B-164646, NOVEMBER 26, 1968, 48 COMP. GEN. 361

B-164646: Nov 26, 1968

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VEHICLES - CHARTER COACH SERVICE - DAMAGE LIABILITY OF GOVERNMENT ASSUMPTION BY THE SELECTIVE SERVICE SYSTEM OF LIABILITY FOR DAMAGES TO MOTOR VEHICLES BY REGISTRANTS WHO WHEN ORDERED FOR PHYSICAL EXAMINATIONS OR FOR INDUCTION BY LOCAL BOARDS ARE TRANSPORTED IN CHARTER COACH SERVICE IS NOT PRECLUDED BECAUSE THE SYSTEM LACKS EXPRESS AUTHORITY TO CONTRACT FOR LIABILITY. THE TERMS OF CHARTER CERTIFICATES FURNISHED WHEN SERVICE IS USED INCORPORATING INTO THE CONTRACT BY REFERENCE THE INDEMNITY PROVISION OF CARRIERS' CHARTER COACH TARIFFS. 1968: FURTHER REFERENCE IS MADE TO YOUR LETTER OF JUNE 20. RECENTLY CLAIMS HAVE BEEN RECEIVED FROM MOTOR CARRIERS FOR COMPENSATION FOR DAMAGES TO VEHICLES CAUSED BY REGISTRANTS WHO HAVE BEEN TRANSPORTED IN CHARTER COACH SERVICE FOR THE SYSTEM.

B-164646, NOVEMBER 26, 1968, 48 COMP. GEN. 361

VEHICLES - CHARTER COACH SERVICE - DAMAGE LIABILITY OF GOVERNMENT ASSUMPTION BY THE SELECTIVE SERVICE SYSTEM OF LIABILITY FOR DAMAGES TO MOTOR VEHICLES BY REGISTRANTS WHO WHEN ORDERED FOR PHYSICAL EXAMINATIONS OR FOR INDUCTION BY LOCAL BOARDS ARE TRANSPORTED IN CHARTER COACH SERVICE IS NOT PRECLUDED BECAUSE THE SYSTEM LACKS EXPRESS AUTHORITY TO CONTRACT FOR LIABILITY, APPROPRIATIONS FOR THE OPERATION AND MAINTENANCE OF THE SYSTEM PROVIDING AUTHORITY TO CONTRACT FOR THE TRAVEL OF SELECTEES WITH NO EXPRESS LIMITATION PLACED ON SUCH AUTHORITY IN THE APPROPRIATION ACTS OR IN THE UNIVERSAL MILITARY TRAINING AND SERVICE ACT. NOR DOES THE FACT THAT THE SERVICE CONTRACTS DO NOT EXPRESSLY PROVIDE FOR LIABILITY PRECLUDE THE PAYMENT OF DAMAGE CLAIMS, THE TERMS OF CHARTER CERTIFICATES FURNISHED WHEN SERVICE IS USED INCORPORATING INTO THE CONTRACT BY REFERENCE THE INDEMNITY PROVISION OF CARRIERS' CHARTER COACH TARIFFS.

TO THE DIRECTOR, SELECTIVE SERVICE SYSTEM, NOVEMBER 26, 1968:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF JUNE 20, 1968, CONCERNING THE QUESTION OF THE LIABILITY OF THE SELECTIVE SERVICE SYSTEM (SYSTEM) FOR DAMAGES TO MOTOR VEHICLES CAUSED BY REGISTRANTS TRANSPORTED IN CHARTER COACH SERVICE FOR THE SYSTEM.

YOU STATE THAT IT HAS BEEN A PRACTICE OF LONG STANDING TO ENTER INTO WRITTEN AGREEMENTS WITH MOTOR CARRIERS OR THEIR REPRESENTATIVES FOR THE TRANSPORTATION OF REGISTRANTS ORDERED FOR PHYSICAL EXAMINATION OR FOR INDUCTION BY SELECTIVE SERVICE LOCAL BOARDS. RECENTLY CLAIMS HAVE BEEN RECEIVED FROM MOTOR CARRIERS FOR COMPENSATION FOR DAMAGES TO VEHICLES CAUSED BY REGISTRANTS WHO HAVE BEEN TRANSPORTED IN CHARTER COACH SERVICE FOR THE SYSTEM. YOU REQUEST OUR CONSIDERATION OF THE QUESTION OF THE LIABILITY OF THE SYSTEM FOR CLAIMS OF THIS KIND AND OUR DECISION WHETHER PAYMENT SHOULD BE MADE FOR SUCH DAMAGES IN ANY OTHERWISE PROPER CASE.

THE NATIONAL MILITARY BUS BUREAU, REPRESENTING A NUMBER OF PARTICIPATING MOTOR CARRIERS, IN A LETTER DATED MAY 10, 1968, COPY FURNISHED WITH YOUR LETTER, CONTENDS THAT THE SYSTEM IS LIABLE FOR THE DAMAGES AS A "CHARTER PARTY" UNDER THE PROVISIONS OF THE CHARTER COACH TARIFFS, PUBLISHED PURSUANT TO FEDERAL AND STATE LAW, AND THE CONTRACT OF CARRIAGE.

YOU REPORT THAT SELECTEE PASSENGER AGREEMENT NO. 3, THE CURRENT CONTRACT BETWEEN THE SYSTEM AND THE NATIONAL MILITARY BUS BUREAU, COPY ALSO FURNISHED WITH YOUR LETTER, DOES NOT CONTAIN ANY SPECIFIC PROVISION WHICH WOULD MAKE THE SYSTEM LIABLE FOR DAMAGES AS A "CHARTER PARTY," AND FURTHER, THAT THE SYSTEM HAS NOT BEEN GIVEN ANY AUTHORITY BY STATUTE TO CONTRACT FOR THE ASSUMPTION OF LIABILITY FOR DAMAGES AS A "CHARTER PARTY," AND EXPRESS THE VIEW THAT, IN THE ABSENCE OF SUCH AUTHORITY, THE SYSTEM IS NOT LIABLE FOR THOSE DAMAGES.

WHILE, AS STATED BY YOU, SELECTEE PASSENGER AGREEMENT NO. 3 DOES NOT CONTAIN EXPRESS WORDS DECLARING THAT THE SYSTEM AGREES TO BE LIABLE FOR SUCH DAMAGES, IT DOES PROVIDE IN PART III, PARAGRAPH 3, THAT A MILITARY CHARTER COACH CERTIFICATE, SIGNED BY THE AUTHORIZED OFFICER OR REPRESENTATIVE OF THE SYSTEM, WILL BE FURNISHED WHEN CHARTER COACH SERVICE IS USED. THE CHARTER CERTIFICATE THEREBY FORMS PART OF THE CONTRACT OF TRANSPORTATION. A PROVISION ON THE REVERSE OF THE CHARTER CERTIFICATE, FORM NBTA-3 REV. 5-65 STATES: IT IS UNDERSTOOD AND AGREED THAT THE PERFORMANCE OF THE SERVICE DETAILED IN THIS CERTIFICATE IS SUBJECT TO ALL APPLICABLE TARIFF PROVISIONS AND SUCH OTHER ARRANGEMENTS AS MAY BE AGREED UPON NOT CONTRARY TO PERTINENT TARIFF RULES AND REGULATIONS. THIS PROVISION INCORPORATES INTO THE CONTRACT BY REFERENCE THE PROVISIONS OF THE CARRIERS' CHARTER COACH TARIFFS. ALL MOTOR CARRIER CHARTER COACH TARIFFS TO WHICH OUR ATTENTION HAS BEEN DIRECTED CONTAIN AN INDEMNITY PROVISION READING SUBSTANTIALLY AS FOLLOWS:

EACH VEHICLE ASSIGNED FOR CHARTER SERVICE WILL BE IN GOOD CONDITION, INCLUDING THE CONDITION OF WINDOW GLASS AND SEATS. ANY DAMAGE TO THE VEHICLE CAUSED BY THE "CHARTER PARTY" WILL BE CHARGED BY THE CARRIER TO THE "CHARTER PARTY.' SEE RULE 10, SOUTHEASTERN CHARTER COACH TARIFF NO. A -436-B, MP-I.C.C. NO. 1678; RULE 10, NORTHEASTERN CHARTER COACH TARIFF NO. A-285-C, MP-I.C.C. 885; RULE 10, CHARTER COACH TARIFF A 290, NATIONAL BUS TRAFFIC ASSOCIATION, INC., AGENT, MP-I.C.C. 799; AND RULE 9, CAPITAL MOTOR LINES CHARTER COACH TARIFF NO. 12. THEREFORE, ASSUMING THE CHARTER CERTIFICATE REFERRED TO ABOVE WAS EXECUTED WITHOUT BEING ALTERED IN ANY WAY, THE CONTRACT BETWEEN THE SYSTEM AND THE CARRIERS DOES OBLIGATE THE SYSTEM FOR ANY DAMAGE TO THE VEHICLE, ORDINARY WEAR AND TEAR EXCEPTED, UNLESS THAT CONTRACT IS UNAUTHORIZED.

THE BASIC STATUTE, NOW CALLED THE MILITARY SELECTIVE SERVICE ACT OF 1967, APPROVED JUNE 24, 1948, CH. 625, 62 STAT. 604 AT 618, AS AMENDED, 50 U.S.C. APP. 451 AT 460, CREATING THE SYSTEM, IS SILENT CONCERNING THE TRANSPORTATION OF SELECTEES. HOWEVER, THE APPROPRIATION ACTS FROM THE FIRST HAVE PROVIDED FUNDS UNDER LANGUAGE READING SUBSTANTIALLY LIKE THIS:

SALARIES AND EXPENSES: FOR EXPENSES NECESSARY FOR THE OPERATION AND MAINTENANCE OF THE SELECTIVE SERVICE SYSTEM * * *. SEE, FOR EXAMPLE, THE SECOND DEFICIENCY APPROPRIATION ACT, 1948, APPROVED JUNE 25, 1948, CH. 658, 62 STAT. 1027, 1035, AND THE INDEPENDENT OFFICES AND DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT APPROPRIATION ACT, 1968, APPROVED NOVEMBER 3, 1967, PUBLIC LAW 90-121, 81 STAT. 341, 350. AS SHOWN IN THE HEARINGS ON THE BILL WHICH BECAME THE INDEPENDENT OFFICES APPROPRIATION ACT, 1965, APPROVED AUGUST 30, 1964, PUBLIC LAW 88-507, 78 STAT. 640, 659, THE COST OF THE TRANSPORTATION OF SELECTEES IS COVERED UNDER THIS GENERAL FUND. SEE HEARINGS BEFORE THE SUBCOMMITTEE OF THE SENATE COMMITTEE ON APPROPRIATIONS ON H.R. 11296, 88TH CONG. 2D SESS., PAGE 616, ITEM 21, AND HEARINGS BEFORE A SUBCOMMITTEE OF THE HOUSE COMMITTEE ON APPROPRIATIONS, 88TH CONG., 2D SESS., PAGE 1009. FROM THIS PROVISION THE AUTHORITY TO CONTRACT FOR THE TRAVEL OF SELECTEES IS DERIVED. AND WE FIND NO EXPRESS LIMITATION ON THIS AUTHORITY EITHER IN THE APPROPRIATION ACTS OR IN THE UNIVERSAL MILITARY TRAINING AND SERVICE ACT.

UNDER SIMILAR CIRCUMSTANCES THE COURTS HAVE HELD, IN PASSING ON THE AUTHORITY OF GOVERNMENT AGENTS TO AGREE BY CONTRACT TO LIMITATIONS OF TIME ON THE ASSERTION OF CLAIMS BY THE GOVERNMENT, THAT THE AUTHORITY TO CONTRACT, IN THE ABSENCE OF EXPRESS LIMITATION, INCLUDES AUTHORITY TO AGREE TO THE CUSTOMARY PROVISIONS. UNITED STATES V CHICAGO, ROCK ISLAND AND PACIFIC RAILROAD CO., 200 F.2D 263 (1952); UNITED STATES V SEABOARD AIR LINE RY. CO., 22 F.2D 113 (1927); DELAWARE, L.-AND-W. RAILROAD CO. V UNITED STATES, 123 F.SUPP. 579 (1954); GRACE LINE V UNITED STATES, 144 F.SUPP. 548 (1956), AFFIRMED 255 F.2D 810 (1958); UNITED STATES V THE SOUTH STAR, 115 F.SUPP. 102 (1953), AFFIRMED 210 F.2D 44 (1954).

ALSO, IN A CASE SUBSTANTIALLY SIMILAR TO THIS ONE, WE HELD, AMONG OTHER THINGS, THAT AUTHORITY IN A FEDERAL AVIATION AGENCY APPROPRIATION ACT TO HIRE PASSENGER MOTOR VEHICLES AND AIRCRAFT INCLUDED AUTHORITY TO USE IN THE PROCUREMENT DOCUMENTS AN INDEMNITY PROVISION PROVIDING FOR RETURN OF THE EQUIPMENT TO THE OWNER IN THE SAME CONDITION AS RECEIVED, ORDINARY WEAR AND TEAR EXCEPTED. 42 COMP. GEN. 708 (1963).

THEREFORE, IN THE ABSENCE OF EXPRESS STATUTORY LIMITATION, AND SINCE THE AMOUNT OF THE POTENTIAL LIABILITY IS OF NECESSITY LIMITED TO THE VALUE OF THE MOTOR CARRIER'S EQUIPMENT AND IS NOT INDEFINITE OR UNLIMITED (CF. 7 COMP. GEN. 507 (1928); 16 ID. 803 (1937) (, WE CONCLUDE THAT THE DIRECTOR OF THE SYSTEM HAS AUTHORITY TO AGREE TO AN INDEMNITY PROVISION LIKE THE ONE QUOTED ABOVE WHICH APPEARS TO BE A STANDARD PROVISION IN ALL MOTOR CARRIER CHARTER COACH TARIFFS.

WE NOTE, HOWEVER, THAT THE PRESIDENT IS AUTHORIZED BY THE BASIC STATUTE "* * * TO PRESCRIBE THE NECESSARY RULES AND REGULATIONS TO CARRY OUT THE PROVISIONS OF THIS TITLE.' SECTION 10 (B) (1) OF THE UNIVERSAL MILITARY TRAINING AND SERVICE ACT, 62 STAT. 619, 50 U.S.C. APP. 460 (B) (1). THIS AUTHORITY WAS DELEGATED TO THE DIRECTOR OF THE SYSTEM BY EXECUTIVE ORDER NO. 9979, JULY 22, 1948, 13 FED. REG. 4177, AS AMENDED. PURSUANT TO THIS AUTHORITY THE SYSTEM HAS PROMULGATED THE SELECTIVE SERVICE SYSTEM FISCAL AND PROCUREMENT MANUAL, PART 3, TRAVEL. BY A REVISION TO SECTION 3.51 (J) (1), PAGE 3-38, DATED OCTOBER 1, 1967, THE MANUAL PROVIDES:

* * * SINCE THE SELECTIVE SERVICE SYSTEM HAS NO SPECIFIC AUTHORIZATION TO PAY FOR DAMAGE CAUSED BY A REGISTRANT WHILE PERFORMING TRAVEL INCIDENT TO HIS SELECTIVE SERVICE OBLIGATIONS, ANY STATEMENT IN A CHARTER FORM WHICH REQUIRES SUCH A PAYMENT SHALL BE DELETED FROM THE FORM PRIOR TO ITS EXECUTION.

THE OBVIOUS PURPOSE OF THIS REVISION TO THE REGULATION IS TO PREVENT AGREEMENT TO BE LIABLE FOR THE DAMAGES IN QUESTION. HOWEVER, THE REGULATION IS DIRECTED TO THE PERSONNEL OF THE SYSTEM, NOT TO THE CARRIERS, IS TO OUR KNOWLEDGE NOT PUBLISHED IN THE FEDERAL REGISTER, AND, IN FACT, DIRECTS THE PERFORMANCE OF AN ACT NOT POSSIBLE UNDER THE PRESENT STRUCTURE OF THE TRANSPORTATION CONTRACT, SINCE THERE IS NO PROVISION IN THE CHARTER CERTIFICATE WHICH, IN SO MANY WORDS, MAKES THE SYSTEM LIABLE FOR THE DAMAGES IN QUESTION. THE EXPRESS PROVISION IS CONTAINED IN THE SEVERAL CARRIERS' TARIFFS AND IS INCORPORATED BY GENERAL REFERENCE INTO THE CHARTER CERTIFICATE.

WHILE THE DIRECTOR OF THE SYSTEM HAS THE AUTHORITY TO LIMIT BY REGULATION THE AUTHORITY OF THE SYSTEM'S CONTRACTING OFFICERS, WE DO NOT BELIEVE THAT THE REVISION TO SECTIONS 3.51 (J) (1) IS EFFECTIVE FOR THAT PURPOSE.

THE NATIONAL MILITARY BUS BUREAU, IN ITS LETTER OF MAY 10, 1968, SEEMS TO INDICATE ITS WILLINGNESS TO EXAMINE THE INDEMNITY QUESTION AND TO CONSIDER MAKING APPROPRIATE AMENDMENTS TO THE CURRENT SELECTEE PASSENGER AGREEMENT. WHETHER SUCH AN AMENDMENT COULD BE NEGOTIATED WITHOUT PROVIDING INCREASES IN THE CHARTER HIRE TO BE PAID THE CARRIERS OR DESPITE SUCH POSSIBLE INCREASES THE BEST INTERESTS OF THE SYSTEM AND OF THE UNITED STATES WOULD THEREBY BE SERVED, APPEAR TO BE MATTERS FOR YOUR CONSIDERATION.

HOWEVER, ASSUMING THE APPLICABLE TARIFF CONTAINS AN INDEMNITY PROVISION SUBSTANTIALLY AS SET OUT ABOVE AND THAT THE CHARTER CERTIFICATE REFERRED TO ABOVE WITHOUT ALTERATION IN THAT REGARD WAS EXECUTED, IT IS OUR VIEW THAT CLAIMS FROM MOTOR CARRIERS FOR COMPENSATION FOR DAMAGES TO VEHICLES CAUSED BY REGISTRANTS WHO HAVE BEEN TRANSPORTED IN CHARTER COACH SERVICE FOR THE SYSTEM, IN ANY OTHERWISE PROPER CASE, ARE REQUIRED TO BE ALLOWED AND PAID.