B-169175 May 23, 1972

B-169175: May 23, 1972

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Was certified to be indebted to the United States for $17. CNA's liability is limited to the maximum amount of $10. The debtor and surety were fully advised of the matter but the amounts indicated have not been refunded. The Government's claim is referred to you for collection from CNA of $10. Royal was an unregulated freight forwarder. The Government's right of action is subject to the 6-year period of limitations provided in 28 U.S.C. 2415. Each claim for loss and damages is supported with factual evidence establishing a prima facie case of carrier liability. Because the debt was not established until after May 24. The debts owed the United States were not listed in the bankruptcy petition.

B-169175 May 23, 1972

The Honorable Harlington Wood, Jr. Acting Assistant Attorney General Civil Division Department of Justice

Dear Mr. Wood:

Subject: Claim against Continental Casualty Company, surety for Royal Household Goods Shipping, Inc., for $17,757.49 for excess transportation charges and loss and damage on shipments of household goods.

By two United States General Accounting Office Certificates in Indebtedness dated February 10, 1972, two copies of each enclosed, Continental Casualty Company (CNA), as surety for Royal Household Goods Shipping, Inc. (Royal), now bankrupt, under performance bond No. 2211003, issued July 14, 1961, was certified to be indebted to the United States for $17,757.49, representing $11,629.12 for excess transportation charges and $6,128.37, an expense incurred by the United States incident to loss and damage claims on shipments of household goods moving during the years 1963 through 1967. Bond No. 2211003, two copies enclosed, covered the entire time the shipment moved, but CNA's liability is limited to the maximum amount of $10,000.

The debtor and surety were fully advised of the matter but the amounts indicated have not been refunded. Accordingly, the Government's claim is referred to you for collection from CNA of $10,000 of the amount certified plus interest from February 10, 1972. See 50 Am. Jur., Suretyship 217; United States v. United States Fidelity & Guaranty Co., 236 U.S. 512, 530 (1915), and United States v. Quinn, 122 Fed. 65 (1903).

Royal was an unregulated freight forwarder, exempt from regulation under the Interstate Commerce Act. Therefore, the Government's right of action is subject to the 6-year period of limitations provided in 28 U.S.C. 2415.

The overcharge arose by reason of Royal's failure to compute its charges in conformity with the lowest rates applicable in duly published tenders as set forth on our notices of overcharges, Forms 1003. Each claim for loss and damages is supported with factual evidence establishing a prima facie case of carrier liability.

We also enclose a check list indicating the action we took under the Federal Claims Collection Act of 1966, Public Law 89-508, 80 Stat. 308, 31 U.S.C. 951. A credit report relative to Royal's financial standing has not been obtained since the debtor-carrier filed in bankruptcy on October 24, 1967. Because the debt was not established until after May 24, 1968, the last day fixed for the filing of claims in that proceeding, the debts owed the United States were not listed in the bankruptcy petition, thereby necessitating recovery action against the surety.

It, therefore, appears necessary to institute suit to recover the amount due from the surety. The amount certified due from CNA in the excess of the $10,000 limitation of the bond and the amount which may be barred from suit byt he 6-year period of limitations might be entered under the blanket counterclaims filed by the United States in the suits brought by Royal, Court of Claims No. 220-66, 256-67, 293-68, 245-69, and 309-71. We note that Government bill of lading No. B-8462864, which covers the overcharge of $81.69 listed on the second page of the February 10, 1972, Certificate of indebtedness against CNA, is involved in Court of Claims No. 220-66.

We will upon request, furnish any additional information or documents available here which may be required for the preparation of a complaint.

Sincerely yours,

M. J. NEVINS Assistant General Counsel

Enclosures