B-146530, SEP. 6, 1961

B-146530, SEP. 6, 1961

TO ALBUQUERQUE PHOENIX EXPRESS, INC.:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF JULY 26, 1961, IN WHICH YOU REQUESTED THAT WE REFUND CERTAIN AMOUNTS DEDUCTED FROM YOUR CURRENT ACCOUNTS TO COVER OVERCHARGE CLAIMS ON SHIPMENTS OF JATO UNITS, AND THAT NO FURTHER DEDUCTIONS BE MADE FOR OTHER SIMILAR CLAIMS.

YOU EXPLAIN THAT THE INVOLVED SHIPMENTS MOVED IN INTERLINE SERVICE AND THAT THE GREATER PORTION OF THE REVENUE COLLECTED BY YOU AS DELIVERING CARRIER WAS DISTRIBUTED TO THE OTHER PARTICIPATING CARRIERS WHICH NOW REFUSE TO ASSUME THEIR SHARE OF THE SETOFFS MADE AGAINST YOUR ACCOUNTS IN ADJUSTMENT OF THE OVERCHARGES FOUND HERE. IT IS YOUR FEELING, THEREFORE, THAT IT IS INEQUITABLE FOR YOUR COMPANY, AS DESTINATION CARRIER, TO BEAR FULL RESPONSIBILITY FOR THE PAYMENT OF THESE OVERCHARGE CLAIMS. YOU STATE THAT A REDUCTION IN YOUR PRESENT CASH POSITION TO COVER THIS INDEBTEDNESS COULD BE DISASTROUS TO YOUR COMPANY, AND FURNISH A BALANCE SHEET BEARING A DATE OF JUNE 1961 TO SUPPORT YOUR POINT. YOU INDICATE THAT YOU WOULD BE WILLING TO POST AN INDEMNITY BOND TO PROTECT PAYMENT OF THE OVERCHARGES IF A FINAL COURT DECISION ON THE ISSUE OF THE PROPER CHARGE BASIS APPLICABLE ON JATO SHIPMENTS IS RENDERED IN THE GOVERNMENT'S FAVOR.

ACCORDING TO OUR RECORDS AS OF AUGUST 16, 1961, OVERCHARGE CLAIMS AGAINST YOUR COMPANY INVOLVING THE JATO ISSUE TOTAL $19,623.23, OF WHICH WE HAVE COLLECTED $7,461.25, LEAVING A BALANCE DUE OF $12,161.98.

SECTION 322 OF THE TRANSPORTATION ACT OF 1940, AS AMENDED, 49 U.S.C.A. 66, PROVIDES THAT:

"PAYMENT FOR TRANSPORTATION OF * * * PROPERTY FOR OR ON BEHALF OF THE UNITED STATES BY ANY COMMON CARRIER * * * SHALL BE MADE UPON PRESENTATION OF BILLS THEREFOR, PRIOR TO AUDIT OR SETTLEMENT BY THE GENERAL ACCOUNTING OFFICE, BUT THE RIGHT IS RESERVED TO THE UNITED STATES GOVERNMENT TO DEDUCT THE AMOUNT OF ANY OVERCHARGES BY ANY SUCH CARRIER FROM ANY AMOUNT SUBSEQUENTLY FOUND TO BE DUE SUCH CARRIER.'

SINCE CONDITION 1 ON THE BACK OF THE INVOLVED GOVERNMENT BILLS OF LADING PROVIDES THAT "PAYMENT WILL BE MADE TO THE LAST CARRIER, UNLESS OTHERWISE SPECIFICALLY STIPULATED," AND YOUR COMPANY WAS SO PAID AS THE LAST CARRIER, OUR POLICY OF LOOKING TO THE DESTINATION CARRIER FOR RECOVERY OF OVERCHARGES IS CONSISTENT WITH THE LAW AND THE CONTRACT OF CARRIAGE. WHILE WE RECOGNIZE THAT THIS POLICY IN SOME INSTANCES MAY IMPOSE A BURDEN UPON THE AFFECTED CARRIER, AS IN THE SITUATION WHERE THE OTHER PARTICIPATING CARRIERS DECLINE TO CONCUR IN APPROPRIATE INTERLINE ADJUSTMENTS, THE PROBLEM SEEMS TO BE ONE WITH WHICH THE INDUSTRY GENERALLY IS CONCERNED. IN THE DISCHARGE OF OUR OBLIGATIONS UNDER THE LAW, INDIVIDUAL EXCEPTIONS TO THE PROCEDURES REQUIRED TO MAINTAIN UNIFORM AND ORDERLY ACCOUNTING FOR PUBLIC FUNDS WOULD NOT BE WARRANTED IN THE ABSENCE OF COMPELLING REASONS ESTABLISHING A DEFINITE NEED FOR SPECIAL TREATMENT OF PARTICULAR CARRIERS WHOSE CONTINUED EXISTENCE AS A GOING CONCERN MIGHT BE JEOPARDIZED SOLELY BECAUSE OF EXTENSIVE ADJUSTMENTS OF OVERCHARGES BY SETOFF.

WE HAVE CAREFULLY CONSIDERED THE PROPRIETY AND EFFICACY OF ACCEPTING AN INDEMNITY BOND AS A BASIS FOR SUSPENDING DEDUCTION ACTION AND HAVE CONCLUDED THAT SUCH A DEPARTURE FROM OUR USUAL PROCEDURES IS NOT PRACTICABLE OR CONSISTENT WITH OUR STATUTORY FUNCTIONS. OUR FACILITIES AND OPERATIONS ARE NOT ADAPTED TO THE SUBSTITUTION OF INDEMNITY BONDS FOR THE MEANS REQUIRED BY STATUTE OF ENFORCING THE COLLECTION OF DEBTS ARISING BECAUSE OF EXCESSIVE PAYMENTS TO CARRIERS DETERMINED IN THE COURSE OF OUR AUDIT TO BE DUE THE UNITED STATES. APART FROM THE ADMINISTRATIVE PROBLEMS THAT WOULD BE GENERATED BY THE FILING AND OVERSEEING OF SUCH AN INSTRUMENT, OUR CONCURRENCE IN YOUR PROPOSAL TO FURNISH AN INDEMNITY BOND RAISES A QUESTION AS TO A CONFLICT WITH OUR DUTY TO SETTLE AND ADJUST CLAIMS OF THE UNITED STATES AND WITH THE INTENT OF THE TRANSPORTATION ACT OF 1940 WHERE NECESSARY ADJUSTMENTS MAY BE ACCOMPLISHED BY SETOFF OR VOLUNTARY REFUND.

THE FINANCIAL STATEMENT SUBMITTED WITH YOUR LETTER OF JULY 26, 1961, SHOWS AS OF JUNE 1961 CURRENT ASSETS OF MORE THAN $144,000, INCLUDING MORE THAN $72,000 IN CASH OR CASH INVESTMENTS. TOTAL CURRENT LIABILITIES AT THAT DATE ARE SHOWN AS AMOUNTING TO ABOUT $74,000. IN THE LIGHT OF THESE FIGURES AND IN CONSIDERATION OF OUR DUTIES AND RESPONSIBILITIES WE WOULD NOT BE JUSTIFIED IN REFUNDING TO YOU THE $7,461 ALREADY COLLECTED, OR IN AN INDEFINITE POSTPONEMENT OF ACTION TO RECOVER THE BALANCE OF $12,161 DUE THE GOVERNMENT. HOWEVER, AS A REASONABLE ALTERNATIVE FOR MINIMIZING THE EFFECT ON YOUR COMPANY'S OPERATING CAPITAL, WE ARE NOT OPPOSED TO ENTERTAINING A PROPOSAL FOR INSTALLMENT PAYMENT ARRANGEMENTS WHICH WOULD LIQUIDATE THE PRESENT INDEBTEDNESS WITHIN A PERIOD OF SIX MONTHS TO ONE YEAR, AND WE WILL POSTPONE FURTHER COLLECTION EFFORTS FOR 30 DAYS IN ORDER TO AFFORD YOU AN OPPORTUNITY TO SUBMIT AN AGREEABLE PROPOSAL ALONG THESE LINES. A COPY OF THIS LETTER IS BEING SENT TO HONORABLE THOMAS G. MORRIS, MEMBER OF CONGRESS, WHOSE STAFF HAS INDICATED AN INTEREST IN THE MATTER.