B-153419, NOV. 2, 1964

B-153419, NOV. 2, 1964

TO FRANK B. HALL AND CO., INC.:

REFERENCE IS MADE TO THE BRIEF DATED SEPTEMBER 11, 1964, SUBMITTED BY YOUR ATTORNEY, MR. MILTON C. GRACE, ON YOUR BEHALF REQUESTING RECONSIDERATION OF OUR DECISION OF JUNE 12, 1964, B-153419. THAT DECISION HELD THAT DESPITE THE PROVISIONS OF ARTICLE 4 OF THE MILITARY SEA TRANSPORTATION SERVICE (MSTS) CONTRACT MST-51 QUOTED IS OUR DECISION OF JUNE 12, 1964, PROVIDING FOR PAYMENT OF 80 PERCENT OF THE FREIGHT AFTER SAILING OF THE VESSEL FROM THE PORT OF LOADING, THE FREIGHT UNDER SUCH CONTRACT WAS, NEVERTHELESS, UNEARNED UNTIL THE CARGO WAS DELIVERED AT DESTINATION AND THEREFORE WAS 100 PERCENT AT RISK OF THE VESSEL OPERATOR AND ACCORDINGLY SUCH FREIGHT SHOULD CONTRIBUTE IN GENERAL AVERAGE ALONG WITH THE CARGO AND THE SHIP.

THE BRIEF SUBMITTED BY YOUR ATTORNEY REFERRING TO A GENERAL AVERAGE CLAIM INVOLVING THE S. S. HENRY STEVENSON TAKES THE POSITION THAT YOU ARE NOT RELYING ON THE SETTLEMENT (Z1-858589) OF OUR CLAIMS DIVISION BUT THE ACTION TAKEN REGARDING SUCH CLAIM WHEN THIS MATTER WAS HANDLED UNDER OUR FILE B-134213. SUCH FILE CONTAINS SEVERAL INTRAOFFICE MEMORANDUMS AS TO THE ACTION TO BE TAKEN IN CONNECTION WITH THE CLAIM AND ALTHOUGH IT CONTAINS A COPY OF A LETTER OF APRIL 20, 1959, FORWARDED TO YOU COMPANY, ADVISING THAT WE HAD CONCLUDED THE SAID CLAIM WAS ALLOWABLE AND THAT OUR CLAIMS DIVISION WAS BEING INSTRUCTED TO ISSUE A SETTLEMENT IN YOUR FAVOR, SUCH LETTER IS NOT A DECISION OF OUR OFFICE SUCH AS WE ARE AUTHORIZED AND REQUIRED TO RENDER AT THE REQUEST OF THE HEAD OF A GOVERNMENT DEPARTMENT OR ESTABLISHMENT OR CERTAIN DISBURSING AND CERTIFYING OFFICERS UNDER 31 U.S.C. 74, 82D AND 82E. NOR IS IT A DECISION OF AN APPEAL FROM A CLAIMS SETTLEMENT GIVING THE BASIS FOR THE ACTION TAKEN BUT A MERE NOTICE OF THE CONCLUSION REACHED, ITS APPARENT PURPOSE BEING TO APPRISE THE CLAIMANT AND ITS ATTORNEY OF SUCH CONCLUSION. ALSO, THE INTRA-OFFICE MEMORANDUMS OBVIOUSLY ARE NOT DECISIONS FOR THE GUIDANCE OF PERSONS OUTSIDE OUR OFFICE BUT MERELY DIRECTIONS ISSUED TO ONE OF THE DIVISIONS OF OUR OFFICE TO DISPOSE OF THE PARTICULAR CLAIM. THE SAME CONTENTION WAS MADE BY YOUR ATTORNEY TO PRESENTING A PROTEST FOR ANOTHER CLIENT. IN LETTER OF JULY 26, 1961, B-144216, ADDRESSED TO WATERMAN STEAMSHIP CORPORATION, WE STATED THAT THE OFFICE MEMORANDUM IN FILE B-134213 DIRECTED THE ACTION OF OUR CLAIMS DIVISION CONCERNING THE APPLICABILITY OF THE LAW OR ESTABLISHED RULES TO THE ISSUES INVOLVED IN THAT PARTICULAR CASE AND DID NOT CONSTITUTE A "DECISION" OF THE COMPTROLLER GENERAL, BUT WAS MERELY AN INTERNAL DIRECTION TO A SUBORDINATE DIVISION AS TO THE DISPOSITION OF A PARTICULAR CLAIM. THE SETTLEMENT STATED BY THE CLAIMS DIVISION DID NOTHING MORE THAN DISPOSE OF THAT CLAIM, AND OUR FILE B-134213 AND THE CLAIMS SETTLEMENT MADE PURSUANT THERETO ARE ENTITLED TO NO EFFECT AS A PRECEDENT.

ASIDE FROM THE EFFECT TO BE GIVEN THE SETTLEMENT OF THE S. S. HENRY STEVENSON CLAIM, THE FIRST POINT UPON WHICH THE RECONSIDERATION OF OUR DECISION OF JUNE 12, 1964, B-153419, IS URGED IS THE CONTENTION THAT THE CONTRACT PROVISIONS RELATIVE TO PAYMENT OF 80 PERCENT OF THE FREIGHT CHARGES AFTER SAILING OF THE VESSEL FROM THE PORT OF LOADING ARE NOT AMBIGUOUS AND THEREFORE IT WAS IMPROPER TO CONSIDER THE INTENTION OF THE PARTIES TO DETERMINE THE MEANING OF THE CONTRACTUAL PROVISIONS IN DISPUTE. WHILE THE LANGUAGE PROVIDING FOR THE 80 PERCENT PAYMENT IS CLEAR OF ITSELF, SUCH LANGUAGE IS NOT EXPLICIT AS TO WHETHER THE 80 PERCENT PAYABLE ON SAILING OF THE VESSEL WAS TO BE CONSIDERED THEN FULLY EARNED REGARDLESS OF WHETHER THE GOODS SHIPPED WERE DELIVERED AT DESTINATION. THE CONTENTION OF YOUR ATTORNEY IS THAT IT IS SO EARNED. THE VIEW OF THE MSTS, AT LEAST EQUALLY AS POSITIVE, IS THAT IT IS NOT. ALSO, NO DOUBT BOTH PARTIES WOULD BE ABLE TO AGREE THAT BY THE INSERTION OF A FEW WORDS INTO SUCH LANGUAGE THE PROVISION COULD BE CLARIFIED TO MEAN EITHER THAT THE 80 PERCENT WAS TO BE CONSIDERED FULLY EARNED ON SAILING OF THE VESSEL, OR TO THE CONTRARY, TO CONSTITUTE A MERE PREPAYMENT TO ASSIST IN FINANCING THE VOYAGE AND TO BE REPAID, IF THE CARGO WAS NOT DELIVERED AT DESTINATION. IT IS ONLY IN THE ABSENCE OF SUCH CLARIFYING WORDS AND QUESTION OF WHETHER SUCH CLARIFICATION IS NECESSARY THAT THE CONTRARY VIEWS ARISE.

A CONTRACT (OR PROVISION THEREOF) IS AMBIGUOUS IF IT IS SUSCEPTIBLE OF TWO DIFFERENT MEANINGS. ZEHNDER V. MICHAUD, 145 F.2D 713, 714 (1944). SEE ALSO, FRANKLIN V. AMERICAN NAT. INS. CO. 135 F.2D 531, 534 (1943), WHERE THE COURT HELD THAT THE FACT THAT "EMINENT COUNSEL, SKILLED AND LEARNED IN THE LAW AND IN THE INTERPRETATION OF THE LEGAL EFFECT OF WRITTEN INSTRUMENTS, FAIL TO AGREE DOES LEND SUPPORT TO THE CLAIM OF AMBIGUITY.' BOTH YOUR ATTORNEY AND COUNSEL FOR MSTS ARE LAWYERS POSSESSING SOME FAMILIARITY WITH MATTERS MARITIME. BOTH CONTEND ON THE BASIS OF THE PROVISIONS IN THE CONTRACT, ABSENT THE LANGUAGE WHICH WOULD MAKE EXPLICIT WHETHER FREIGHT WAS EARNED ABSOLUTELY ON SAILING OF THE VESSEL, FOR EXACTLY OPPOSITE MEANINGS OF THE CONTRACT ON SUCH POINT. THERE IS THUS, AT LEAST, SOME DOUBT WHETHER THE LANGUAGE OF THE CONTRACT AS TO SUCH POINT IS NOT AMBIGUOUS.

IN UNITED STATES V. UNITED STATES LINES, 324 F.2D 97, 100 (1963) THE COURT OF APPEALS FOR THE SECOND CIRCUIT STATED:

"IN VIEW OF THE POSSIBLE AMBIGUITY IN THE CONTRACT LANGUAGE IT WAS IN ORDER FOR THE PARTIES TO INTRODUCE EVIDENCE RELATING TO THE NEGOTIATIONS PRECEDING THE AGREEMENT, THE PRACTICE UNDER THE AGREEMENT, AND THE GENERAL ISSUE OF THE INTENTIONS OF THE PARTIES.' WE THEREFORE ARE OF THE OPINION THAT IT WAS PROPER FOR US TO CONSIDER IN OUR DECISION OF JUNE 12, 1964, EXTRINSIC EVIDENCE, OUTSIDE THE FOUR CORNERS OF THE WRITTEN CONTRACT, BEARING ON THE INTENT OF THE AGREEMENT IN THAT REGARD.

MOREOVER, IT IS REPORTED THAT YOUR COMPANY, AS WELL AS OTHER ADJUSTERS AND CARRIERS BILLED FREIGHT CHARGES, PRESENTED ADJUSTMENTS, SETTLEMENTS AND GENERAL AVERAGE ADJUSTMENTS BASED ON FREIGHT UNDER SUCH CONTRACTS BEING CONSIDERED UNEARNED UNTIL DELIVERY OF THE CARGO. THUS, UNTIL THIS CONTROVERSY AROSE, YOU AS WELL AS OTHERS IN THE INDUSTRY, CONSTRUED THE PAYMENT PROVISIONS OF THE CONTRACT IN SUCH A MANNER THAT FREIGHT WAS NOT DEEMED EARNED UNTIL DELIVERY IS MADE AT DESTINATION. IN THESE CIRCUMSTANCES, IT SEEMS PROPER THAT WE CONSIDER THE CONSTRUCTION USED BY THE PARTIES BEFORE THE CONTROVERSY DEVELOPED AS BEING SIGNIFICANT AND ENTITLED TO GREAT WEIGHT. IN WOODBINE V. VAN HORN, 173 P.2D 17 (1946), AT PAGE 22, THE SUPREME COURT OF CALIFORNIA SAID:

"* * * A CONSTRUCTION GIVEN THE CONTRACT BY THE ACTS AND CONDUCT OF THE PARTIES WITH KNOWLEDGE OF ITS TERMS, BEFORE ANY CONTROVERSY HAS ARISEN AS TO ITS MEANING, IS ENTITLED TO GREAT WEIGHT AND WILL, WHEN REASONABLE, BE ADOPTED AND ENFORCED BY THE COURT.'

SEE ALSO THE CASES CITED THEREIN AND IN GILLESPIE V. CITY OF LOS ANGELES, 225 P.2D 522 (1950). THE SAME RULE IS REFERRED TO IN LOUISVILLE WATER CO. V. LOUISVILLE, H. AND ST.L. RY. CO., 110 S.W.2D 668, 671 (1937), WHERE THE COURT SAID:

"ALTHOUGH, AS HEREINBEFORE INDICATED, ACQUIESCENCE OR LONG CONTINUED HABIT OR COURSE OF CONDUCT BY THE PARTIES WOULD NOT HAVE THE EFFECT OF ABROGATING TARIFF RATES, THE SWITCHING TARIFF BEING OF DOUBTFUL APPLICATION AND THE RATE CHARGED BEING SPECIFIC, THE CONDUCT OF THE PARTIES AND THE INTERPRETATION THEY PLACED UPON THE TARIFF OF THE L. AND N. TAKE ON SIGNIFICANCE AND HAVE A PERSUASIVE INFLUENCE IN DETERMINING AND GIVING EFFECT TO THE INTENTION AND MEANING OF THE PROVISIONS THEREOF.'

THE ACTS OF PARTIES UNDER A CONTRACT, BEFORE DISPUTES ARISE, ARE THE BEST EVIDENCE OF THE MEANING OF DOUBTFUL CONTRACTUAL TERMS. BROWN V. COWDEN LIVESTOCK CO., 187 F.2D 1015 (1951); MOORE V. JONES, 215 F.2D 719 (1954); BRUCE V. MCCLURE, 220 F.2D 330 (1955). LIKEWISE, WHERE PARTIES TO A CONTRACT HAVE GIVEN IT A PRACTICAL CONSTRUCTION BY THEIR CONDUCT, SUCH CONSTRUCTION IS ENTITLED TO GREAT WEIGHT IN DETERMINING ITS PROPER INTERPRETATION, ESPECIALLY WHERE SUCH PRACTICAL CONSTRUCTION OCCURRED BEFORE THE CONTROVERSY AROSE. UNITED STATES V. LUTHER, 225 F.2D 499 (1955); BECK V. F. W. WOOLWORTH CO., 111 F.SUPP. 824 (1953); FREEPORT SULPHUR CO. V. AETNA LIFE INS. CO., 107 F.SUPP. 508 (1952); SHIPLEY V. PITTSBURGH AND L.E.R. CO., 83 F.SUPP. 722 (1949). A COURSE OF CONDUCT PURSUED BY PARTIES IS STRONGEST EVIDENCE OF WHAT CONTRACTING PARTIES ORIGINALLY INTENDED. CAMPBELL V. AMERICAN LIMESTONE CO., 109 F.SUPP. 741 (1951).

HOWEVER, ASIDE FROM WHETHER THE CONTRACT IN THIS RESPECT POSSIBLY COULD BE CONSIDERED AMBIGUOUS SO THAT EVIDENCE OF THE INTENT OF THE PARTIES MAY PROPERLY BE CONSIDERED IN DETERMINING WHETHER FREIGHT UNDER THE CONTRACT IS EARNED OR UNEARNED, IT IS OUR VIEW THAT OUR HOLDING OF JUNE 12, 1964, WAS SOUND ON OTHER GROUNDS. YOUR ATTORNEY, MSTS, AND OUR OFFICE ARE IN APPARENT AGREEMENT AS TO WHAT IS THE LEGAL QUESTION INVOLVED, NAMELY, WHETHER THE PARTIES CONTRACTED THAT 80 PERCENT OF FREIGHT IS EARNED WITHOUT RESPECT TO WHETHER THE GOODS ARE DELIVERED. YOUR ATTORNEY SAYS THEY HAVE. IT IS OUR VIEW THAT THE CONTRACT IS SILENT WITH RESPECT THERETO MAKING CONTROLLING, IN INTERPRETING THIS CONTRACT, THE GENERAL RULE ENUNCIATED BY THE SUPREME COURT OF THE UNITED STATES IN ALCOA STEAMSHIP COMPANY, INC. V. UNITED STATES, 338 U.S. 421 (1949). THE COURT STATES THE RULE THUSLY:

"IT IS A PRINCIPLE OF AMERICAN MARITIME LAW THAT OCEAN CARRIER FREIGHT CHARGES ARE NOT EARNED UNLESS AND UNTIL THE GOODS ARE DELIVERED TO DESTINATION. BUT CONTRACTUAL PROVISIONS ESTABLISHING THE SHIPPER'S LIABILITY FOR FREIGHT REGARDLESS OF ACTUAL DELIVERY HAVE BEEN UNIFORMLY HELD VALID * * *.'

IT IS OUR VIEW THAT THE PARTIES HAVE NOT ENTERED INTO ANY CONTRACTUAL PROVISION THAT FREIGHT IS EARNED REGARDLESS OF ACTUAL DELIVERY. YOUR ATTORNEY APPARENTLY CONTENDS THAT, ALTHOUGH THE CONTRACT CONTAINS NO EXPRESS WORDS THAT 80 PERCENT OF THE FREIGHT IS EARNED ON SAILING OF THE VESSEL, NEVERTHELESS, THE CONTRACT MUST BE SO INTERPRETED IF SUCH IS ITS "NECESSARY EFFECT" OR IF IT IS "SUFFICIENTLY INTELLIGIBLE TO THAT END.' THESE QUOTATIONS ARE FROM THE TWO CASES ON WHICH YOUR ATTORNEY TO A CONSIDERABLE EXTENT RELIES, NAMELY, CHRISTIE V. DAVIS COAL AND COKE CO., 95 F. 837 (1899) AND PORTLAND FLOURING MILLS CO. V. BRITISH AND FOREIGN MARINE INS. CO., 130 F. 860 (1904). THE COURT IN THE CHRISTIE CASE AT PAGES 838 AND 839 SAID:

"THE PRESUMPTION THAT FREIGHT IS PAYABLE ONLY UPON CARGO DELIVERED RESTS UPON EQUITABLE ROUNDS; AND THIS EQUITABLE PRESUMPTION OUGHT TO PREVAIL, UNLESS THE CONTRACT OF THE PARTIES EXPRESSES A CONTRARY INTENT WITH REASONABLE CLEARNESS AND CERTAINTY. THERE IS MORE REASON FOR MAINTAINING THIS CONSTRUCTION AS RESPECTED ALL SEA RISKS, INASMUCH AS SUCH RISKS MAY BE, AND USUALLY ARE, COVERED BY INSURANCE.

FREIGHT IS LIABLE TO BE LOST BY SEA PERILS. THAT RISK MUST BE BORNE BY THE CARRIER AND COVERED BY INSURANCE IN HIS BEHALF. THAT RISK OUGHT NOT THEREFORE TO BE SHIFTED BY CONSTRUCTION MERELY AND CAST UPON THE SHIPPER, EXCEPT UPON REASONABLY CLEAR EVIDENCE AND THAT SUCH WAS THE INTENT, OR THE NECESSARY EFFECT, OF THE CONTRACT. OTHERWISE, THE SHIPPER IS MISLEAD, AND SUFFERS LOSS THROUGH LACK OF REASONABLE NOTICE THAT HE MUST INSURE THE FREIGHT INTEREST AT HIS PERIL. WHILE, THEREFORE, THE CONTRACT OF THE PARTIES ON THIS POINT IS ABSOLUTELY CONTROLLING WHEN ITS INTENT AND MEANING ARE CLEAR, EITHER FROM THE FACE OF THE INSTRUMENT ITSELF, OR WHEN OTHERWISE DEFINITELY ASCERTAINED, STILL, IN CONSTRUING ANY MODIFICATIONS OF THE USUAL TERMS OF SHIPMENT INTRODUCED INTO THE CHARTER OR BILLS OF LADING FOR THE SHIPS BENEFIT, IF THE MEANING AND EXTENT OF SUCH MODIFICATIONS ARE NOT CLEAR, THEY SHOULD NOT BE EXTENDED BEYOND THE PRESUMED INTENT, TO BE GATHERED FROM THE CIRCUMSTANCES AND THE PRESUMED PURPOSE OF THE CHANGES.'

THE COURT IN THE PORTLAND FLOURING MILLS CASE AT PAGES 863 864 SAID:

"THE TRUE RULE IN REGARD TO CONTRACTS OF THIS CHARACTER WAS THUS EXPRESSED BY LORD ELLENBOROUGH, C.J., IN 1815 IN DE SILVALE V. KENDALL, 4 M. AND S. 37, 42:

"BY THE POLICY OF THE LAW OF ENGLAND FREIGHT AND WAGES, STRICTLY SO CALLED, DO NOT BECOME DUE UNTIL THE VOYAGE HAS BEEN PERFORMED. BUT IT IS COMPETENT TO THE PARTIES TO A CHARTER PARTY TO COVENANT BY EXPRESS STIPULATIONS IN SUCH MANNER AS TO CONTROL THE GENERAL OPERATION OF LAW. THE QUESTION IN THIS CASE IS WHETHER THE PARTIES HAVE NOT SO COVENANTED BY THE STIPULATIONS OF THIS CHARTER PARTY. IF THE CHARTER PARTY BE SILENT, THE LAW WILL DEMAND A PERFORMANCE OF THE VOYAGE; FOR NO FREIGHT CAN BE DUE UNTIL THE VOYAGE BE COMPLETED. BUT IF THE PARTIES HAVE CHOSEN TO STIPULATE BY EXPRESS WORDS, OR BY WORDS NOT EXPRESS, BUT SUFFICIENTLY INTELLIGIBLE TO THAT END, THAT A PART OF THE FREIGHT * * * SHOULD BE PAID BY ANTICIPATION, WHICH SHOULD NOT DEPEND UPON THE PERFORMANCE OF THE VOYAGE, MAY THEY NOT SO STIPULATE? * * * AND THERE CAN BE NO DOUBT THAT THE PAYMENT OF FREIGHT MAY BE THE AGREEMENT OF THE PARTIES BE SO EXEMPTED. " "IN 7 AM. AND ENC. OF LAW, 246 IT IS SAID:

" "IT IS COMPETENT FOR THE PARTIES TO A CONTRACT OF AFFREIGHTMENT TO STIPULATE EXPRESSLY THAT THE FREIGHT, OR A PART THEREOF, SHALL BE PAYABLE ABSOLUTELY AT THE TIME OF THE SHIPMENT OF THE CARGO, OR AT A CERTAIN TIME THEREAFTER, WITHOUT REGARD TO PERFORMANCE OF THE CONTRACT.'" THESE CASES, WE FEEL, LEND SUPPORT TO OUR VIEW RATHER THAN THAT URGED BY YOUR ATTORNEY. THERE ARE NO PROVISIONS IN THE CONTRACT IN QUESTION WHICH PROVIDE THAT FREIGHT OR ANY PART THEREOF IS EARNED IRRESPECTIVE OF DELIVERY. THE VERY SILENCE OF THE CONTRACT IN THIS REGARD MILITATES AGAINST ANY CONSTRUCTION THAT FREIGHT IS EARNED REGARDLESS OF DELIVERY FOR, AS STATED IN THE QUOTED EXCERPT FROM THE DE SILVALE CASE,"IF THE CHARTER PARTY BE SILENT, THE LAW WILL DEMAND A PERFORMANCE OF THE VOYAGE; FOR NO FREIGHT CAN BE DUE UNTIL THE VOYAGE BE COMPLETED.' THIS IS THE PRECISE POSITION OF MSTS WHICH DRAFTED THIS TYPE OF CONTRACT, THAT BY REMAINING SILENT AND PUTTING NO PROVISION IN THE CONTRACT RESPECTING THE EARNINGS OF FREIGHT, THE PRESUMPTION AND GENERAL RULES OF LAW APPLY AND NO FREIGHT IS EARNED UNTIL DELIVERY OF THE GOODS AT DESTINATION.

WE AGREE THAT WHEN PARTIES DO NOT WISH THE GENERAL RULE AND PRESUMPTION REGARDING THE EARNING OF FREIGHT AS SET FORTH IN THE ALCOA CASE TO GOVERN, THAT THEY MAY STIPULATE TO THE CONTRARY. ALSO, WE AGREE THAT SUCH STIPULATION DOES NOT HAVE TO BE MADE IN ANY PARTICULAR LANGUAGE OR WORDS BUT THE AUTHORITIES UNIFORMLY REQUIRE THAT SUCH STIPULATION BE DONE WITH REASONABLE CLARITY AND CERTAINTY. QUOTING FROM THE SYLLABUS OF THE CHRISTIE CASE REFERRED TO ABOVE RELIED UPON HEAVILY BY YOUR ATTORNEY, IT IS STATED:

"AS A GENERAL PRINCIPLE, FREIGHT IS PAYABLE ONLY ON SO MUCH OF A CARGO AS IS DELIVERED, AND THERE IS AN EQUITABLE PRESUMPTION THAT SUCH IS THE CONTRACT OF THE PARTIES, TO OVERCOME WHICH A CONTRARY INTENT MUST BE EXPRESSED WITH REASONABLE CLEARNESS AND CERTAINTY.'

THIS, WE BELIEVE, WAS NOT DONE IN THE CONTRACT UNDER DISCUSSION. IN ALL THE CASES INVOLVING THIS ISSUE WHICH HAVE COME TO OUR ATTENTION AND IN WHICH THE COURT HELD THAT THE FREIGHT WAS EARNED, THE CONTRACTS CONTAINED SOME EXPRESS WORDS WHICH MADE IT CLEAR AND CERTAIN THAT FREIGHT WAS TO BE EARNED IRRESPECTIVE OF DELIVERY. IN THE CASE OF ALLAN WILDE TRANSPORT CORP. V. VACUUM OIL CO., 248 U.S. 377 (1919) THE CHARTER PROVIDED "FREIGHT TO BE PREPAID NET ON SIGNING BILLS OF LADING" AND "FREIGHT EARNED, RETAINED AND IRREVOCABLY, VESSEL LOST OR NOT LOST.' IN INTERNATIONAL PAPER CO. V. THE "GRACIE D. CHAMBERS," 248 U.S. 387 (1919), THE BILL OF LADING CONTAINED THE PROVISION "RESTRAINTS OF PRINCES AND RULERS EXCEPTED. FREIGHT FOR SAID GOODS TO BE PREPAID IN FULL WITHOUT DISCOUNT, RETAINED AND IRREVOCABLY SHIP AND/OR CARGO LOST OR NOT LOST.' ALSO, IN STANDARD VARNISH WORKS V. THE "BRIS," 248 U.S. 392 (1919), THE BILLS OF LADING CONTAINED A CLAUSE THAT "PREPAID FREIGHT IS TO BE CONSIDERED AS EARNED ON SHIPMENT OF THE GOODS AND IS TO BE RETAINED BY THE VESSEL'S OWNERS, VESSEL OR CARGO LOST OR NOT LOST.' LIKEWISE, IN THE MALCOLM BAXTER, JR., 277 U.S. 323 (1928) THE BILLS OF LADING STIPULATED "PREPAID FREIGHT IS TO BE CONSIDERED AS EARNED ON SHIPMENT OF GOODS AND IS TO BE RETAINED BY VESSEL'S OWNER * * * IF THERE BE FORCED INTERRUPTION OR ABANDONMENT OF THE VOYAGE, AT A PORT OF DISTRESS OR ELSEWHERE.' AND, IN MITSUBISHI SHEJI KAISHA V. SOCIETE PURFINA MARITIME (THE LAURENT MEEUS), 133 F.2D 552 (1943), THE CHARTER PROVISION WAS "THE FREIGHT TO BE PAID IN CASE IN NEW YORK LESS 1 PERCENT DISCOUNT ON TELEGRAPHIC ADVICE OF SIGNING BILLS OF LADING AND IS TO BE CONSIDERED EARNED AND NOT RETURNABLE SHIP AND/OR CARGO LOST OR NOT LOST.'

IN THE PORTLAND FLOURING MILLS CO., CASE RELIED UPON IN THE BRIEF FILED IN YOUR BEHALF THE BILL OF LADING CONTAINED THE PROVISION "THE SEVERAL FREIGHT AND PRIMAGES TO BE CONSIDERED AS EARNED, STEAMER OR GOODS LOST OR NOT LOST AT ANY STAGE OF THE ENTIRE TRANSIT.' THIS CASE WAS DISCUSSED SOME 30 YEARS LATER IN THE LAURENT MEEUS CASE, WHERE THE COURT ALSO DISCUSSED THE DECISIONS IN ,THE GRACIE D. CHAMBERS," THE ALLAN WILDE, THE "BRIS," AND THE MALCOLM BAXTER, JR., CASES REFERRED TO ABOVE AND THE COURT POINTED OUT THAT THE DECISION IN THE EARLIER PORTLAND FLOURING MILLS CASE THAT FREIGHT WAS EARNED DESPITE THE LOSS OF THE VESSEL PRIOR TO DELIVERY OF CARGO WAS BASED ON THE QUOTED CLAUSE. THE COURT NOTED THAT IN THE ABSENCE OF THE WORDS "STEAMER OR GOODS LOST OR NOT LOST" THE FREIGHT WOULD HAVE BEEN PAYABLE ONLY UPON DELIVERY AT DESTINATION.

IN THE CHRISTIE CASE, THE OWNER BROUGHT SUIT FOR UNPAID FREIGHT ALLEGEDLY DUE ON A PORTION OF THE CARGO WHICH WAS JETTISONED WHEN THE VESSEL STRANDED. THE CHARTER PARTY CONTAINED THE FOLLOWING CLAUSE:

"THE SHIP SHALL TAKE ON A FULL AND COMPLETE CARGO * * * AND BEING SO LOADED SHALL THEREWITH PROCEED TO TAMPICO, MEXICO, OR AS NEAR THEREUNTO AS SHE MAY SAFELY GET, AND THERE DELIVER THE SAME IN THE CUSTOMARY MANNER, WHERE SHE CAN SAFELY DELIVER AFLOAT, ON BEING PAID FREIGHT, AT AND AFTER THE RATE OF ONE 65/100 DOLLARS ON COAL, AND TWO 70/100 DOLLARS ON COKE, ALL UNITED STATES CURRENCY, PER TON OF 2,240 LBS. ON THE QUANTITY INTAKEN IN FULL OF ALL PORT CHARGES, PILOTAGE, WHARFAGE, ETC. (THE ACT OF GOD, PERILS OF THE SEA, FIRE, BARRATRY OF THE MASTER AND CREW, ENEMIES, PIRATES, THIEVES, ARRESTS, AND RESTRAINTS OF PRINCES, RULERS, AND PEOPLE, COLLISION, STRANDING AND OTHER ACCIDENTS OF NAVIGATION, EXCEPTED).' THE COURT, IN CONSTRUING THIS LANGUAGE WHICH IS MUCH MORE PERSUASIVE TOWARDS THE CONCLUSION THAT FREIGHT WAS EARNED UPON LOADING THAN IS THE MSTS SHIPPING CONTRACT, NEVERTHELESS, HELD THAT THE ENTIRE FREIGHT WAS AT THE RISK OF THE SHIP. AFTER STATING THE RULE QUOTED ABOVE FROM PAGES 838 AND 839 OF THE DECISION, THE COURT INTERPRETED THE ABOVE QUOTED CLAUSE OF THE CHARTER PARTY AS PROVIDING THAT FREIGHT PAYABLE ON A LUMP-SUM BASIS ON ALL OF THE CARGO LOADED WAS EARNED IF THE VESSEL ARRIVED AT THE DISCHARGE PORT, EVEN THOUGH A PORTION OF THE CARGO WAS JETTISONED. THE COURT RENDERED JUDGMENT FOR THE SHIPOWNER FOR THE AMOUNT OF FREIGHT DUE ON THAT PORTION OF THE CARGO WHICH WAS JETTISONED AS A CONSEQUENCE OF THE VESSEL'S STRANDING BECAUSE THE BULK OF THE CARGO WAS DELIVERED AT DESTINATION AND UNDER THE CONTRACT THE FULL FREIGHT WAS CONSIDERED INDIVISIBLE AND EARNED IF ANY PART OF THE CARGO SHIPPED WAS DELIVERED. HOWEVER, THE COURT RECOGNIZED THAT THIS INTERPRETATION DID NOT SAVE THE FREIGHT FROM CONTRIBUTING TO THE GENERAL AVERAGE EXPENSES. THE COURT SAID ON PAGE 842:

"IF THE RESPONDENT PAYS THIS FREIGHT THE FREIGHT SO PAID AS WELL AS THE VALUE OF THE GOODS MUST BE MADE GOOD TO THE CONSIGNEE BY ALLOWANCE TO HIM IN THE AVERAGE ADJUSTMENT; WHILE IF NOT PAID BY THE RESPONDENT, THE FREIGHT ON THE JETTISONED GOODS WILL BE MADE GOOD TO THE MASTER IN GENERAL AVERAGE. IN EITHER CASE, THIS FREIGHT WILL ENTER INTO THE CONTRIBUTORY VALUES FOR THE SAME AMOUNT, UNDER THE YORK-ANTWERP RULES, WHICH ARE ADOPTED IN THIS CHARTER. MUTUAL SAFETY INS. CO. V. CARGO OF THE GEORGE OLCOTT, 157 FED. CAS. NO. 9,982; GOURL. GEN. AV. 486. THE ASSESSMENT ON THE FREIGHT MUST ALSO IN EITHER CASE BE PAID BY THE MASTER, BECAUSE AT THE TIME OF THE JETTISON, THIS FREIGHT, LIKE ALL THE REST OF THE FREIGHT, WAS AT THE RISK OF THE SHIP AND NOT OF THE SHIPPER.' THE CHRISTIE CASE CITED WITH APPROVAL AN EARLIER DECISION BY THE SAME COURT IN GIBSON V. BROWN, 44 F. 98 (1890), WHEREIN THE COURT AT PAGE 99 STATES THAT

"* * * ORDINARILY, FREIGHT IS COLLECTIBLE ONLY UPON PACKAGES DELIVERED. TO TAKE THE CASE OUT OF THAT RULE, THE LANGUAGE OF THE CONTRACT MUST EXPRESS THAT INTENT WITH SUCH A REASONABLE CERTAINTY AS DOES NOT APPEAR UPON THESE BILLS OF LADING.'

IN VIEW OF THE CASES CITED ABOVE AND THE VARIOUS EXAMPLES OF CONTRACTUAL PROVISIONS QUOTED IT DOES NOT APPEAR THAT THE MSTS SHIPPING CONTRACT PROPERLY MAY BE CONSTRUED AS URGED BY YOUR ATTORNEY'S BRIEF. EVEN THE CASES RELIED UPON IN SUCH BRIEF NAMELY THE PORTLAND FLOURING MILLS AND CHRISTIE CASES WOULD INDICATE THAT THE WORDS OF THE MSTS SHIPPING CONTRACT DO NOT HAVE " THE NECESSARY EFFECT" OR ARE "SUFFICIENTLY INTELLIGIBLE" TO THE END THAT FREIGHT UNDER SUCH A CONTRACT IS EARNED IRRESPECTIVE OF DELIVERY. CONSIDERING THE HIGH STANDARDS SET IN THESE CASES AND OF THE EXTREMELY HEAVY BURDEN PLACED UPON A PARTY ATTEMPTING TO SHOW THAT THE CONTRACT CONTEMPLATED PAYMENT OF FREIGHT WITHOUT RENDERING THE CONTRACTED PERFORMANCE, IT DOES NOT APPEAR THAT A PROPER CONSTRUCTION OF THE MSTS SHIPPING CONTRACT WOULD HAVE THAT "NECESSARY EFFECT" OR ,INEVITABLE OR UNAVOIDABLE EFFECT," URGED. ALTHOUGH, THE CHRISTIE AND PORTLAND FLOURING MILLS CASES ARE CITED AS SUPPORT FOR THE THEORY THAT THERE DOES NOT HAVE TO BE EXPRESS WORDS IN THE CONTRACT STATING THAT THE FREIGHT IS EARNED IRRESPECTIVE OF DELIVERY, AND THAT SUCH CONCLUSION CAN BE REACHED IF THE CONTRACT "IS SUFFICIENTLY INTELLIGIBLE TO THAT END" OR THAT IT IS "THE NECESSARY EFFECT OF THE CONTRACT," NO CASE HAS BEEN BROUGHT TO OUR ATTENTION HOLDING THAT FREIGHT IS EARNED WITHOUT DELIVERY WHERE THE CONTRACT DID NOT CONTAIN SOME LANGUAGE INDICATING FREIGHT WAS TO BE CONSIDERED EARNED IRRESPECTIVE OF DELIVERY. WHILE WE DO NOT CONTEND THAT ANY PARTICULAR OR EVEN EXPRESS WORDS ARE NECESSARY, NEVERTHELESS, WE FIND NO CASES WHERE A COURT HELD FREIGHT WAS EARNED WHERE THE CARGO WAS NOT DELIVERED WHERE EXPRESS WORDS MAKING SUCH INTENTION CLEAR WERE NOT USED AND IN ANY EVENT, AS YOU POINT OUT THE WORDS WOULD HAVE TO BE CLEAR ENOUGH FOR THE COURT TO UNDERSTAND, AND WE DO NOT BELIEVE A COURT WOULD SO UNDERSTAND THE WORDS IN THE MSTS SHIPPING CONTRACT. WITHOUT BELABORING THE POINT, IN GRIGGS V. AUSTIN, 15 AM.DEC. 175 (1825), IT IS STATED THAT FREIGHT IS THE COMPENSATION FOR THE CARRIAGE OF GOODS, AND IF IT BE PAID IN ADVANCE, AND THE GOODS BE NOT CARRIED BY REASON OF ANY EVENT NOT IMPUTABLE TO THE SHIPPER, IT IS TO BE REPAID, UNLESS THERE BE A SPECIAL AGREEMENT TO THE CONTRARY. IN THIS CASE, IT IS STATED, AT PAGE 179:

"BUT ONE OF THE COUNSEL FOR THE DEFENDANT HAS PUT THE CASE ON GROUND WHICH ADMITS THE GENERAL PRINCIPLE, THAT FREIGHT MAY BE RECOVERED BACK WHEN THE GOODS ARE NOT DELIVERED, UNLESS THERE BE AN AGREEMENT TO THE CONTRARY, BUT HE INSISTS THAT SUCH AN AGREEMENT DOES NOT APPEAR FROM THE EVIDENCE; THAT IS, FROM THE BILL OF LADING AND THE RECEIPT ON THE ACCOUNT. BUT WE THINK THEY FURNISH NO EVIDENCE OF SUCH AN AGREEMENT; THEY MERELY PROVE THE FREIGHT WAS PAID IN ADVANCE.

"INDEED, IT WILL BE SEEN AT ONCE THAT IF THE PAYMENT OF FREIGHT THUS PROVED WERE TO BE CONSTRUED INTO A STIPULATION THAT IT SHOULD NOT BE RECOVERED BACK, THE WHOLE DOCTRINE OF THE MARINE LAW ON THE SUBJECT WOULD BE USELESS. THE MAXIM IS THAT FREIGHT PAID IN ADVANCE, IF THE GOODS BE NOT CARRIED, SHALL BE RETURNED, UNLESS THERE BE A STIPULATION TO THE CONTRARY. NOW IF THE MERE PAYMENT PROVED SUCH A STIPULATION, THERE WOULD BE NO CASE FOR THE RULE TO OPERATE ON. * * *.'

THE BRIEF FILED IN YOUR BEHALF CONTENDS THAT ARTICLE 4 OF THE MSTS SHIPPING CONTRACT CLEARLY REFLECTS THE INTENT THAT 80 PERCENT OF THE FREIGHT IS EARNED IRRESPECTIVE OF DELIVERY OF CARGO TO DESTINATION AND SUCH IS THE NECESSARY EFFECT OF THE CONTRACT. IT SHOULD BE MADE CLEAR AT THE OUTSET THAT ARTICLE 4 DOES NOT STATE ANYTHING IN REGARD TO THE EARNING OF FREIGHT, NOR IS THE EARNING OF FREIGHT MENTIONED IN ANY OTHER PROVISION OF THE CONTRACT, THE CONTRACT IS ABSOLUTELY SILENT AS TO WHETHER FREIGHT IS EARNED. IT SHOULD ALSO BE POINTED OUT THAT THERE IS A VAST DIFFERENCE BETWEEN PAYMENT OF FREIGHT AND THE EARNING OF FREIGHT. PAYMENT OF FREIGHT MAY BE PARTIAL, CONTINGENT, CONDITIONAL OR MAY RELATE TO THE TIME OF PAYMENT AND DOES NOT RUN TO THE MERITS OF WHETHER THE FREIGHT IS EARNED. THUS, A SHIPOWNER MAY DEMAND PAYMENT OF FREIGHT IN ADVANCE OF CARRIAGE, SUBJECT TO REFUND IF NOT EARNED. SEE ANNOTATIONS TO 60 AM.DEC. 152. THE SETTLED DOCTRINE IN THIS COUNTRY IS THAT FREIGHT, BEING COMPENSATION FOR THE CARRIAGE OF GOODS, IF PAID IN ADVANCE IS NOT EARNED UNLESS THE VOYAGE IS PERFORMED, AND IS IN ALL CASES, UNLESS THERE IS A SPECIAL AGREEMENT TO THE CONTRARY, TO BE REFUNDED, IF FOR ANY FAULT NOT IMPUTABLE TO THE SHIPPER THE GOODS ARE NOT CARRIED AND THE CONTRACT IS NOT FULFILLED. SEE GRIGGS V. AUSTIN, CITED ABOVE; ATWELL V. MILLER, 69 AM.DEC. 206 (1857); THE KIMBALL, 3 WALL. 37, 44-45 (1865); THE BIRD OF PARADISE, 5 WALL. 545, 562 (1866); 40 AM.JUR., PAYMENT SEC. 218; 48 AM.JUR., SHIPPING SEC. 430. AS INDICATED, THE PARTIES CAN, HOWEVER, LAWFULLY AGREE THAT THE FREIGHT SHALL BE COMPLETELY EARNED AS SOON AS THE GOODS ARE LADEN ON BOARD THE VESSEL, SO AS NOT TO BE REFUNDED IN CASE THEY ARE NOT DELIVERED. SUCH AGREEMENT, HOWEVER, IS NOT TO BE INFERRED FROM THE MERE FACT OR PAYMENT IN ADVANCE. SEE THE ATWELL AND GRIGGS CASES CITED ABOVE.

YOUR ATTORNEY'S BRIEF URGES THAT FREIGHT IS EARNED IRRESPECTIVE OF DELIVERY BECAUSE THE INTENT MANIFESTED IN ARTICLE 4 OF THE ARMY SPACE CHARTER IS CARRIED OVER THROUGH FAULTY DRAFTING OF THE MSTS SHIPPING CONTRACT. HOWEVER, THE OMISSION OF THE LANGUAGE OF THE ARMY SPACE CHARTER WHEREIN IT WAS SPELLED OUT IN INFINITE DETAIL THAT FREIGHT WAS EARNED ON LOADING OF THE CARGO SEEMS CLEARLY TO INDICATE THE MSTS SHIPPING CONTRACTS DO NOT CONTEMPLATE FREIGHT BEING EARNED WITHOUT DELIVERY. THE MSTS SHIPPING CONTRACT WAS DELIBERATELY CONTRIVED TO AVOID THE EFFECTS OF THE SPACE CHARTER AND THE STANDARD COMMERCIAL CONTRACT TYPE OF CLAUSE INDICATING FREIGHT WAS TO BE CONSIDERED EARNED ON LOADING OR SAILING OF THE VESSEL. THE POINT IS ALSO URGED IN YOUR ATTORNEY'S BRIEF THAT IF THE FREIGHT IS NOT EARNED ON SAILING OF THE VESSEL, THAT THE 80 PERCENT PAYMENT PROVISION MUST BE CONSTRUED AS VIOLATIVE OF THE PROVISIONS OF 31 U.S.C. 529, PROHIBITING PAYMENT IN ADVANCE AND IN EXCESS OF THE VALUE OF THE SERVICES RENDERED; AND SINCE IT MUST BE PRESUMED THAT THE PARTIES DID NOT INTEND IN ENTERING INTO THE CONTRACT TO DO SOMETHING PROHIBITED BY LAW THAT SUCH A CONSTRUCTION SHOULD BE AVOIDED IF ANOTHER REASONABLE CONSTRUCTION COULD BE PLACED ON THE PROVISION. IT IS ACCORDINGLY URGED THAT ARTICLE 4 OF MSTS CONTRACT 51 PROVIDING FOR PAYMENT OF 80 PERCENT OF THE FREIGHT AFTER SAILING OF THE VESSEL REQUIRES A CONSTRUCTION THAT SUCH PORTION OF THE FREIGHT WAS EARNED ON SAILING OF THE VESSEL. HOWEVER, THE QUESTION WHETHER THE ADVANCED PAYMENT STATUTE PRECLUDES PAYMENT OF FREIGHT ON SAILING OF A VESSEL AND PRIOR TO DELIVERY OF THE CARGO AT DESTINATION WAS ON SEVERAL OCCASIONS CONSIDERED BY COURTS WHICH DID NOT SPECIFICALLY RULE ON THE POINT. THUS THE SECOND CIRCUIT COURT OF APPEALS IN THE ALCOA CASE, 175 F.2D 661, 663 (1949), STATED:

"DID THIS (31 U.S.C. 529) FORBID THE UNITED STATES TO DELIVER ANY GOODS TO A CARRIER UNDER A BILL OF LADING OF THE "USUAL FORM? " MAYBE NOT; IT IS AT LEAST PLAUSIBLE TO SAY THAT, IF THE INDUSTRY CONCERNED ACCEPTS MERE DELIVERY OF THE GOODS TO THE CARRIER AS A SERVICE WHOSE "VALUE" IS THE WHOLE FREIGHT, AND THROWN UPON THE SHIPPER THE RISK OF PERFORMANCE, AND IF NO PROVISION TO THE CONTRARY IS MADE BY THE PARTIES, DELIVERY IS A VALUE WHICH WILL SATISFY THE STATUTE. NOR IN THAT EVENT WOULD IT BE AN "ADVANCE OF PUBLIC MONEY," IF THE UNITED STATES, AS SHIPPER, PAID THE FREIGHT WHEN THE CARRIER ACCEPTED THE GOODS. HOWEVER, SINCE IN THE CASE AT BAR THE PARTIES DID SPECIFICALLY PROVIDE TO THE CONTRARY BY DECLARING WHAT THE SERVICES SHOULD BE ON WHICH PAYMENT DEPENDED, WE MAY LEAVE THE QUESTION UNANSWERED.' ALSO, THE SUPREME COURT IN A FOOTNOTE TO ITS OPINION IN THAT CASE, 338 U.S. 421, 425, STATED:

"THE GOVERNMENT INTERPRETS A FURTHER PROVISION OF THIS STATUTE (3 STAT. 723, 31 U.S.C. 529) THAT "PAYMENT SHALL NOT EXCED (EXCEED) THE VALUE OF THE SERVICE RENDERED" TO RESOLVE THE ISSUE AT BAR IN ITS FAVOR. LIKE THE COURT BELOW, WE FIND IT UNNECESSARY TO PASS UPON THIS CONTENTION.'

IN UNITED STATES V. AMERICAN TRADING CO. OF SAN FRANCISCO, 138 F.SUPP. 536, 541-542 (1956), THE COURT STATED:

"BUT NO CASE HAS BEEN CITED HOLDING PAYMENTS UNLAWFUL BY VIRTUE OF THAT STATUTE (31 U.S.C.A. 529) AND THE SUPREME COURT IN THE ALCOA CASE EXPRESSLY RESERVED RULING ON THIS POINT * * *. NOR HAS ANY CASE BEEN CITED WHICH CONSTRUES THE LANGUAGE OF THAT STATUTE AND RESOLVES THE QUESTIONS THAT MAY PROPERLY BE RAISED AS TO ITS APPLICATION; E.G., VALUE TO WHOM? * *. UNDER ALL THE FACTS PRESENTED HERE, THIS COURT IS NOT CONSTRAINED TO HOLD THE PAYMENT UNLAWFUL SOLELY BY REASON OF THIS STATUTE.'

WE THEREFORE HAVE CONSIDERABLE DOUBT THAT A COURT WOULD HOLD THE ARTICLE AUTHORIZING 80 PERCENT PAYMENT ON SAILING OF THE VESSEL VIOLATES 31 U.S.C. 529. ALSO, THAT SECTION OF LAW APPEARS TO BE INTENDED FOR THE PROTECTION OF THE UNITED STATES AND WHILE OUR OFFICE MIGHT RAISE THE QUESTION OF WHETHER THE 80 PERCENT PAYMENT PROVISION IS PROPER IN OUR AUDIT OF PAYMENTS THEREUNDER IF WE FELT SUCH PAYMENTS CLEARLY WERE PROHIBITED BY LAW, IN THE ABSENCE OF AN AUTHORITATIVE COURT DECISION SO HOLDING WE HAVE NOT DONE SO. IN ANY EVENT WE DO NOT FEEL THAT THE RULE OF CONSTRUCTION TO WHICH YOU REFER IS SUFFICIENTLY COGENT TO OVERCOME THE RULE OF GENERAL APPLICABILITY PREVIOUSLY REFERRED TO THAT, UNLESS THE CONTRACT OF THE PARTIES EXPRESSES A CONTRARY INTENT WITH REASONABLE CLEARNESS AND CERTAINTY, OCEAN FREIGHT CHARGES ARE NOT EARNED UNLESS AND UNTIL THE CARGO IS DELIVERED AT DESTINATION.

THE BRIEF OF YOUR ATTORNEY STATES THAT A FURTHER INDICATION OF THE INTENT THAT FREIGHT IS EARNED IRRESPECTIVE OF DELIVERY IS THAT ARTICLE 4 (A) OF THE MSTS SHIPPING CONTRACT PROVIDES THE 80 PERCENT PAYMENT WILL BE MADE UPON SUBMISSION OF "PROPERLY CERTIFIED INVOICES OR VOUCHERS WITH RESPECT TO EACH SHIPPING ORDER * * *.' HE ALLEGES THAT THIS IS THE PROCEDURE ADOPTED FOR THE PAYMENT OF A DEBT TO THE UNITED STATES--- NOT FOR MAKING A LOAN TO THE CONTRACTOR AND REFERS TO TITLE 5, SECTION 3060.20 OF THE GENERAL ACCOUNTING OFFICE POLICY AND PROCEDURES MANUAL FOR GUIDANCE OF FEDERAL AGENCIES WHICH PROVIDES FOR USE OF S.F. 1113, A STANDARD FORM USED FOR BILLING OF CHARGES AGAINST ALL BRANCHES OF THE UNITED STATES GOVERNMENT SERVICES FOR FREIGHT OR EXPRESS TRANSPORTATION CHARGES, AND CONTAINS LANGUAGE REQUIRING THE PAYEE TO CERTIFY THE SERVICES WERE RENDERED. HOWEVER, WHEN SHIPMENTS ARE MADE UNDER MSTS SHIPPING CONTRACTS, A DIFFERENT VOUCHER FORM (STANDARD FORM 1034, PRESCRIBED BY TITLE 7, SECTION 5010-5040 OF THE GENERAL ACCOUNTING OFFICE MANUAL) IS USED AND SUCH CERTIFICATES ARE NOT EXECUTED. SEE 4 C.F.R. 75.1. THUS, IT DOES NOT APPEAR THAT ANY INTENT RELATIVE TO THE EARNING OF FREIGHT MAY BE IMPUTED FROM THE TYPE OF VOUCHER USED IN BILLING FOR PAYMENTS UNDER THE MSTS SHIPPING CONTRACTS, SINCE THE KIND OF CERTIFICATION REFERRED TO IS NOT INVOLVED.

YOU CONTEND THAT THE PARTIES HAVE AGREED THAT 80 PERCENT OF FREIGHT WAS TO BE CONSIDERED EARNED. ON THE CONTRARY, THEY HAVE NOT AGREED THAT ANY FREIGHT IS EARNED. RATHER THE MOST THAT CAN BE SAID IS THAT THE PARTIES HAVE AGREED THAT AT A PARTICULAR TIME (ANYTHING AFTER SAILING) ONE PARTY (THE CONTRACTOR) MAY BE PAID A SUM EQUAL TO 80 PERCENT OF THE COMPENSATION PAYABLE UNDER ARTICLE 3 OF THE CONTRACT. ARTICLE 3 CONTAINS SCHEDULES OF RATES, WHICH RATES MAY BE USED IN DETERMINING A PART OF OR ALL OF FREIGHT CHARGES BUT SUCH COMPENSATION MAY OR MAY NOT BE ALL OF THE "FREIGHT" CHARGES. THIS CONTRACTUAL PAYMENT IS NOT NECESSARILY REPRESENTATIVE OF FREIGHT CHARGES AND CERTAINLY IN AND OF ITSELF DOES NOT INDICATE THAT FREIGHT IS EARNED. IN OTHER WORDS, WE DO NOT BELIEVE THAT IT IS PROPER TO EQUATE "PAYABLE" OR "PAYMENT" WITH "EARNED" OR "EARNINGS.'

ONE OTHER POINT OF YOUR REQUEST FOR RECONSIDERATION SHOULD BE CLEARED UP. THE BRIEF URGES THAT IN OUR A-24222, MAY 11, 1944, WE RECOGNIZED THAT UNDER THE UNIFORM MARITIME PRACTICE THE ENTIRE FREIGHT IS EARNED ON THE LOADING OF CARGO. WE BELIEVE THE PORTION OF THAT DECISION WHICH YOU HAVE REFERENCE TO READS AS FOLLOWS:

"IN PRESCRIBING THE USE OF THE WAR SHIPLADING (FORM) 7/1/42 FOR OCEAN SHIPMENTS BY OFFICE LETTER OF AUGUST 31, 1943, A-24222, FULL CONSIDERATION WAS GIVEN TO THE COMMERCIAL INTERNATIONAL MARITIME AGREEMENT OF LONG STANDING THAT TRANSPORTATION CHARGES ARE EARNED AND PAYABLE, OR PAYMENT TO BE PROPERLY GUARANTEED, ON LOADING, SHIP OR CARGO LOST OR NOT LOST.' THIS QUOTATION MERELY INDICATES THAT WE RECOGNIZED THAT UNDER THE USUAL COMMERCIAL MARITIME PRACTICE PARTIES FREQUENTLY, POSSIBLY EVEN USUALLY, EXPRESSLY CONTRACT THAT FREIGHT PAID WILL BE CONSIDERED EARNED UPON LOADING WHETHER THE VESSEL OR CARGO BE LOST OR NOT AND THAT THIS PRACTICE OF SO CONTRACTING NECESSITATED THE INCLUSION OF THE WORDING IN PARAGRAPH 15 OF THE TERMS OF THE WAR SHIPLADING FORM THAT FULL FREIGHT SHALL BE COMPLETELY EARNED, SHIP AND OR CARGO LOST OR NOT LOST. THIS IS THE VERY POSITION WE HAVE TAKEN IN THIS MATTER THAT FREIGHT IS NOT DEEMED EARNED UNTIL GOOD DELIVERY UNLESS THE PARTIES HAVE CONTRACTED OTHERWISE.

OUR DECISION OF JUNE 12, 1964, IS ACCORDINGLY AFFIRMED AND PAYMENT OF THE SUM OF $7,969.66 REFERRED TO IN SUCH DECISION SHOULD BE MADE WITHIN 30 DAYS OF THE DATE OF THIS LETTER SO AS TO MAKE UNNECESSARY FURTHER COLLECTION ACTION.