B-159274, NOV. 22, 1967

B-159274: Nov 22, 1967

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CERTIFICATES OF SETTLEMENT OF CLAIMS OF CARRIERS' FOR LOSS AND DAMAGE OFTEN INVOLVE RESOLUTION OF DOUBTFUL ISSUES OF FACT RESPECTING A CARRIER'S LIABILITY AND THEREFORE REVIEW OF SUCH SETTLEMENTS AT THE REQUEST OF THE ADMINISTRATIVE OFFICER AS DISTINGUISHED FROM THE CARRIER IS GENERALLY NOT IN INTEREST OF GOVT. SETTLEMENT WILL BE REVIEWED. WHERE EVIDENCE WHICH WAS DEVELOPED AS RESULT OF CARRIERS' CLAIM FOR REFUND ON ACCOUNT OF CONCEALED DAMAGE ESTABLISHED PRIMA FACIE LIABILITY FOR DAMAGE. RECOVERY IS LIMITED TO ACTUAL DAMAGES NOT TO EXCEED AGREED VALUE PER POUND OF THAT PART OF SHIPMENT LOST OR DAMAGED. NOTHING IN DECISION SHOULD BE CONSTRUED AS APPROVAL OF USE OF EXPRESS FOR HEAVY TRANSCONTINENTAL SHIPMENT SINCE OTHER TRANSPORTATION MIGHT HAVE BEEN BOTH MORE ECONOMICAL AND RESULTED IN GREATER PROTECTION FROM LOSS OR DAMAGE.

B-159274, NOV. 22, 1967

PROPERTY - PUBLIC - DAMAGE, LOSS, IN TRANSIT DECISION TO A.F. ACCOUNTING AND FINANCE CENTER RE LIABILITY OF REA EXPRESS FOR DAMAGE TO JET ENGINE TRANSPORTED UNDER GOVERNMENT BILL OF LADING FROM GENERAL ELECTRIC CO., MASS. TO NORAIR IN CALIFORNIA. CERTIFICATES OF SETTLEMENT OF CLAIMS OF CARRIERS' FOR LOSS AND DAMAGE OFTEN INVOLVE RESOLUTION OF DOUBTFUL ISSUES OF FACT RESPECTING A CARRIER'S LIABILITY AND THEREFORE REVIEW OF SUCH SETTLEMENTS AT THE REQUEST OF THE ADMINISTRATIVE OFFICER AS DISTINGUISHED FROM THE CARRIER IS GENERALLY NOT IN INTEREST OF GOVT. AND SHOULD NOT BE REQUESTED. HOWEVER, IN VIEW OF NEED FOR GUIDELINES AND FACT THAT ADMINISTRATIVE VIEWS WOULD RESULT IN LARGER RECOVERY BY U.S. SETTLEMENT WILL BE REVIEWED. WHERE EVIDENCE WHICH WAS DEVELOPED AS RESULT OF CARRIERS' CLAIM FOR REFUND ON ACCOUNT OF CONCEALED DAMAGE ESTABLISHED PRIMA FACIE LIABILITY FOR DAMAGE, CARRIER MAY RECOVER. WITH RESPECT TO RELEASED VALUATION AGREEMENT NOTATION AND RELATED TENDER PROVISIONS IN CASE OF CONFLICT SEC. 22 QUOTATION APPLIES OVER OFFICIAL EXPRESS CLASSIFICATION. IN ABSENCE OF SPECIFIC PROVISION IN QUOTATION FOR PARTIAL LOSSES OR DAMAGES, RECOVERY IS LIMITED TO ACTUAL DAMAGES NOT TO EXCEED AGREED VALUE PER POUND OF THAT PART OF SHIPMENT LOST OR DAMAGED. NOTHING IN DECISION SHOULD BE CONSTRUED AS APPROVAL OF USE OF EXPRESS FOR HEAVY TRANSCONTINENTAL SHIPMENT SINCE OTHER TRANSPORTATION MIGHT HAVE BEEN BOTH MORE ECONOMICAL AND RESULTED IN GREATER PROTECTION FROM LOSS OR DAMAGE.

TO HEADQUARTERS AIR FORCE ACCOUNTING AND FINANCE CENTER:

YOUR LETTER OF JANUARY 13, 1967, FILE AGF GB/L B-8913606, AND SUBSEQUENT CORRESPONDENCE REQUEST RECONSIDERATION OF OUR TRANSPORTATION DIVISION'S SETTLEMENT TK-822918 OF THE CLAIM OF REA EXPRESS, 612 SOUTH CLINTON STREET, CHICAGO, ILLINOIS 60607, FOR REFUND OF A DEDUCTION OF $8,463.25 MADE BY ADMINISTRATIVE OFFSET FROM FUNDS OTHERWISE PAYABLE TO THE CARRIER BECAUSE OF DAMAGE TO AN INTERNAL COMBUSTION ENGINE, JET PROPULSION TYPE, WEIGHING 1,085 POUNDS, CONSIGNED FROM THE GENERAL ELECTRIC CO. (GE), WEST LYNN, MASSACHUSETTS, TO NORTHROP CORPORATION, NORAIR DIVISION (NORAIR), PALMDALE, CALIFORNIA, UNDER GOVERNMENT BILL OF LADING B-8913606, DATED JUNE 23, 1964. THE SETTLEMENT COMPUTED REA'S LIABILITY FOR THE DAMAGE AS $542.50 AND ALLOWED TO THAT CARRIER A REFUND OF $7,920.75, REPRESENTING THE DIFFERENCE BETWEEN THE AMOUNT OF THE LIABILITY SO DETERMINED AND THE SUM OF $8,463.25 WHICH HAD BEEN COLLECTED BY OFFSET.

YOUR LETTER INDICATES REVIEW OF THE SETTLEMENT IS DESIRED TO CLARIFY ITS BASIS FOR POSSIBLE USE WITH REA DAMAGE CLAIMS WHICH ARE PENDING ADJUSTMENT IN YOUR HEADQUARTERS OR MAY ARISE IN THE FUTURE, PARTICULARLY SINCE THE BASIS OF THE SETTLEMENT SEEMS TO BE AT VARIANCE WITH THE CONSTRUCTION BY THE MILITARY TRAFFIC MANAGEMENT AND TERMINAL SERVICE (MTMTS), SET OUT IN ITS FIRST INDORSEMENT OF JANUARY 6, 1967, OF CERTAIN RULES IN THE CARRIER'S CLASSIFICATION.

CERTIFICATES OF SETTLEMENT OF CLAIMS BY OUR TRANSPORTATION AND CLAIMS DIVISIONS DO NOT CONSTITUTE DECISIONS OF THE COMPTROLLER GENERAL AND ARE NOT TO BE CONSTRUED AS PRECEDENTS. MOREOVER, OUR REGULATIONS, 5 GAO MANUAL 6060, DO NOT PROVIDE SPECIFICALLY FOR REVIEW OF OUR SETTLEMENT CERTIFICATES AT THE REQUEST OF THE ADMINISTRATIVE OFFICE INVOLVED AS DISTINGUISHED FROM THE CLAIMANT. WE DO NOT FEEL THAT IT WOULD GENERALLY BE IN THE GOVERNMENT'S INTEREST FOR ADMINISTRATIVE OFFICES TO QUESTION OUR SETTLEMENTS OF CLAIMS INVOLVING CARRIERS' LIABILITY FOR LOSS AND DAMAGE, WHICH CLAIMS OFTEN INVOLVE THE RESOLUTION OF DOUBTFUL ISSUES OF FACT RESPECTING CARRIER'S LIABILITY. HOWEVER, IN VIEW OF THE STATED NEED OF YOUR HEADQUARTERS FOR FUTURE GUIDANCE AND SINCE THE VIEWS EXPRESSED IN THE CORRESPONDENCE FROM YOUR HEADQUARTERS FORWARDED HERE, IF PROPER, WOULD RESULT IN A LARGER RECOVERY BY THE UNITED STATES, WE WILL CONSIDER HEREINAFTER, AS REQUESTED, THE BASIS OF THE SETTLEMENT.

THE RECORD HERE RELATIVE TO THE CLAIM SHOWS A SHIPMENT OF 30,925 POUNDS OF INTERNAL COMBUSTION ENGINES AND PARTS WAS TENDERED BY GE TO REA EXPRESS AT WEST LYNN, MASSACHUSETTS, FOR DELIVERY TO NORAIR AT PALMDALE, CALIFORNIA, UNDER GOVERNMENT BILL OF LADING B-8913606 DATED JUNE 23, 1964. THE FRONT OF THE BILL OF LADING IS ANNOTATED TO SHOW THE SHIPMENT WAS MADE UNDER SECTION 22 QUOTATION 11-B AND BEARS A NOTATION "VNX $50.00 OR .50) POUNDS.' THE SHIPMENT WAS DELIVERED ON JULY 2, 1964, AT DESTINATION AND THE CARRIER WAS GIVEN A CLEAR RECEIPT. ON AUGUST 12, 1964, WHEN ONE OF THE HEAVY METAL CANS CONTAINING ONE OF THE ENGINES AND COMPRISING A PART OF THE SHIPMENT WAS OPENED, THE ENGINE WAS FOUND TO BE DAMAGED AND THE CARRIER WAS THEN PROMPTLY GIVEN NOTICE OF THE DAMAGE AND A JOINT INSPECTION WAS MADE ON AUGUST 17, 1964. THIS REPORT OF INSPECTION DISCLOSED THAT THE "ENGINE SUSPENSION FRAME (WAS) BENT OUT OF SHAPE FROM IMPACT OF UNKNOWN NATURE, ALLEGED DAMAGE TO BE CHECKED WHEN RETURNED TO FACTORY FOR CHECK OUT. OUTSIDE OF CAN SHOWED NO DAMAGE AT TIME OF DELIVERY.' THE NORAIR ENGINE MANAGER, NORTHROP NORAIR, PALMDALE FACILITY, REPORTED THAT "DIRT WAS FOUND ON INTER-LIP OF CAN (PACKED IN BOTTOM LID RIDGE). THE DIRT WAS ASPHALT AND LOOSE SOIL. NORTHROP PALMDALE FACILITY HAS ONLY HARD-TOP ASPHALT. WE CONCLUDED THE DIRT WOULD HAVE (TO HAVE) BEEN INFILTRATED AT THE PLACE ENGINE WAS DROPPED IN ORDER TO HAVE BEEN SO TIGHTLY PACKED INTO LID-RIDGE OF THE LID. THE BENT FRAME (INTERNAL SUSPENSION FRAME IN CAN) OF ENGINE CAN IS SHOWN IN PICTURES.'

A NOTATION DATED SEPTEMBER 30, 1964, WAS MADE ON THE REVERSE OF THE BILL OF LADING THAT "1 GENERAL ELECTRIC J-85-13 TURBOJET ENGINE DAMAGED, EXTENT TO BE DETERMINED AT REPAIR FACILITY. DAMAGE APPARENTLY CAUSED BY DROPPING IN TRANSIT.' THE ENGINE WAS RETURNED FROM PALMDALE, CALIFORNIA, TO GENERAL ELECTRIC AT ARKANSAS CITY, KANSAS, WHERE IT WAS REPAIRED AT A COST OF $8,271.45 AND $191.80 TRANSPORTATION COSTS WERE INCURRED INCIDENT TO ITS SHIPMENT TO AND RETURN FROM THE REPAIR FACILITY MAKING THE TOTAL DAMAGES $8,463.25, THE AMOUNT WHICH WAS RECOVERED BY OFFSET.

WHEN THE CLAIM OF REA EXPRESS FOR REFUND OF THE AMOUNT OF THE OFFSET ON ACCOUNT OF THE CONCEALED DAMAGE WAS RECEIVED HERE, CERTAIN EVIDENCE WAS DEVELOPED INDICATING THE ENGINE WAS INSPECTED BY GE PRIOR TO ITS BEING TENDERED TO REA EXPRESS FOR CARRIAGE AND IT WAS THEN IN GOOD CONDITION. ALSO, A STATEMENT WAS OBTAINED FROM NORAIR TO THE EFFECT THAT THE ENGINE WAS NOT DROPPED OR SUBJECTED TO ANY DAMAGE DURING THE PERIOD JULY 2 TO AUGUST 12, 1964. SUCH EVIDENCE WHEN CONSIDERED WITH THE BILL OF LADING RECORD WAS CONSIDERED PRIMA FACIE TO ESTABLISH CARRIER LIABILITY FOR THE DAMAGES. SEE MISSOURI PACIFIC RAILROAD CO. V. ELMORE AND STAHL, 377 U.S. 134 (1964). THE ONLY REMAINING QUESTION WAS THE EFFECT TO BE GIVEN THE RELEASED VALUATION AGREEMENT NOTATION UNDER THE BILL OF LADING AND RELATED TENDER.

THE REFERENCE ON THE BILL OF LADING TO SECTION 22 QUOTATION 11-B AND THE NOTATION AS TO THE RELEASED VALUATION MAKE IT APPARENT THAT THE SHIPMENT WAS MADE PURSUANT TO THE RELEASED VALUATION PROVISIONS OF SECTION 22 QUOTATION 11-B. ITEM 2 (C) OF THAT TENDER, EFFECTIVE JUNE 15, 1944, IN FORCE AT THE TIME THE SHIPMENT MOVED, PROVIDES "RATES AND CHARGES SHOWN IN THIS QUOTATION ARE BASED ON DECLARED OR RELEASED VALUE NOT EXCEEDING $50 FOR ANY SHIPMENT OF 100 POUNDS OR LESS OR NOT EXCEEDING 50 CENTS PER POUND, ACTUAL WEIGHT, FOR ANY SHIPMENT IN EXCESS OF 100 POUNDS * * *.' ITEM 4 OF THE SAME QUOTATION PROVIDES "EXCEPT AS PROVIDED HEREIN, TRAFFIC MOVING UNDER THIS QUOTATION IS SUBJECT TO THE RULES, CHARGES AND ALLOWANCES OF THE CURRENT OFFICIAL EXPRESS CLASSIFICATION, OR AS AMENDED. IN ANY CASE, WHERE CONFLICT OCCURS BETWEEN THIS QUOTATION AND THE OFFICIAL EXPRESS CLASSIFICATION, THE PROVISIONS OF THIS QUOTATION WILL APPLY.'

MTMTS, IN ITS 1ST INDORSEMENT OF JANUARY 6, 1967, TO THE COMMANDER OF THE AIR FORCE ACCOUNTING AND FINANCE CENTER, INTERPRETS TWO PROVISIONS OF THE THEN CURRENT OFFICIAL EXPRESS CLASSIFICATION 36 EFFECTIVE MARCH 1, 1956, WHICH READ AS FOLLOWS: RULE 9 (B) "IN CASE OF PARTIAL LOSS OR DAMAGE, THE EXPRESS COMPANY WILL BE LIABLE FOR THE ACTUAL VALUE OF GOODS LOST OR DAMAGED UP TO, BUT NOT EXCEEDING, THE TOTAL VALUE DECLARED AT THE TIME OF SHIPMENT.' RULE 13 VALUATION CHARGES

"/A) 1. RATES PUBLISHED IN TARIFFS GOVERNED BY THIS CLASSIFICATION, * * * ARE DEPENDENT UPON AND VARY WITH THE DECLARED OR RELEASED VALUE OF THE PROPERTY, AND * * * ARE BASED UPON PROPERTY DECLARED TO BE OF, OR RELEASED TO, A VALUE NOT EXCEEDING $50 FOR ANY SHIPMENT OF 100 POUNDS OR LESS, OR NOT EXCEEDING 50 CENTS PER POUND ACTUAL OR BILLING WEIGHT FOR ANY SHIPMENT IN EXCESS OF 100 POUNDS * * *.'

THE 1ST INDORSEMENT OF MTMTS AS TO THE EFFECT OF RULES 9 (B) AND 13 (A) OF THE CLASSIFICATION SAYS:

"THIS SERVICE INTERPRETS THE FOREGOING PROVISIONS OF THE REA EXPRESS CLASSIFICATION TO MEAN THAT THE MAXIMUM EXTENT OF CARRIER LIABILITY ON THIS SHIPMENT WOULD BE DETERMINED BY COMPUTING 50 CENTS X 30,925 LBS. EQUALS $15,462.50, SINCE THE SHIPMENT EXCEEDED 100 LBS. SINCE BASIC COMMUNICATION INDICATES THAT THE ACTUAL MEASURE OF INJURY AMOUNTED TO $8,271.45 IT IS THE OPINION OF THIS SERVICE THAT EXTENT OF CARRIER LIABILITY, IN THIS INSTANCE WOULD BE $8,271.45.'

IT SEEMS OBVIOUS THAT MTMTS WHEN IT PREPARED ITS 1ST INDORSEMENT HAD NOT BEEN INFORMED AND WAS UNAWARE OF THE $191.80 TRANSPORTATION COSTS INCIDENT TO SHIPMENT OF THE DAMAGED ENGINE TO AND RETURN FROM THE REPAIR FACILITY. ALSO, IT SEEMS CLEAR THAT IT DID NOT GIVE CONSIDERATION TO THE FACT THAT THE SHIPMENT MOVED UNDER A SECTION 22 QUOTATION AND THE EFFECT TO BE GIVEN TO ITS PROVISIONS (ITEMS 2 (C) AND 4 QUOTED ABOVE). ITS INTERPRETATION OF THE PROVISIONS OF THE REA CLASSIFICATION PROVISIONS TO THE EFFECT THAT REA LIABILITY IN CASE OF PARTIAL LOSS OR PARTIAL DAMAGE IS MEASURED BY THE ACTUAL DAMAGE NOT TO EXCEED 50 CENTS TIMES THE TOTAL WEIGHT OF THE ENTIRE SHIPMENT ACCORDINGLY IS NOT CONTROLLING IF THE LANGUAGE OF 2 (C) OF THE QUOTATION PRODUCES A DIFFERENT LIMIT OF LIABILITY SINCE IN THAT CASE THERE WOULD BE A CONFLICT BETWEEN THE QUOTATION AND THE EXPRESS CLASSIFICATION AND, UNDER ITEM 4 OF THE QUOTATION, THE PROVISIONS OF THE QUOTATION WILL APPLY. THUS, THERE MUST BE CONSIDERED WHETHER ITEM 2 (C) OF THE QUOTATION PRODUCES A DIFFERENT LIMIT OF LIABILITY.

THE LANGUAGE OF ITEM 2 (C) IS SUBSTANTIALLY SIMILAR TO THAT CONSIDERED BY THE INTERSTATE COMMERCE COMMISSION IN GOLDSTEIN AND LEAVY, INC. V. ARROW CARRIER CORP., 53 M.C.C. 9, INVOLVING THE REASONABLENESS OF A LIMITED LIABILITY RULE APPLYING WITH RELEASED VALUE RATES. THE WORDING OF THE LIABILITY RULE WAS SUBSTANTIALLY SIMILAR TO ITEM 2 (C) OF THE QUOTATION HERE INVOLVED. COMPLAINANT THERE ALLEGED THAT USE OF THE WORDS "ACTUAL WEIGHT" UNREASONABLY RESTRICTED RECOVERY TO THE WEIGHT OF THE PARTIAL LOSS AND THAT RECOVERY SHOULD BE PERMITTED UP TO AN AMOUNT COMPUTED ON THE WEIGHT OF THE ENTIRE SHIPMENT AT 50 CENTS PER POUND. IN HOLDING THAT THE USE OF THE WORDS "ACTUAL WEIGHT" WAS NOT SHOWN TO BE AN UNREASONABLE PRACTICE, THE COMMISSION EXPRESSED THE VIEW THAT WHETHER OR NOT THE WORDS "ACTUAL WEIGHT" WERE USED, IT WAS DOUBTFUL IF THE COMPLAINANT COULD RECOVER MORE THAN 50 CENTS PER POUND ON THE ACTUAL WEIGHT OF THE PARTIAL LOSS. A LIKE FINDING WAS MADE IN ADELINE APPAREL SHOPS, INC. V. SAVAGE TRUCK LINES, INC., 63 M.C.C. 369.

REFERENCE WAS MADE IN THOSE DECISIONS TO THE HOLDING IN CHENANGO TEXTILE CORPORATION V. WILLOCK, 288 N.Y.S. 270, WHEREIN ON PAGE 274 IT IS STATED: "THE LAW IS FIRMLY GROUNDED THAT IN CASES WHERE A CONTRACT OF CARRIAGE FIXES THE VALUE OF A SHIPMENT AT SO MUCH PER POUND, PER HUNDREDWEIGHT, PER TON, OR AT SOME OTHER UNIT OF WEIGHT OR MEASURE AND THE RATE IS CALCULATED UPON SUCH AGREED VALUE, THE RECOVERY, IN CASE OF PARTIAL LOSS, IS LIMITED TO THE AGREED VALUE, PER UNIT, OF THAT PART OF THE SHIPMENT WHICH WAS LOST, FOR THE CONSIGNOR IS ESTOPPED FROM ASSERTING ANY UNIT TO HAVE A GREATER VALUE THAN THE PER UNIT VALUE DECLARED.' SEE ALSO WESTERN TRANSIT CO. V. LESLIE AND CO., 242 U.S. 448; KANSAS CITY SOUTHERN RY. V. CARL, 227 U.S. 639, 656; WHITE V. SOUTHERN RY., 38 S.E. 2D 111, 121; GULF, COLORADO AND S.F. RY. V. MCCANDLESS, 190 S.W. 2D 185, 186-187. COMPARE ZIMMERMAN V. ALLIED VAN LINES, 317 F.2D 72, CERTIORARI DENIED 375 U.S. 930; PORTER V. RAILWAY EXPRESS, 155 N.E. 2D 528, 532; INVOLVING LIABILITY LIMITATIONS BASED ON THE RELEASED VALUE PER SHIPMENT.

IT IS OUR VIEW THAT THE WORDS "ACTUAL WEIGHT" IN ITEM 2 (C) WERE INSERTED TO MAKE CLEAR THAT THE 50 CENT PER POUND LIMITATION APPLIES TO THE ACTUAL WEIGHT RATHER THAN THE BILLING WEIGHT WHICH MAY BE HIGHER, THE SAME CHARGES UNDER THE QUOTATION APPLYING IN SOME CASES AT LEAST TO SHIPMENTS WEIGHING BETWEEN CERTAIN SPECIFIED WEIGHTS AS FOR EXAMPLE SHIPMENTS RANGING BETWEEN 150 AND 300 POUNDS. THERE IS NOTHING IN THE QUOTATION ITEM MAKING SPECIFIC PROVISION FOR PARTIAL LOSSES OR PARTIAL DAMAGES AND IT IS OUR VIEW THAT UNDER THE COURT CASES CITED, RECOVERY THEREUNDER IN CASE OF PARTIAL LOSS IS LIMITED TO THE ACTUAL DAMAGES NOT TO EXCEED THE AGREED VALUE PER POUND OF THAT PART OF THE SHIPMENT WHICH WAS LOST OR DAMAGED. THE PROVISIONS OF ITEM 4 OF THE QUOTATION MAKING PARAMOUNT THE QUOTATION PROVISIONS OVER CONFLICTING PROVISIONS OF THE OFFICIAL EXPRESS CLASSIFICATION PRECLUDE THE PROVISIONS OF THE CLASSIFICATION REFERRED TO IN THE MTMTS MEMORANDUM FROM HAVING EFFECT AND MAKE THE COMPUTATION OF DAMAGES DEPEND SOLELY ON RULE 2 (C) OF THE QUOTATION AND THE RULE QUOTED ABOVE FROM THE CHENANGO CASE AND APPLIED IN THE CITED COURT CASES CONSTRUING LIMITATIONS PER UNIT OF WEIGHT OR MEASURE IN PARTIAL LOSS AND PARTIAL DAMAGE CASES. THE SETTLEMENT MADE ON THAT BASIS ACCORDINGLY APPEARS CORRECT AND IS SUSTAINED.

NOTHING HEREIN SHOULD BE CONSTRUED AS INDICATING APPROVAL OF THE USE OF EXPRESS FOR SUCH A HEAVY TRANSCONTINENTAL SHIPMENT AS HERE INVOLVED, IT APPEARING LIKELY THAT OTHER MEANS OF TRANSPORTATION WOULD HAVE BEEN BOTH MORE ECONOMICAL AND WOULD HAVE RESULTED IN GREATER PROTECTION TO THE UNITED STATES SO FAR AS LOSS AND DAMAGES ARE CONCERNED. ALSO, SINCE THE SETTLEMENT IS BASED UPON THE LANGUAGE OF THE SECTION 22 QUOTATION AND REA CLASSIFICATION IN EFFECT AT THE TIME THE SHIPMENT MOVED, CARE SHOULD BE TAKEN BEFORE APPLYING WHAT IS SAID HEREIN TO OTHER LOSS AND DAMAGE CLAIMS.