B-171245, APR 16, 1971

B-171245: Apr 16, 1971

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IS NOT LEGALLY RESPONSIBLE FOR DEMURRAGE CHARGES INCURRED IN CONNECTION WITH THE UNLOADING AND HAULING OF POSTAL SUPPLIES. THE CLAIM WAS NOT FILED AT GAO WITHIN THE THREE YEAR PERIOD OF LIMITATIONS UNDER 49 U.S.C. 66. THE GOVERNMENT IS NOT LIABLE FOR THE DEMURRAGE CHARGES AND THERE IS NO BASIS FOR CHARGING K&R. IS LEGALLY RESPONSIBLE FOR DEMURRAGE CHARGES INCURRED IN CONNECTION WITH THE UNLOADING AND HAULING OF POSTAL SUPPLIES AND EQUIPMENT PERFORMED UNDER K & R'S CONTRACT NO. WE DEVELOPED FURTHER FACTS AND THE EXPANDED RECORD SHOWS THAT A SHIPMENT OF LETTER BOXES WAS TRANSPORTED IN CARS MKT 97641 AND ATSF 211570 FROM WARRENTON. THE CARS WERE SPOTTED ON THE RAILROAD'S TEAM TRACK ON APRIL 24.

B-171245, APR 16, 1971

DEMURRAGE CHARGES - GOVERNMENT LIABILITY - TIME BARRED DECISION HOLDING THAT K & R DELIVERY, INC., A POST OFFICE DEPARTMENT CONTRACTOR, IS NOT LEGALLY RESPONSIBLE FOR DEMURRAGE CHARGES INCURRED IN CONNECTION WITH THE UNLOADING AND HAULING OF POSTAL SUPPLIES. ALTHOUGH ILLINOIS CENTRAL BILLED THE POSTMASTER, CHICAGO ILL., $170.50 IN DEMURRAGE CHARGES, THE CLAIM WAS NOT FILED AT GAO WITHIN THE THREE YEAR PERIOD OF LIMITATIONS UNDER 49 U.S.C. 66. THEREFORE, THE GOVERNMENT IS NOT LIABLE FOR THE DEMURRAGE CHARGES AND THERE IS NO BASIS FOR CHARGING K&R; THE $170.50 WITHHELD SHOULD BE REFUNDED.

TO MR. C. W. LAMAR:

WE REFER AGAIN TO YOUR LETTER OF NOVEMBER 6, 1970, FILE 9100-KLS:EM, RECEIVED IN THE GENERAL ACCOUNTING OFFICE NOVEMBER 9, 1970, REQUESTING OUR ADVICE WHETHER A POST OFFICE DEPARTMENT CONTRACTOR, K & R DELIVERY, INC., IS LEGALLY RESPONSIBLE FOR DEMURRAGE CHARGES INCURRED IN CONNECTION WITH THE UNLOADING AND HAULING OF POSTAL SUPPLIES AND EQUIPMENT PERFORMED UNDER K & R'S CONTRACT NO. S-59. ALSO, YOU ASK US ABOUT THE PROPRIETY OF CERTIFYING THE PAYMENT OF THOSE DEMURRAGE CHARGES TO THE ILLINOIS CENTRAL RAILROAD COMPANY ON POD FORM 1864, VOUCHER AND SCHEDULE OF PAYMENTS.

BASED ON SUPPLEMENTARY INFORMATION FURNISHED BY YOU, WE DEVELOPED FURTHER FACTS AND THE EXPANDED RECORD SHOWS THAT A SHIPMENT OF LETTER BOXES WAS TRANSPORTED IN CARS MKT 97641 AND ATSF 211570 FROM WARRENTON, GEORGIA, CONSIGNED TO THE POSTMASTER, CHICAGO, ILLINOIS, UNDER GOVERNMENT BILL OF LADING NO. D-0949220. THE CARS WERE SPOTTED ON THE RAILROAD'S TEAM TRACK ON APRIL 24, 1967, BUT A TEAMSTERS STRIKE PREVENTED K & R FROM PICKING UP THE SHIPMENT AND PERFORMING ITS SERVICES UNDER CONTRACT NO. S-59. AS A RESULT, THE RAILROAD BILLED THE POSTMASTER, CHICAGO, ILLINOIS, FOR DEMURRAGE CHARGES OF $170.50 CAUSED BY THE FAILURE OF K & R TO UNLOAD THE CARS WITHIN THE PRESCRIBED FREE TIME.

DEMURRAGE IS A CHARGE FOR THE DETENTION OF CARRIER EQUIPMENT INCIDENT TO TRANSPORTATION (UNION BELT OF DETROIT POOLING OF REVENUES, 201 I.C.C. 577, 581 (1934); ST. LOUIS, SOUTHWESTERN RY. CO. V MAYS, 177 F. SUPP. 182, 183 (1959)), AND IS PART AND PARCEL OF THE TRANSPORTATION CHARGES. DAVIS V TIMMONSVILLE OIL CO., 285 F. 470, 472 (1922); PROCTOR AND GAMBLE CO. V UNITED STATES, 281 F. 1014, 1015 (1922); NORTON V SHOTMEYER, 72 F. SUPP. 188, 191 (1947); INDIANA HARBOR BELT R. CO. V JACOB STERN & SONS, 37 F. SUPP. 690, 692 (1941). HOWEVER, DEMURRAGE CHARGES ON AN INTERSTATE SHIPMENT ARE SUBJECT TO REGULATION BY THE INTERSTATE COMMERCE COMMISSION (TURNER LUMBER CO. V CHICAGO, M. & ST. P. RY. CO., 271 U.S. 259 (1926)) AND EVEN THOUGH FREIGHT CHARGES AND DEMURRAGE CHARGES ACCRUE ON THE SAME INTERSTATE SHIPMENT, THE TWO CHARGES ARE TREATED AS GIVING RISE TO SEPARATE AND INDEPENDENT CLAIMS. GREAT NORTHERN RY. CO. V UNITED STATES, 312 F. 2D 906, 910 (1963); KRAUSS BROTHERS LUMBER CO. V DIRECTOR GENERAL, 92 I.C.C. 450, 452 (1924); CF. ISTHMIAN S.S. CO. V UNITED STATES, 191 F. SUPP. 335, 337 (1957); PENNSYLVANIA R. CO. V MOORE-MCCORMACK LINES, INC., 246 F. SUPP. 143, 146 (1965), AFFIRMED 370 F. 2D 430 (1966).

ON MARCH 1, 1968, THE POST OFFICE DEPARTMENT BOARD OF CONTRACT APPEALS, WASHINGTON, D. C., NOTED THAT CONTRACT NO. S-59 STATED IN CONNECTION WITH DEMURRAGE THAT

"CONTRACTOR WILL BE RESPONSIBLE FOR ANY DEMURRAGE CHARGES RESULTING FROM HIS FAILURE TO UNLOAD CARS WITHIN THE REQUIRED TIME LIMIT" AND FOUND THAT K & R IS OBLIGATED TO PAY THE DEMURRAGE CHARGE TO THE ILLINOIS CENTRAL IF SUCH CHARGES ARE LEGALLY AND PROPERLY PAYABLE, SINCE UNDER CONTRACT NO. S- 59 THE GOVERNMENT WAS NOT LEGALLY LIABLE FOR THOSE CHARGES. SEE IN THE MATTER OF THE APPEAL OF K & R DELIVERY, INC., P.O.D. BCA NO. 248.

THE CARS WERE SPOTTED FOR UNLOADING ON APRIL 24, 1967, AND THE CARS WERE RELEASED TO THE RAILROAD ON MAY 12 AND 15, 1967; THIS IS THE TIME WHEN THE CLAIM FOR DEMURRAGE AROSE AND WHEN THE THREE-YEAR LIMITATION PERIOD IN 49 U.S.C.A. 66 ON CLAIMS FOR TRANSPORTATION CHARGES BEGAN TO RUN. SINCE THE RAILROAD'S CLAIM FOR DEMURRAGE WAS NOT RECEIVED IN THE GENERAL ACCOUNTING OFFICE UNTIL NOVEMBER 9, 1970, THAT IS WITHIN THREE YEARS FROM THOSE RELEASE DATES, ANY CLAIM FOR THE DEMURRAGE CHARGES IS BARRED AND NO PAYMENT CAN BE MADE TO THE ILLINOIS CENTRAL. SINCE THE GOVERNMENT IS NOT LIABLE FOR THE DEMURRAGE CHARGES, THERE IS NO BASIS FOR CHARGING K & R AND THE $170.50 WITHHELD SHOULD BE REFUNDED TO THAT COMPANY, IF OTHERWISE PROPER.

POD FORM 1864, VOUCHER AND SCHEDULE OF PAYMENTS, WHICH AS INDICATED IS NOT PROPERLY PAYABLE, IS RETURNED HEREWITH.