B-169285, FEB 24, 1971

B-169285: Feb 24, 1971

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IS LIABLE FOR THE FULL EXTENT OF DAMAGES TO A JET ENGINE SHIPPED AT RELEASED VALUE FROM LORING AIR FORCE BASE. RECOVERY FOR DAMAGES WHEN GOODS ARE SHIPPED AT RELEASED VALUE IS LIMITED TO THE AGREED VALUE AND NO RECOVERY OF THE EXCESS MAY BE HAD. SINCE THE RELEASED VALUE OF THE JET ENGINE WAS $11. 265.40 ARE RECOVERABLE IN FULL AND NOT LIMITED. S. DUBREY F/B 03-784832 (DUBREY) F/B C 788696 (COAKLEY) WE HAVE CONSIDERED YOUR LETTER OF JANUARY 6. YOUR OBJECTION IS NOT TO THE ASSUMPTION OF LIABILITY NOR TO THE COST OF REPAIRS. BILL OF LADING C-6452480 WAS ISSUED AUGUST 11. THE ENGINE WAS DELIVERED IN A DAMAGED CONDITION AT DESTINATION ON AUGUST 17. TO SHOW THAT THE ENGINE WAS DAMAGED WHEN RECEIVED FROM P.

B-169285, FEB 24, 1971

TRANSPORTATION CHARGES - DAMAGE IN TRANSIT - RELEASED VALUE DECISION HOLDING THAT NELSON FREIGHTWAYS, INC., IS LIABLE FOR THE FULL EXTENT OF DAMAGES TO A JET ENGINE SHIPPED AT RELEASED VALUE FROM LORING AIR FORCE BASE, MAINE, TO PLATTSBURGH AIR FORCE BASE, NEW YORK. RECOVERY FOR DAMAGES WHEN GOODS ARE SHIPPED AT RELEASED VALUE IS LIMITED TO THE AGREED VALUE AND NO RECOVERY OF THE EXCESS MAY BE HAD. THEREFORE, SINCE THE RELEASED VALUE OF THE JET ENGINE WAS $11,460, THE DAMAGES OF $1,265.40 ARE RECOVERABLE IN FULL AND NOT LIMITED, AS THE CARRIER CONTENDS, TO A PROPORTIONATE SHARE BASED ON THE RATIO OF THE RELEASED VALUE TO THE ACTUAL VALUE.

TO NELSON FREIGHTWAYS, INC.:

SUBJECT: REPAIRS TO DAMAGED ENGINE - $1,267.40. YOUR CLAIM FILE C-6 452- 480 P. D. COAKLEY C/O P. S. DUBREY F/B 03-784832 (DUBREY) F/B C 788696 (COAKLEY)

WE HAVE CONSIDERED YOUR LETTER OF JANUARY 6, 1971, AND EARLIER CORRESPONDENCE, IN WHICH YOU PROTESTED COLLECTION OF THE GOVERNMENT'S CLAIM FOR REPAIRS TO A JET ENGINE SHIPPED AT A RELEASED VALUE AND DAMAGED IN TRANSIT. YOUR OBJECTION IS NOT TO THE ASSUMPTION OF LIABILITY NOR TO THE COST OF REPAIRS, BUT RATHER TO BEING CHARGED WITH LIABILITY FOR THE FULL AMOUNT OF THE DAMAGES. YOU URGE THAT THE EXTENT OF YOUR LIABILITY RUNS ONLY TO THAT PROPORTION OF THE REPAIR COSTS DETERMINED BY THE RATIO BETWEEN THE RELEASED VALUE AND THE ACTUAL VALUE. IN THE CIRCUMSTANCES OF THIS CASE, WE DISAGREE.

BILL OF LADING C-6452480 WAS ISSUED AUGUST 11, 1966, TO COVER A SHIPMENT DESCRIBED AS "1 RT ENGINE INTERNAL COMBUSTION NOI (JET PROPULSION TYPE J57/43WB) RELEASED TO VALUE NOT EXC $2.50 PER POUND. ACFT TYPE J57/43WB SER NR P 627098," WEIGHING 4,584 POUNDS, FROM LORING AIR FORCE BASE, MAINE TO PLATTSBURGH AIR FORCE BASE, NEW YORK, VIA P. D. COAKLEY MOTOR TRANSPORTATION, INC., AND NECESSARY CONNECTIONS. THE ENGINE WAS DELIVERED IN A DAMAGED CONDITION AT DESTINATION ON AUGUST 17, 1966, BY P. S. DUBREY TRUCKING COMPANY, WHICH HAD NOTED ITS FREIGHT BILL, PRO NO. 03-784832, TO SHOW THAT THE ENGINE WAS DAMAGED WHEN RECEIVED FROM P. D. COAKLEY. THE DELIVERING CARRIER BILLED AND COLLECTED FREIGHT CHARGES OF $205.82 BASED UPON THE LESS TRUCKLOAD CLASS 85 RATING NAMED IN ITEM 120820, SUB 1, NATIONAL MOTOR FREIGHT CLASSIFICATION A-8, MF-I.C.C. 7.

THE DAMAGED ENGINE WAS REPAIRED AT A COST OF $1,267.40; EFFORTS WERE MADE TO COLLECT THAT AMOUNT FROM THE CARRIERS. YOU ASSUMED THE INITIAL CARRIER'S LIABILITY AND, AFTER AN EXCHANGE OF CORRESPONDENCE WITH YOU, OUR TRANSPORTATION DIVISION COLLECTED THE DAMAGES BY DEDUCTION. YOUR PROTEST, GROUNDED UPON YOUR CONTENTION THAT THE RELEASED VALUE MAKES YOU LIABLE ONLY FOR A PROPORTIONATE SHARE OF THE DAMAGES, FOLLOWED THAT ACTION. YOU WOULD LIMIT THE GOVERNMENT'S RECOVERY TO $50.70, 4 PERCENT OF THE REPAIR COSTS, WHICH IS ALMOST THE FACTOR DERIVED FROM DIVIDING THE RELEASED VALUE ($11,460) BY THE ACTUAL VALUE ($228,511). BUT SUCH AN ADJUSTMENT IS NOT AUTHORIZED BY THE TRANSPORTATION CONTRACT.

TO SET THIS QUESTION IN ITS PROPER CONTEXT, WE MUST RESORT TO THE FACTS OF THE SHIPMENT AND TO THE TRANSPORTATION CONTRACT, AS REPRESENTED BY THE GOVERNMENT BILL OF LADING, TOGETHER WITH THE GOVERNING CLASSIFICATION. THE TERMS AND CONDITIONS OF THE CONTRACT AND THE CLASSIFICATION DETERMINE THE EXTENT OF LIABILITY FOR LOSS AND DAMAGE IN TRANSIT TO GOODS SHIPPED AT A RELEASED VALUATION. HERE, ONE JET ENGINE-WEIGHING 4,584 POUNDS MOVED ON A GOVERNMENT BILL OF LADING "AT THE RESTRICTED OR LIMITED VALUATION SPECIFIED IN THE TARIFF OR CLASSIFICATION AT OR UNDER WHICH THE LOWEST RATE IS AVAILABLE, UNLESS OTHERWISE INDICATED ON THE FACE HEREOF." (CONDITION 5 ON THE REVERSE OF THE GOVERNMENT BILL OF LADING.) ON THE FACE OF THE BILL OF LADING, THE ENGINE WAS STATED TO BE RELEASED TO A VALUE NOT EXCEEDING $2.50 PER POUND.

THE GOVERNING CLASSIFICATION, NATIONAL MOTOR FREIGHT CLASSIFICATION A 8, PROVIDED RELEASED AND UNRELEASED RATINGS ON "ENGINES, INTERNAL COMBUSTION, NOI." ITEM 120820, SUB 1, PROVIDED A LESS TRUCKLOAD CLASS 85 RATING FOR SUCH ENGINES WHEN RELEASED TO A VALUE NOT EXCEEDING $2.50 PER POUND, SUBJECT TO THE NOTE IN ITEM 120822. THAT NOTE PROVIDED FOR ENTRY ON THE BILL OF LADING OF THE "RELEASED VALUATION, WHICH SHALL BE DEEMED TO RELATE TO EACH ARTICLE SEPARATELY, AND NOT TO THE SHIPMENT AS A WHOLE." THERE IS NOTHING IN THIS PROVISION OR IN THE TRANSPORTATION CONTRACT WHICH WOULD AUTHORIZE DETERMINATION OF LIABILITY AT A RATIO ESTABLISHED BY THE RELATIONSHIP BETWEEN THE ACTUAL VALUE AND THE RELEASED VALUE.

THIS IS INDEED THE "TRUE LIMITATION" TYPE OF VALUATION CLAUSE DESCRIBED BY THE SUPREME COURT IN THE ANSALDO SAN GIORGIO I V RHEINSTROM BROS. CO., 294 U.S. 494, 497 (1935), IN WHICH THE AGREED OR RELEASED VALUE OF THE GOODS OR OF EACH UNIT IS STATED IN THE BILL OF LADING, THE RATE IS TIED TO THE RELEASED VALUE, AND THE CARRIER'S LIABILITY IS LIMITED THERETO IN CONSIDERATION OF THE RATE. AS THE COURT EXPLAINED, THE "DAMAGES ARE COMPUTED IN THE USUAL WAY WITHOUT REFERENCE TO THE STIPULATION, BUT IF WHEN SO COMPUTED THEY EXCEED THE AGREED LIMIT OF VALUE, NO RECOVERY OF THE EXCESS MAY BE HAD."

THE SHIPMENT AT ISSUE CONSISTED OF ONE ARTICLE - ONE JET ENGINE WEIGHING 4,584 POUNDS - AND IN TERMS OF THE TARIFF PROVISION THE RELEASED VALUE NECESSARILY RELATED TO THAT ONE ENGINE. THE LIMITATION ON THE CARRIER'S LIABILITY WAS, THEREFORE, $11,460 (4,584 POUNDS AT $2.50 PER POUND). THE DAMAGES - THE COST OF REPAIRS - WERE $1,267.40, LESS THAN THE STIPULATION (THE AGREED LIMIT OF VALUE), SO THE DAMAGES ARE RECOVERABLE IN FULL.

OUR CONCLUSION IS NOT INCONSISTENT WITH WESTERN TRANSIT CO. V A. C. LESLIE & CO., LTD., 242 U.S. 448 (1917), WHICH YOU CITED. THERE, 25 TONS OF COPPER INGOTS WERE SHIPPED AT A RELEASED VALUE OF $100 PER TON; WHILE IN STORAGE UNDER THE TRANSPORTATION CONTRACT, ABOUT ONE TON WORTH $271.38 WAS STOLEN. THE LOWER COURTS HAD GIVEN JUDGMENT FOR THE FULL VALUE ON THE THEORY THAT THE MAXIMUM LIMITATION OF LIABILITY WAS $2,500, THE RELEASED VALUE OF THE ENTIRE SHIPMENT. THE SUPREME COURT REVERSED AND REMANDED FOR FURTHER PROCEEDINGS, HOLDING THAT UNDER THE TERMS OF THE BILL OF LADING CONTRACT AND THE APPLICABLE TARIFF, THE SHIPPER COULD RECOVER NO MORE THAN $100 PER TON FOR EACH TON DAMAGED OR LOST.

YOU ALSO CITED IN SUPPORT OF YOUR POSITION ARONSTEIN V NEW YORK CENTRAL R. CO., 243 N.Y.S. 221, CERT. DEN. 282 U.S. 850 (1930). IN THAT CASE, A NEW YORK STATE COURT, WITHOUT OPINION, MODIFIED THE ORDER FOR THE PAYMENT OF DAMAGES WHICH HAD BEEN ENTERED BY THE TRIAL COURT. NO EXPLANATION WAS GIVEN FOR THE MODIFICATION; HOWEVER, THE TRIAL COURT HAD WRITTEN AN OPINION (230 N.Y.S. 298) EXPLAINING THE PRINCIPLES UNDERLYING ITS CONCLUSION AND THESE WERE NOT DISTURBED. WE DO NOT THINK THE ARONSTEIN CASE CAN BE CONSIDERED A BINDING PRECEDENT.

WE CONCLUDE THAT THE TERMS OF THE BILL OF LADING, REPRESENTING THE TRANSPORTATION CONTRACT, AND THE GOVERNING CLASSIFICATION AUTHORIZED THE RECOVERY OF DAMAGES ON THE JET ENGINE TRANSPORTED WITHIN THE LIMITATION OF ITS RELEASED VALUE, $11,460. THE ACTION OF OUR TRANSPORTATION DIVISION IN COLLECTING THE FULL AMOUNT OF THE DAMAGES, $1,267.40, WAS THEREFORE PROPER AND IT IS SUSTAINED.