDANCE WITH "REASONABLE COMMERCIAL PRACTICES.' ACTING UNDER THE AGENCY AGREEMENTS, THE COMPANIES ENTERED INTO 12 CHARTER PARTY AGREEMENTS WITH THE INDIA SUPPLY MISSION FOR THE USE OF THE VESSELS, WHICH CHARTERS PROVIDED FOR ONE LOADING PORT.

IT IS NOT DISPUTED THAT THE AGENTS OF THE NSA, IN ENTERING INTO THE CHARTER PARTY AGREEMENTS, WERE REQUIRED TO IMPLEMENT THE PROVISIONS OF NSA ORDER NO. 5 IN NINE INSTANCES AND NSA ORDER NO. 45 IN THE REMAINING THREE CASES. NSA ORDER NO. 5, PUBLISHED IN THE FEDERAL REGISTER ON MAY 8, 1951, WAS MADE APPLICABLE BY ITS TERMS TO VESSEL LOADINGS BEGUN UNDER THE PROGRAM ON OR AFTER MARCH 13, 1951. THE ORDER IN SECTION 2 SETS OUT RATES FOR SHIPMENT FROM PORT AREAS IN THE UNITED STATES TO PORT AREAS IN INDIA. UNDER THAT SECTION APPEARS THE FOLLOWING NOTE:

"NOTE: FOREGOING RATES APPLY TO CARGOES LOADED AT ONE PORT AND DISCHARGED AT ONE PORT; FOR MORE THAN ONE PORT OF LOADING OR DISCHARGE, WITHIN THE SAME GENERAL AREA OR RANGE, ADD FIFTY CENTS (50 CENTS) U.S. CURRENCY PER TON FOR EACH ADDITIONAL PORT TO THE HIGHEST APPLICABLE RATE, THE TOTAL RATE THUS FORMED TO APPLY ON THE ENTIRE CARGO. CARGOES FOR MORE THAN ONE PORT OF LOADING OR DISCHARGE SHALL BE SUBJECT TO NEGOTIATION AND MUTUAL AGREEMENT BETWEEN THE OWNERS AND ARTERERS.'

NSA ORDER NO. 45, APPROVED SEPTEMBER 18, 1951, CANCELLED THE EARLIER ORDER AND GENERALLY INCREASED RATES. IT CONTAINS THE FOLLOWING NOTE:

"NOTE: FOREGOING RATES APPLY TO CARGOES LOADED AT ONE PORT AND DISCHARGED AT ONE PORT; FOR MORE THAN ONE PORT OF LOADING IN THE SAME COASTAL RANGE OR ONE PORT OF DISCHARGE IN THE SAME COASTAL RANGE, EITHER WEST COAST INDIA OR EAST COAST INDIA, THE RATE OF FREIGHT AS DESCRIBED HEREIN WILL BE INCREASED BY FIFTY CENTS (50 CENTS) PER TON OF 2,240 POUNDS FOR EACH ADDITIONAL LOADING OR DISCHARGE PORT ON THE ENTIRE CARGO.'

IT IS OUR UNDERSTANDING THAT A GENERAL AREA OR RANGE OR COASTAL RANGE IS GENERALLY REGARDED AS ENCOMPASSING A BROAD COASTAL AREA; FOR EXAMPLE, THE PACIFIC-NORTHWEST RANGE INCLUDES ALL OF THE COAST OF WASHINGTON AND OREGON.

THE COLUMBIA RIVER BASIN FROM WHICH ALL OF THE LOADINGS WERE MADE, INCLUDES DOCKING FACILITIES AT ASTORIA AND PORTLAND, OREGON, AND LONGVIEW AND VANCOUVER, WASHINGTON. LOADINGS WERE MADE IN EACH CASE AT TWO OF THE DESIGNATED PLACES. THE INDIA SUPPLY MISSION WAS BILLED AT THE INCREASED RATE FOR TWO-PORT LOADINGS IN EACH INSTANCE. FIVE OF THESE BILLINGS WERE ACCEPTED AS CORRECT. HOWEVER, WITH RESPECT TO THE OTHER SEVEN THE SUPPLY MISSION REFUSED TO PAY THE ADDITIONAL 50 CENTS PER LONG TON CHARGE ON THE GROUND THAT THE COLUMBIA RIVER AREA CONSTITUTED A SINGLE PORT. IN THIS CONNECTION IT SHOULD BE NOTED THAT, AT LEAST WITH RESPECT TO THE SEVEN BILLINGS AT ISSUE, SHIFTING CHARGES (STIPULATED FOR MOVEMENTS FROM ONE LOADING BERTH TO ANOTHER WITHIN THE LIMITS OF A SINGLE PORT) WERE ALSO ASSESSED. IT IS AGREED BY ALL PARTIES THAT IF THE TWO-PORT LOADING CHARGE IS FOUND TO BE CORRECT THE SHIFTING CHARGES SHOULD BE DEDUCTED.

ICA OR ITS PREDECESSOR EFFECTED A SETTLEMENT WITH THE MARITIME ADMINISTRATION WHICH APPEARS TO HAVE INCLUDED PAYMENT IN FULL FOR THE CHARGES AT ISSUE. IT FURTHER APPEARS, HOWEVER, THAT THE TRUST ACCOUNT WAS INSUFFICIENT FOR THIS PURPOSE AND THE PRESENT SUBMISSION RESULTED FROM ICA'S EFFORTS TO OBTAIN REIMBURSEMENT FROM THE INDIAN GOVERNMENT FOR THE DEFICIENCY.

MARITIME ADMINISTRATION CONTENDS THAT THE AGENTS OF NSA HAD AUTHORITY TO ACT ONLY IN ACCORDANCE WITH THE TERMS OF THE AGENCY AGREEMENT; THAT THE PROPER NSA RATE ORDER WAS REQUIRED TO BE INCLUDED IN EACH CHARTER PARTY AGREEMENT; AND THAT UNDER THE NSA RATE ORDERS THE TWO-PORT LOADING CHARGE WAS INTENDED AND CALLED FOR IN THESE CASES. THE MARITIME ADMINISTRATION TAKES THE POSITION THAT IN THE ORDINARY MEANING OF THE TERM "PORT" WHICH SHOULD BE APPLIED IN THE INTERPRETATION OF ITS RATE ORDERS IN THIS CASE EACH OF THE SEVERAL AREAS IN THE COLUMBIA RIVER BASIN MUST BE REGARDED AS A SEPARATE PORT.

THE ISSUE CLEARLY REVOLVES AROUND THE DEFINITION OF A PORT. THE AGENCY AGREEMENT BETWEEN NSA AND THE SHIPPING COMPANIES AUTHORIZES THE ADOPTION OF REASONABLE COMMERCIAL PRACTICES IN THE ABSENCE OF DIRECTIVES ON THE MATTER FROM THE UNITED STATES. WE FIND NOTHING IN THE CHARTER PARTY AGREEMENTS OR THE NSA RATE ORDERS TO EITHER SUPPORT OR REFUTE THE PROPOSITION THAT EACH LOCALITY HAVING DOCKAGE FACILITIES ON THE COLUMBIA RIVER BASIN SHOULD BE REGARDED AS AN INDIVIDUAL PORT. THE ABSENCE OF ANY DEFINITIVE POSITION IN THESE DOCUMENTS IS INDICATED BY THE FACT THAT, AFTER ALL OF THE LOADINGS HAD BEEN COMPLETED, ONE OF THE AGENTS BY LETTER OF JUNE 3, 1952, REQUESTED CLARIFICATION OF THE MATTER FROM THE NSA, AND THE SAN FRANCISCO OFFICE OF NSA HAD TO REFER THE QUESTION TO WASHINGTON TO FIND OUT THE NSA INTERPRETATION. THE REPLY, DATED JUNE 19, 1952, STATES THAT, CONTRARY TO THE AGENT'S UNDERSTANDING, THE TWO-PORT LOADING CHARGE WAS PROPER. THIS APPEARS TO HAVE BEEN THE FIRST CLEAR STATEMENT OF THE NSA POSITION ON THE QUESTION. ALL OF THE SEVEN AGENTS INVOLVED WERE ASKED BY THE MARITIME ADMINISTRATION IN 1960 TO FURNISH STATEMENTS OF THEIR CONTEMPORANEOUS INTERPRETATION OF THE RATE ORDER, AND OF THE THREE WHICH UNDERTOOK TO DO SO ONLY ONE WAS IN AGREEMENT WITH THE NSA INTERPRETATION.

THE COURTS HAVE REGARDED THE TERM "PORT" AS WITHOUT A FIXED MEANING AND NORMALLY DENOTING EITHER A PARTICULAR PLACE OR A DISTRICT ENCOMPASSING A NUMBER OF PLACES. HAMBURG-AMERICAN STEAM PACKET CO. V. UNITED STATES, 250 F. 747; STRAW V. HARRIS, 103 P. 777. SEE ALSO THE TAWTAMIO, 53 F. 835; AND DEVATO V. 823 BARRELS OF PLUMBAGO, 20 F. 510. THE CUSTOM OF THE PORT FOR THE COLUMBIA RIVER DISTRICT, AS OF JANUARY 1, 1960, PUBLISHED BY THE MERCHANTS EXCHANGE AT PORTLAND, OREGON, PROVIDES THAT ALL OF THE LOCALITIES LISTED EARLIER SHALL BE REGARDED AS ONE PORT. IT IS THE POSITION OF THE INDIA SUPPLY MISSION THAT THESE LOCALITIES HAVE ALWAYS BEEN REGARDED IN THE TRADE AS A SINGLE PORT. IT ALSO APPEARS THAT THE COLUMBIA RIVER AREA CONSTITUTED A SINGLE PORT FOR CUSTOMS PURPOSES.

THE NSA IN ENTERING INTO THE CHARTER PARTY AGREEMENTS THROUGH ITS AGENTS APPEARS TO HAVE INTENDED THE WORD "PORT" TO MEAN A SINGLE PLACE, WHILE THE INDIAN GOVERNMENT AND AT LEAST TWO OF THE AGENTS, WITH EQUAL JUSTIFICATION, SEEM TO HAVE UNDERSTOOD IT IN THE BROADER MEANING. WHERE THERE EXISTS A JUSTIFIABLE DIFFERENCE OF BELIEF CONCERNING THE SENSE IN WHICH THE PARTIES USED WORDS, THE PROPER LOCAL USAGE WILL BE APPLIED IN CONSTRUING THE LANGUAGE OF THE CONTRACT. 3 WILLISTON ON CONTRACTS (REVISED EDITION) SECTION 607. SINCE THE PREPONDERANCE OF THE EVIDENCE ADDUCED TENDS TO ESTABLISH THAT LOCAL USAGE IS TO REGARD THE COLUMBIA RIVER AREA AS A SINGLE PORT AND NOTHING IN THE CONTRACT DOCUMENTS AND RATE ORDERS CAN PROPERLY BE REGARDED AS CONCLUSIVELY ESTABLISHING A CONTRARY INTENT, NO FURTHER DEMAND SHOULD BE MADE UPON THE INDIAN GOVERNMENT FOR THE AMOUNT IN QUESTION.