B-147507, JUN. 6, 1962

B-147507, JUN. 6, 1962

TO THE NAVAJO FREIGHT LINES, INC.:

WE REFER AGAIN TO YOUR LETTERS OF OCTOBER 25, 1961, JANUARY 8, 1962, JANUARY 29, 1962, AND MARCH 6, 1962, ALL WITH ENCLOSURES, REQUESTING REVIEW OF 13 SETTLEMENT CERTIFICATES ON WHICH WE DISALLOWED YOUR CLAIMS FOR ADDITIONAL TRANSPORTATION CHARGES. OUR REVIEW NECESSARILY ENCOMPASSES THE 13 REQUESTS FOR REFUND OF OVERCHARGES WHICH WERE ISSUED IN CONNECTION WITH THE SETTLEMENTS AND WHICH YOU HAVE DECLINED. THERE ARE THE CLAIMS INVOLVED:

CHART YOUR SUPPLEMENTAL AMOUNT CLAIMED DATE OF CERTIFICATE AMOUNT OF BILL NO. AND DISALLOWED AND OUR CLAIM NO. OVERCHARGE---- ------------ --------- ----- ------------------- ---------- 28A-11 26-A $2,345.44 10/19/61 (TK- 720255) $ 460.41 28A- 3- 5 A 1,294.07 1/12-62 (TK-719868) 1,374.35 28A- 1- 10-A

485.11 10/26/61 (TK-719861) 385.68 28A-11-51-A 1,873.07 12/19-61 (TK- 719882) 644.77 28A- 3-13-A 793.44 10/26/61 (TK-719870) 804.00 28A-12-12-A 5,371.82 10/26/61 (TK-719879) 1,913.27 28A-12- 3-A 340.18 10/26/61 (TK- 720256) 152.68 28A-11-30-A 375.41 11/13/61 (TK-719881) 103.49 28A-12-17- A513.65 11/13/61 (TK 719883) 195.12 28A-12-26-A 1,444.55 11/13/61 (TK- 719885) 1,523.20 28A- 1-23-A 2,411.32 1/24/62 (TK-719862) 1,648.07 28A- 3- 36-B-A 4,159.85 1/15/62 (TK-719858) 1,572.47 28A- 3-10-A-A 309.06 10/19/61 (TK-719869) 154.53

YOUR SUPPLEMENTAL BILLS STATE CLAIMS FOR ADDITIONAL TRANSPORTATION CHARGES ALLEGEDLY DUE NAVAJO FREIGHT LINES ON 45 GOVERNMENT BILLS OF LADING. THE BILLS OF LADING WERE PREPARED BY THE SHIPPING OFFICER, U.S. NAVAL AMMUNITION DEPOT, MCALESTER, OKLAHOMA, TO COVER THE TRANSPORTATION OF TRUCKLOAD SHIPMENTS OF AMMUNITION AND EXPLOSIVES FROM THE UNITED STATES NAVAL AMMUNITION DEPOT, (SAVANNA) NEAR MCALESTER, OKLAHOMA, TO THE RECEIVING OFFICER NAVAL MAGAZINE, PORT CHICAGO, CALIFORNIA, BETWEEN OCTOBER 31, 1951, AND FEBRUARY 27, 1952. WITH A FEW EXCEPTIONS, THE BILLS OF LADING ARE ROUTED "LUPER LINES: LEE WAY MTR FRT: NAVAJO FRT LINES: WELLS CARGO, INC., " AND CONTAINED THIS TYPEWRITTEN ANNOTATION: "CARRIERS SEC 22 QUO 43-A SAA CONTROL NO. 136 PLICABLE.' ALTHOUGH THE SHIPMENTS WERE NOT DELIVERED AT PORT CHICAGO BY NAVAJO FREIGHT LINES, ALL CLAIM AND INTEREST IN THE TRANSPORTATION CHARGES ON EACH BILL OF LADING WERE WAIVED BY THE DELIVERING CARRIERS TO NAVAJO.

IN OUR AUDIT OF THE ORIGINAL CHARGES BILLED AND COLLECTED BY YOU FOR THESE TRANSPORTATION SERVICES, WE DETERMINED AND NOTIFIED YOU ON USGAO FORMS 1003 (REQUESTS FOR REFUND OF OVERCHARGES) THAT THE ALLOWABLE CHARGES ON EACH SHIPMENT SHOULD BE BASED ON THE JOINT THROUGH RATE IN ITEM NO. 205 OF ROCKY MOUNTAIN MOTOR TARIFF BUREAU, INC., AGENT, U.S. GOVERNMENT QUOTATION NO. 43-A, APPLYING ON SHIPMENTS OF AMMUNITION OR EXPLOSIVES TRANSPORTED FROM MCALESTER, OKLAHOMA, TO PORT CHICAGO, CALIFORNIA. IN THE ABSENCE OF REFUND, THE OVERCHARGES) THE AMOUNTS YOU COLLECTED IN EXCESS OF THE ALLOWABLE CHARGES) WERE COLLECTED BY DEDUCTION. 49 U.S.C. 66. THE SUPPLEMENTAL BILLS WHICH WERE DISALLOWED BY THE SETTLEMENTS NOW UNDER CONSIDERATION ARE BASED ON A COMBINATION THROUGH RATE CONSTRUCTED OVER MCALESTER, OKLAHOMA, USING AS THE FACTOR FROM SAVANNA TO MCALESTER A CLASS RATE PUBLISHED IN SOUTHWESTERN MOTOR TARIFF BUREAU TARIFF NO. 301, MF- I.C.C. NO. 185, AND AS THE FACTOR FROM MCALESTER TO PORT CHICAGO, THE JOINT THROUGH RATE SHOWN IN ITEM NO. 205 OF QUOTATION NO. 43-A. AT THE TIME OF ISSUANCE OF THE SETTLEMENTS YOU WERE ALSO NOTIFIED BY USGAO FORMS 1003 OF A LOWER CHARGE BASIS WHICH YIELDED ADDITIONAL OVERCHARGES. THE LOWER CHARGE BASIS IS A COMBINATION THROUGH RATE CONSTRUCTED OVER MANTECA, CALIFORNIA, USING AS THE FACTOR FROM SAVANNA TO MANTECA A RATE DERIVED FROM THE RATE BASIS SHOWN IN U.S. GOVERNMENT JOINT QUOTATION NO. 77, AND AS THE FACTOR FROM MANTECA TO PORT CHICAGO THE CLASS RATE PUBLISHED IN WELLS CARGO LOCAL FREIGHT TARIFF NO. 1-A, MF-I.C.C. NO. 2.

WE NOW HAVE DETERMINED THAT THE COMBINATION THROUGH RATE CONSTRUCTED OVER MANTECA, CALIFORNIA, IS INAPPLICABLE AS A CHARGE BASIS ON THESE SHIPMENTS AND HAVE INSTRUCTED OUR TRANSPORTATION DIVISION TO WITHDRAW THE USGAO FORMS 1003 CONTAINING THE REQUESTS FOR REFUND TO OVERCHARGES ISSUED IN CONNECTION WITH THE SETTLEMENTS. THE REMAINING QUESTION, THEN, IS WHETHER THE TRANSPORTATION CHARGES ON THESE SHIPMENTS SHOULD BE BASED ON THE JOINT THROUGH RATE SHOWN IN ITEM NO. 205 OF QUESTION NO. 43-A, THE CHARGE BASIS SHOWN ON OUR ORIGINAL USGAO FORMS 1003, OR ON THE COMBINATION THROUGH RATE CONSTRUCTED OVER MCALESTER, OKLAHOMA, THE CHARGE BASIS SHOWN IN YOUR SUPPLEMENTAL BILLS. WE HOLD THAT THE APPLICABLE CHARGE BASIS ON THESE SHIPMENTS IS THAT SHOWN IN ITEM NO. 205 OF QUOTATION NO. 43-A.

QUOTATION NO. 43-A CONTAINS FOR GOVERNMENT SHIPMENTS A SERIES OF OFFERS OF RATES WHICH ARE LOWER THAN THOSE OTHERWISE APPLICABLE UPON THE CARRIERS' FILED TARIFFS AND WAS TENDERED TO THE GOVERNMENT UNDER SECTION 22 OF THE INTERSTATE COMMERCE ACT, 49 U.S.C. 22. SECTION 22 PERMITS CARRIERS SUBJECT TO THE ACT TO CARRY PROPERTY OF THE UNITED STATES "FREE OR AT REDUCED RATES" AND IS MADE APPLICABLE TO MOTOR COMMON CARRIERS BY SECTION 217 (B) OF PART II OF THE ACT, 49 U.S.C. 317 (B). TO UNDERSTAND THE APPLICATION OF QUOTATION NO. 43-A TO THOSE SHIPMENTS WE FIRST MUST CONSIDER THE PROVISIONS OF ANOTHER OFFER, THE ONE CONTAINED IN U.S. GOVERNMENT JOINT QUOTATION NO. 78.

UNDER THE AUTHORITY OF SECTION 22, NAVAJO FREIGHT LINES, INC., LUPER TRANSPORTATION COMPANY, LEE WAY MOTOR FREIGHT, INC., AND WELLS CARGO, INC., JOINTLY OFFERED TO THE DEPARTMENT OF THE NAVY, AMONG OTHERS,ITS U.S. GOVERNMENT JOINT QUOTATION NO. 78, EFFECTIVE JULY 25, 1951. THE QUOTATION WAS AN OFFER TO TRANSPORT UNDER GOVERNMENT BILLS OF LADING SHIPMENTS OF HIGH EXPLOSIVES AND AMMUNITION BETWEEN THE NAVAL AMMUNITION DEPOT, MCALESTER, OKLAHOMA, AND POINTS SERVED BY WELLS CARGO, INC., "AT 65 PERCENT OF APPLICABLE FIRST CLASS MOTOR CARRIER RATES, MINIMUM-30,000 UNDS," VIA LUPER TO OKLAHOMA CITY, OKLAHOMA, LEE WAY TO AMARILLO, TEXAS, NAVAJO TO MANTECA, AND WELLS CARGO TO DESTINATION. THE OFFER IN QUOTATION NO. 78 WAS AMENDED EFFECTIVE OCTOBER 30, 1951, BY SUPPLEMENTS NO. 1 AND 2 TO PROVIDE FOR THE TRANSPORTATION OF THE COMMODITIES BETWEEN THE "NAVAL AMMUNITION DEPOT (SAVANNA) (SIC) NEAR MCALESTER, OKLAHOMA" AND " POINTS SERVED BY WELLS CARGO, C., IN CALIFORNIA, EXCEPT HERLONG, MARE ISLAND AND PORT CHICAGO, CALIFORNIA.' SUPPLEMENT NO. 2 CONTAINS A PROVISION WHICH READS IN PART:

"FOR RATES TO APPLY TO (OR FROM) MARE ISLAND AND PORT CHICAGO SEE ITEM 205 OF ROCKY MOUNTAIN TARIFF BUREAU, INC., JOINT U.S. GOVERNMENT QUOTATION NO. 43-A * * *.'

AS STATED ABOVE, QUOTATION NO. 43-A IN ITEM NO. 205 A RATE OF$3.96 PER 100 POUNDS WITH MINIMUM WEIGHT OF 30,000 POUNDS WHICH APPLIES ON SHIPMENTS OF AMMUNITION AND EXPLOSIVES WHEN TRANSPORTED UNDER GOVERNMENT BILLS OF LADING FROM MCALESTER, OKLAHOMA, TO PORT CHICAGO, CALIFORNIA, VIA A ROUTING PARTICIPATED IN BY THE CARRIERS NAMED IN THE ROUTE SPECIFIED IN QUOTATION NO. 78.

TO SUPPORT YOUR POSITION THAT A COMBINATION THROUGH RATE CONSTRUCTED OVER MCALESTER, OKLAHOMA, IS THE APPLICABLE RATE OF THESE SHIPMENTS, YOU CONTEND THAT THE JOINT THROUGH RATE IN QUOTATION NO. 43-A APPLIES FROM MCALESTER, OKLAHOMA, NOT FROM SAVANNA, OKLAHOMA, THE SHIPPING POINT INDICATED ON THE BILLS OF LADING; THAT THE POINT "MCALESTER" CANNOT BE BROADENED TO INCLUDE ,SAVANNA OR USNAD SAVANNA-NEAR MCALESTER," SINCE SAVANNA IS NINE MILES FROM MCALESTER; AND THAT THE TWO SHIPPING POINTS OF SAVANNA AND MCALESTER ARE SHOWN IN DIFFERENT RATE GROUPS IN THE ROCKY MOUNTAIN TARIFF BUREAU TRANSCONTINENTAL TERRITORIAL DIRECTORY AND IN QUOTATION NO. 43-B, A REISSUE OF QUOTATION NO. 43-A. YOU SAY FURTHER THAT STRICT ADHERENCE TO QUOTATION NO. 43-A IS REQUIRED BY OUR DECISION OF MAY 11, 1962, B 138622, TO YOU.

QUOTATION NO. 43-A CONTAINS A SERIES OF CONTINUING OFFERS WHICH CREATE IN THE OFFEREE A POWER TO ACCEPT THE OFFER ONLY AS MADE. SEE HARTMAN V. LAUCHLI, 194 F.2D 787, 797, (1952). THUS, WE MUST DETERMINE THE MEANING OF THE OFFER INSOFAR AS IT NAMES A PREFERENTIAL RATE ON SHIPMENTS OF AMMUNITION AND EXPLOSIVES FROM MCALESTER, OKLAHOMA, TO PORT CHICAGO, CALIFORNIA. AND THE TEST OF THE TRUE INTERPRETATION OF AN OFFER IS NOT WHAT THE PARTY MAKING IT THOUGHT IT MEANT OR INTENDED IT TO MEAN BUT WHAT A REASONABLE PERSON IN THE POSITION OF THE PARTIES WOULD HAVE THOUGHT IT MEANT. WILLISTON ON CONTRACTS, THIRD EDITION, SECTION 94; UNITED STATES POTASH CO. V. MCNUTT, 70 F2D 126 (1934); SEE, ALSO SLICE V. CAROZZA PROPERTIES, 137 A.2D 687, 693 (1958).

THE JOINT THROUGH RATE ON AMMUNITION AND EXPLOSIVES FROM MCALESTER, OKLAHOMA, TO PORT CHICAGO, CALIFORNIA, FIRST WAS INCLUDED IN ITEM NO. 205 OF QUOTATION NO. 43-A, ON FEBRUARY 13, 1951; BY APRIL 1952, THE ITEM HAD BEEN AMENDED FOUR TIMES TO INCLUDE THE ADDITIONAL CALIFORNIA DESTINATIONS OF SEAL BEACH, MARE ISLAND, HERLONG, FALL BROOK AND CAMP PENDLETON. DURING THIS TIME, ITEM NO. 205 WAS SUBJECT TO ITEM NO. 45 OF QUOTATION NO. 43-A TITLED "AMMUNITION AND/OR EXPLOSIVES," WHICH, AMONG OTHER THINGS, PROVIDES THAT NAVY SEALS SHOULD NOT BE BROKEN AND "THAT EACH CARRIER WILL AVOID OR SKIRT LARGE CITIES WHERE POSSIBLE AND WHERE ORDINANCES FORBID TRANSPORTATION OF AMMUNITION AND EXPLOSIVES IN OR THROUGH SUCH CITY.' THESE FACTS DEMONSTRATE THAT THE NATURE OF THE OFFER WAS TO GRANT PREFERENTIAL RATES TO THE GOVERNMENT--- POSSIBLY FOR COMPETITIVE REASONS-- - ON SHIPMENTS OF AMMUNITION AND EXPLOSIVES MOVING TO VARIOUS CALIFORNIA DESTINATIONS FROM MCALESTER, OKLAHOMA. WHEN CONSIDERED WITH THE FACT THAT THE NAVAL AMMUNITION DEPOT, LOCATED AT SAVANNA, NINE MILES SOUTH OF THE CENTER OF MCALESTER (NAVY SHIPPING GUIDE, PART II, NAVSANDA PUBLICATION NO. 6, 1945), IS TO OUR KNOWLEDGE THE ONLY INSTALLATION IN THE VICINITY OF MCALESTER, OKLAHOMA, WHICH WOULD BE LIKELY TO OFFER FOR TRANSPORTATION TRUCKLOAD QUANTITIES OF MILITARY AMMUNITION AND EXPLOSIVES, AND WITH THE FACT THAT IT IS COMMON KNOWLEDGE THAT SHIPMENTS OF EXPLOSIVES DO NOT ORDINARILY MOVE FROM POINTS WITHIN CITY LIMITS (SEE, FOR EXAMPLE, O. K. TRANSFER AND STORAGE CO., INC., COMMON CARRIER APPLICATION, 32 M.C.C. 107, 113), THE RECORD CLEARLY ESTABLISHES THAT THE OFFER OF THE REDUCED RATE FROM MCALESTER IN ITEM NO. 205 OF QUOTATION 43-A WAS TO APPLY ON SHIPMENTS FROM THE U.S. NAVAL AMMUNITION DEPOT, SAVANNA, OKLAHOMA, WHOSE MAIL ADDRESS IS MCALESTER, OKLAHOMA. THAT THE DEPOT'S SHIPPING OFFICER UNDERSTOOD THAT THE RATE FROM MCALESTER APPLIED TO THESE SHIPMENTS IS INDICATED BY THE REFERENCE ON EACH BILL OF LADING TO QUOTATION NO. 43 A. AND WE NOTE THAT ON MANY OF THE SHIPMENTS HERE UNDER CONSIDERATION THE CHARGES ORIGINALLY BILLED AND COLLECTED BY YOU WERE BASED ON THE RATE ITEM NP. 215 OF THE QUOTATION. SEE, IN THIS CONNECTION, UNITED STATES V. BENJAMIN MOTOR EXPRESS, 147 F.SUPP. 15, 18 (1957).

THE CONCLUSION THAT THE RATE IN ITEM NO. 205 OF QUOTATION 43-A APPLIES TO THESE SHIPMENTS IS BUTTRESSED BY A CONSIDERATION OF THE CIRCUMSTANCES SURROUNDING THE AMENDMENT OF THE OFFER MADE IN QUOTATION NO. 78. THERE, IN SUPPLEMENTS NO. 1 AND 2, EFFECTIVE OCTOBER 30, 1951, AT THE SAME TIME THAT REFERENCE WAS MADE IN THAT QUOTATION TO ITEM NO. 205 OF QUOTATION NO. 43-A "FOR RATES TO APPLY TO (AND FROM) MARE ISLAND AND PORT CHICAGO," THE SHIPPING POINT "NAVAL AMMUNITION DEPOT, MCALESTER,OKLAHOMA," AND AMENDED TO READ "NAVAL AMMUNITION DEPOT, (SAVANNA) (SIC) MEAR MCALESTER, OKLAHOMA.' AND EFFECTIVE NOVEMBER 9, 1951, THE SAME CHARGE IN THE NAME OF THE SHIPPING POINT WAS MADE IN U.S. GOVERNMENT JOINT QUOTATION NO. 77, WHICH CONTAINS A SIMILAR OFFER BY LUPER, LEE WAY AND NAVAJO TO TRANSPORT AMMUNITION AND EXPLOSIVES BETWEEN THE AMMUNITION DEPOT AND POINTS SERVED BY NAVAJO FREIGHT LINES. BESIDES CREATING AN INFERENCE THAT THE RATE BASIS REMOVED FROM QUOTATION NO. 78 HENCEFORTH WOULD BE FOUND IN QUOTATION 43-A, THESE CHANGES INDICATE THAT THE CARRIERS WERE AWARE OF THE LOCATION OF THE AMMUNITION DEPOT IN RELATIONSHIP TO MCALESTER, OKLAHOMA. WE NOTE, TOO, THAT EFFECTIVE OCTOBER 27, 1951, THE LIST OF CALIFORNIA DESTINATION POINTS IN ITEM NO. 205 OF QUOTATION NO. 43-A, WAS AMENDED TO INCLUDE MARE ISLAND, CALIFORNIA, PRESUMABLY TO PROVIDE IN QUOTATION NO. 43-A A SUBSTITUTE FOR THE PREFERENTIAL RATE BASIS REMOVED, ON OCTOBER 30, 1951, FROM QUOTATION NO. 78. FINALLY, INTERPRETING THE OFFER AS APPLYING ON SHIPMENTS MADE FROM THE AMMUNITION DEPOT RESULTS IN A CONTRACT WHICH IS MOST PROBABLE AND NATURAL AND WHICH ATTAINS THE CONTEMPLATED OBJECT OF THE CARRIERS IN MAKING IT. SEE DECATUR BANK V. ST. LOUIS BANK, 88 U.S. 294, 298 (1874).

OUR DECISION OF MAY 11, 1960, B-138622, TO WHICH YOU REFER, DOES NOT REQUIRE A DIFFERENT CONCLUSION. IN THAT DECISION, WHICH RECONSIDERED AND AFFIRMED OUR PREVIOUS DECISIONS DATED DECEMBER 16, 1959, AND AUGUST 13, 1959, B-138622, WE HELD, IN CONNECTION WITH AN OFFER OF RATES IN ROCKY MOUNTAIN MOTOR TARIFF BUREAU, INC., U.S. GOVERNMENT QUOTATION NO. 43-D, THAT A BIDDER MUST BEAR THE CONSEQUENCES OF A MISTAKE MADE IN THE SUBMISSION OF A BID WHICH HAS BEEN ACCEPTED UNLESS THE MISTAKE WAS MUTUAL OR THE ERROR SO APPARENT THAT IT MUST BE PRESUMED THAT THE CONTRACTING OFFICER KNEW OF THE MISTAKE AND SOUGHT TO TAKE ADVANTAGE OF IT. THERE IS NO ALLEGATION IN THE PRESENT CASE THAT MCALESTER WAS NAMED BY MISTAKE IN ITEM NO. 205 OF QUOTATION NO. 43-A; RATHER, WE HOLD THAT IN NAMING IN THEIR OFFER A RATE ON AMMUNITION AND EXPLOSIVES FROM MCALESTER, THE CARRIERS MEANT THAT THE RATE WAS TO APPLY ON SHIPMENTS FROM SAVANNA, OKLAHOMA, WHICH WERE MADE BY THE SHIPPING OFFICER, U.S. NAVAL AMMUNITION DEPOT, WHOSE MAIL ADDRESS WAS MCALESTER, OKLAHOMA.

THE SETTLEMENT CERTIFICATES WHICH DISALLOWED THE CLAIMS CONSIDERED IN THIS DECISION ARE NOT SHOWN TO HAVE BEEN IN ERROR OTHERWISE AND, ACCORDINGLY, THEY ARE SUSTAINED.