B-155415, MAR. 16, 1965

B-155415: Mar 16, 1965

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TO PACIFIC MOTOR TRUCKING COMPANY: FURTHER REFERENCE IS MADE TO YOUR LETTER DATED OCTOBER 9. THE BILL OF LADING WAS SIGNED BY YOUR REPRESENTATIVE. THE ADMINISTRATIVE OFFICE REPORTS THAT THE METAL CONTAINER IN WHICH THE IMPELLER WAS SHIPPED WAS DAMAGED UPON ARRIVAL AT DESTINATION. A PHOTOGRAPH WAS SUBMITTED SHOWING THAT THE CONTAINER COVER WAS DENTED AND THE ADJACENT UPPER RIM OF THE CONTAINER WAS DISTORTED AND BENT. NOTATION OF DAMAGE WAS APPARENTLY NOT MADE ON THE DELIVERY RECEIPT. THE NATURE OF THE DAMAGE WAS NOTED ON THE BILL OF LADING BEFORE SURRENDER OF THE DOCUMENT TO YOU. THE IMPELLER IN THE DAMAGED CONTAINER WAS. SHOWS THAT A REQUEST FOR INSPECTION WAS RECEIVED ON JANUARY 5. INSPECTION WAS NOT MADE BY YOUR INSPECTOR UNTIL JANUARY 10.

B-155415, MAR. 16, 1965

TO PACIFIC MOTOR TRUCKING COMPANY:

FURTHER REFERENCE IS MADE TO YOUR LETTER DATED OCTOBER 9, 1964, YOUR FILE SE-134-49 CC: 99-6472, IN WHICH YOU REQUESTED THAT WE REVIEW THE ACTION OF THE NAVY DEPARTMENT IN DEDUCTING $56.11 FROM YOUR BILL NO. 4 342 4 ON JUNE 26, 1964, AS THE COST OF REPAIRING A TURBINE ROTOR DISC ASSEMBLY ALLEGEDLY DAMAGED WHILE BEING TRANSPORTED FROM EL TORO, CALIFORNIA, TO LEMOORE, CALIFORNIA, UNDER GOVERNMENT BILL OF LADING NO. A-2590642, DATED DECEMBER 27, 1962. YOU ASK THAT THE DEDUCTION ACTION BE CONSIDERED IN THE LIGHT OF THE FACTS RELATED IN YOUR LETTER OF JULY 31, 1964, ADDRESSED TO THE NAVY FINANCE CENTER, WASHINGTON, D.C.

THE RECORD SHOWS THAT THE SHIPMENT IN QUESTION CONSISTED OF EIGHT PIECES OF MISCELLANEOUS FREIGHT WEIGHING 977 POUNDS, TENDERED TO YOUR COMPANY ON DECEMBER 27, 1962. THE BILL OF LADING WAS SIGNED BY YOUR REPRESENTATIVE, AUTRY, ACKNOWLEDGING RECEIPT OF THE EIGHT PIECES IN APPARENT GOOD ORDER AND CONDITION, WITH NO EXCEPTION TAKEN AS TO THE EXTERNAL CONDITION OF ANY OF THE PACKAGES. THE ADMINISTRATIVE OFFICE REPORTS THAT THE METAL CONTAINER IN WHICH THE IMPELLER WAS SHIPPED WAS DAMAGED UPON ARRIVAL AT DESTINATION. A PHOTOGRAPH WAS SUBMITTED SHOWING THAT THE CONTAINER COVER WAS DENTED AND THE ADJACENT UPPER RIM OF THE CONTAINER WAS DISTORTED AND BENT.

NOTATION OF DAMAGE WAS APPARENTLY NOT MADE ON THE DELIVERY RECEIPT, BUT THE NATURE OF THE DAMAGE WAS NOTED ON THE BILL OF LADING BEFORE SURRENDER OF THE DOCUMENT TO YOU. THE IMPELLER IN THE DAMAGED CONTAINER WAS, UPON INSPECTION, ALSO FOUND TO BE DAMAGED; AND PHOTOGRAPHS SHOW CONSIDERABLE BENDING OF SEVERAL OF THE BLADES. THE JOINT INSPECTION REPORT EXECUTED BY YOUR INSPECTOR, WALT MYERS, SHOWS THAT A REQUEST FOR INSPECTION WAS RECEIVED ON JANUARY 5, 1963, ONLY FIVE WORKING DAYS AFTER DELIVERY, IN OUR VIEW A NOT UNREASONABLE PERIOD DURING THE HOLIDAY SEASON, AND INSPECTION WAS NOT MADE BY YOUR INSPECTOR UNTIL JANUARY 10, 1963. THE DAMAGE TO AND NECESSITY FOR REPAIR OF THE IMPELLER IS CONFIRMED BY INSPECTOR MYER'S REPORT. MR. MYERS' REPORT CLASSIFIES THE DAMAGE AS "CONCEALED," AND ALLEGES THAT THE CONTAINER WAS NOT AVAILABLE FOR INSPECTION. IN THIS CONNECTION, THE ADMINISTRATIVE OFFICE REPORTS THAT MR. MYERS DID SEE THE CONTAINER AND THE PHOTOGRAPH IN THE PRESENCE OF MR. M. H. SPENCER, LEMOORE NAVAL AIR STATION TRAFFIC BRANCH SUPERVISOR. IN ANY EVENT, THERE IS NOTHING IN THE RECORD THAT INDICATES THAT THE DAMAGE RESULTED FROM SOME FACTOR FOR WHICH THE CARRIER WAS NOT RESPONSIBLE. UNDER THESE CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE RECORD HERE REASONABLY ESTABLISHES SUCH ELEMENTS OF CARRIER LIABILITY AS TO JUSTIFY THE DEDUCTION ACTION TAKEN BY THE NAVY FINANCE CENTER.

IN YOUR PREVIOUS CORRESPONDENCE WITH THE NAVY DEPARTMENT YOU PROTESTED THE INCLUSION OF THE AMOUNT OF $219 IN INDIRECT COSTS OR "OVERHEAD" IN COMPUTING REPAIR COSTS, INDICATING THAT SUCH AMOUNT REPRESENTED APPROXIMATELY 64 PERCENT OF DIRECT COSTS. IT IS WELL SETTLED THAT IN SITUATIONS WHERE COST OF REPAIRS IS ACCEPTABLE AS THE PROPER MEASURE OF DAMAGE, A FAIR ALLOWANCE MAY BE MADE FOR FURNISHING BUILDINGS, MACHINERY, TOOLS, UTILITIES, SUPERVISION AND OTHER ITEMS OF OVERHEAD CONDITIONED AIR CORPORATION V. ROCK ISLAND MOTOR TRANSIT COMPANY, 114 N.W.2D 304, 309 (1962). IN THE ABSENCE OF INDICATION THAT THE ADMINISTRATIVE COMPUTATION OF OVERHEAD CONTAINS IMPROPER COST FACTORS,WE WOULD NOT BE JUSTIFIED IN QUESTIONING THE VALIDITY OF THE COMPUTATION MERELY BECAUSE THE INDIRECT COST FACTOR REPRESENTS A SUBSTANTIAL PORTION OF THE TOTAL COSTS. ON THE PRESENT RECORD, THEREFORE, THE ADMINISTRATIVE COMPUTATION OF REPAIR COSTS IS NOT SUBJECT TO QUESTION.

WE ARE AWARE, HOWEVER, THAT AN ELEMENT OF DOUBT FREQUENTLY IS PRESENT IN CASES OF CONCEALED DAMAGE. FOR THAT REASON, WE WOULD BE WILLING TO RECOMMEND TO THE DEPARTMENT OF JUSTICE, WHICH HAS JURISDICTION TO ACCEPT OR REJECT COMPROMISE OFFERS OF THIS TYPE, THAT A PROPOSAL BY YOUR COMPANY TO ASSUME LIABILITY FOR 50 PERCENT OF THE FULL AMOUNT OF THE ADMINISTRATIVELY ASSESSED DAMAGES (50 PERCENT OF $561.11, OR $280.56) BY FAVORABLY CONSIDERED. SUCH A PROPOSAL SHOULD BE SUBMITTED TO OUR TRANSPORTATION DIVISION WITHIN 60 DAYS.