B-173269, NOV 29, 1971

B-173269, NOV 29, 1971

TRANSPORTATION CHARGES - CORRECTED RATE - REFUND OF SETOFFS DECISION DENYING CLAIM BY GORDONS TRANSPORTS, INC. FOR REFUND OF $2,561.51 SETOFF FROM CURRENT FREIGHT CHARGES TO SATISFY CLAIMS OF GAO'S TRANSPORTATION DIVISION INCIDENT TO A SHIPMENT OF USED AUTOMOBILE ENGINES IN WHICH CLAIMANT WAS DESTINATION CARRIER. THE COMP. GEN. FINDS THAT IF THE CORRECTION NOTICES (INDICATING USED AUTOMOBILE ENGINES RATHER THAN "ENGINES, INTERNAL COMBUSTION (AUTO), AND PARTS," AS APPEARED ON THE ORIGINAL GBL) WERE NOT TECHNICALLY SUFFICIENT TO ESTABLISH COMPLIANCE WITH THE CLASSIFICATION TERMS, THE CONCURRENCE OF THE ORIGIN CARRIERS WAS AUTHORIZED UNDER SECTIONS 22 AND 317(B) AND HAS THE EFFECT OF AFFORDING THE GOVERNMENT THE MORE FAVORABLE RATE BASIS AS OF THE TIME OF SHIPMENT. THE CLAIM FOR REFUND IS THEREFORE DENIED.

TO GORDONS TRANSPORTS, INC.:

YOUR ATTORNEY'S LETTER OF OCTOBER 27, 1971, RELATES TO YOUR CLAIM FOR $2,561.51, SAID TO HAVE BEEN DEDUCTED FROM CURRENT FREIGHT CHARGES TO SATISFY CERTAIN CLAIMS OF OUR TRANSPORTATION DIVISION. SETOFF OF THE CLAIMS WAS ACCOMPLISHED OCTOBER 21, 1970, AGAINST THE AMOUNT DUE ON YOUR BILL M-38724.

THE SETOFFS WERE BASED ON NOTICES OF OVERCHARGE (FORM 1003) ISSUED BY OUR TRANSPORTATION DIVISION ON VARIOUS SHIPMENTS OF INTERNAL COMBUSTION ENGINES TRANSPORTED UNDER GOVERNMENT BILLS OF LADING FROM THE RED RIVER ARMY DEPOT AT DEFENSE, TEXAS, TO THE CONTINENTAL MOTORS CORPORATION, BROOKLEY AIR FORCE BASE, ALABAMA. THE ORIGIN CARRIER WAS EITHER THE SOUTHWESTERN TRANSPORTATION COMPANY OR THE EAST TEXAS MOTOR FREIGHT LINES, AND THE DESTINATION CARRIER WAS GORDONS TRANSPORTS. THE PROPERTY WAS DESCRIBED ON THE COVERING GOVERNMENT BILLS OF LADING (GBLS) AS ENGINES, INTERNAL COMBUSTION (AUTO), AND PARTS, NMFC (NATIONAL MOTOR FREIGHT CLASSIFICATION) 120820.

YOUR COMPANY ORIGINALLY BILLED AND COLLECTED CHARGES ON THE BASIS OF THE CLASS 45 TRUCKLOAD RATING NAMED IN ITEM 120820 NMFC A-9. OUR NOTICES OF OVERCHARGE WERE COMPUTED ON THE BASIS OF A CLASS 37 1/2 TRUCKLOAD RATING NAMED IN ITEM 18630, APPLICABLE ON USED AUTOMOBILE ENGINES, AND USED AUTOMOBILE ENGINE PARTS. SUPPORT FOR THIS RATING BASIS IS PROVIDED IN GOVERNMENT BILL OF LADING CORRECTION NOTICES (FORM DD-1352), ISSUED IN 1970 BY EMPLOYEES AT THE RED RIVER ARMY DEPOT, ACTING FOR FRANCIS J. BUTRUM, TRANSPORTATION OFFICER, AND SIGNED (ACCEPTED) BY AGENTS OR REPRESENTATIVES OF THE SOUTHWESTERN TRANSPORTATION COMPANY OR THE EAST TEXAS MOTOR FREIGHT LINES, AS THE ORIGIN CARRIERS SIGNING THE GBLS AT THE TIME THE SHIPMENTS WERE RECEIVED FOR TRANSPORTATION.

FORM DD-1352 IS, UNDER MILITARY TRAFFIC MANAGEMENT REGULATION DSAR 4500.3, SECTION XIII, REQUIRED TO BE ISSUED WHEN ALTERATIONS OR CORRECTIONS IN GBLS ARE TO BE EFFECTED, AND THE ORIGIN CARRIER IS GIVEN A COPY AFTER ITS REPRESENTATIVE SIGNS ALL COPIES THAT ARE TO BE DISTRIBUTED. PARAGRAPH 214092 OF DSAR 4500.3. IT IS YOUR POSITION THAT THE CORRECTION NOTICES THUS ISSUED ARE INEFFECTIVE TO REMEDY THE DEFICIENCY CAUSED BY THE FAILURE OF THE GOVERNMENT AS SHIPPER TO COMPLY STRICTLY WITH THE TERMS OF ITEM 18636 OF NMFC A-9, WHICH READS:

"NOTE - APPLIES ONLY WHEN THE ARTICLES ARE USED, AND HAVE VALUE NOT EXCEEDING THE VALUE FOR RECONDITIONING OR SALVAGING PURPOSES, AND ONLY WHEN DESCRIBED AT TIME OF SHIPMENT ON SHIPPING ORDERS AND BILLS OF LADING AS 'USED AUTOMOBILE ENGINES,' 'USED AUTOMOBILE ENGINE PARTS,' OR 'USED AUTOMOBILE PARTS,' AS THE CASE MAY BE."

YOU REFER TO DECISIONS OF THE INTERSTATE COMMERCE COMMISSION ENFORCING A PRINCIPLE TO THE EFFECT THAT A TARIFF REQUIREMENT FOR THE INCLUSION OF A PARTICULAR NOTATION ON BILLS OF LADING IS A CONDITION PRECEDENT TO THE APPLICATION OF THE FAVORABLE RATING OR RATE ASSOCIATED WITH THE NOTATION. IN SUCH CASES A SHIPPER'S FAILURE TO PLACE THE NOTATION ON A BILL OF LADING PRIOR TO OR AT THE TIME OF TENDER OF SHIPMENT TO THE CARRIER COULD OPERATE TO PRECLUDE APPLICATION OF THE FAVORABLE RATING OR RATE. IN YOUR VIEW THE ISSUANCE OF A CORRECTION NOTICE (FORM DD-1352) AFTER THE SHIPMENTS IN THIS CASE HAD MOVED IS NOT ADEQUATE TO SUPPORT AN ADJUSTMENT FROM THE CLASS 45 RATING APPLICABLE ON AUTOMOBILE ENGINES GENERALLY TO THE CLASS 37 1/2 RATING APPLICABLE ON USED AUTOMOBILE ENGINES.

IT WOULD APPEAR THAT THE CARRIERS PARTICIPATING IN THE TRANSPORTATION SERVICE WERE AWARE THAT, BECAUSE OF THE NATURE OF THE MOVEMENTS, INCLUDING THE IDENTITY OF THE CONSIGNOR AND CONSIGNEE (THE CONTINENTAL MOTORS CORPORATION), THE AUTOMOBILE ENGINES WERE UNMISTAKABLY USED ENGINES BEING SENT TO CONTINENTAL FOR REPAIRS AND RECONDITIONING. THE ORIGIN CARRIERS OBVIOUSLY KNEW THAT THE SHIPMENTS CONSISTED OF USED AUTOMOBILE ENGINES INASMUCH AS THEIR REPRESENTATIVES ACQUIESCED IN THE CHANGE OF DESCRIPTION TO BE SUBSTITUTED FOR THAT ON THE GOVERNMENT BILLS OF LADING.

IN THAT RESPECT THE SITUATION IS SIMILAR TO THE ONE CONSIDERED IN UNION PACIFIC R.R. V UNITED STATES, 172 F. SUPP. 668 (CT. CL. 1959), INVOLVING A SECTION 22 (49 U.S.C. 22) QUOTATION REQUIREMENT THAT THE GOVERNMENT FURNISH THE CARRIER A CERTIFICATE TO ESTABLISH THAT THE SHIPMENTS WERE INTENDED TO BE EXPORTED. THE COURT DID NOT REGARD THE GOVERNMENT'S FAILURE TO GIVE THE CARRIER THE REQUISITE CERTIFICATE AS A MATERIAL DEFICIENCY AND IT DENIED THE CARRIER'S CLAIM FOR CHARGES BASED ON DOMESTIC RATES BECAUSE IT KNEW THAT THE SHIPMENTS WERE INTENDED FOR EXPORT AND THAT THEY WERE IN FACT EXPORTED.

WE DO NOT FIND IT NECESSARY TO CONSIDER WHETHER OR NOT THE LINE OF INTERSTATE COMMERCE COMMISSION CASES DENYING A SHIPPER'S ENTITLEMENT TO A MORE ADVANTAGEOUS CHARGE BASIS BECAUSE OF FAILURE TO ANNOTATE SHIPPING DOCUMENTS IN STRICT CONFORMITY WITH A MATERIAL TARIFF REQUIREMENT MUST BE VIEWED AS APPLICABLE IN THE PRESENT TYPE OF CASE. EVEN IF THE RULE ORDINARILY WERE APPLICABLE WITH EQUAL FORCE IN CASES INVOLVING THE UNITED STATES, AND ASSUMING THAT THE PROVISIONS OF CLASSIFICATION ITEMS 18630 AND 18636 ARE SO WORDED AS TO CONSTITUTE A CONDITION PRECEDENT TO THE APPLICABILITY OF THE CLASS 37 1/2 RATING, WE BELIEVE (AND SOME OF THE OTHER CARRIERS PARTICIPATING IN THIS TRAFFIC SEEM TO AGREE SINCE THEY HAVE VOLUNTARILY REFUNDED THE DIFFERENCE IN CHARGES COMPUTED ON THE CLASS 45 AND CLASS 37 1/2 RATING BASIS) THAT THE EFFECT OF THE CORRECTION NOTICES SIGNED BY THE ORIGIN CARRIERS' REPRESENTATIVES WAS TO VALIDATE USE OF THE CLASS 37 1/2 RATING ON THE SHIPMENTS OF USED AUTOMOBILE ENGINES HERE CONCERNED.

WE ARE OF THE OPINION THAT IF THE CORRECTION NOTICES WERE NOT TECHNICALLY SUFFICIENT TO ESTABLISH COMPLIANCE WITH THE CLASSIFICATION TERMS, THE CONCURRENCE OF THE SOUTHWESTERN TRANSPORTATION COMPANY AND THE EAST TEXAS MOTOR FREIGHT LINES IN THE AMENDATORY CORRECTION NOTICES WAS AUTHORIZED UNDER SECTIONS 22 AND 317(B). THEIR CONCURRENCE HAD THE EFFECT OF A SECTION 22 QUOTATION WHICH AFFORDED THE GOVERNMENT THE BENEFIT OF THE USED AUTOMOBILE ENGINE CLASSIFICATION BASIS AS OF THE TIME OF SHIPMENT.

THE EXERCISE OF THE PERMISSIVE AUTHORITY TO QUOTE REDUCED RATES TO THE UNITED STATES SET FORTH IN THE NAMED PROVISIONS OF LAW WOULD SEEM TO BIND ALL CARRIERS PARTICIPATING IN THE ROUTES OF MOVEMENT TO THE RATING AND RATE ASSOCIATED WITH THE SIGNIFICANT DESCRIPTION. AND THE REDUCED RATE MAY TAKE THE FORM OF ACKNOWLEDGING THE CORRECTNESS OF A CHANGE IN THE DESCRIPTION OF A COMMODITY WHICH PRODUCES LOWER CHARGES. THERE IS NO QUESTION THAT A SECTION 22 AGREEMENT MAY BE RETROACTIVE. THAT BEING SO, THE FACT THAT THE DESCRIPTION WAS CHANGED AFTER THE SHIPMENTS WERE TRANSPORTED TO DESTINATION IS IMMATERIAL.

WE THEREFORE BELIEVE THAT THE ACTION TAKEN BY THE TRANSPORTATION DIVISION WAS PROPER AND THAT YOU ARE NOT ENTITLED TO REFUND OF THE SETOFFS MADE.