B-174694, FEB 29, 1972

B-174694: Feb 29, 1972

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

CAMPBELL CONTENDS THAT THE ISSUANCE OF A CORRECTION NOTICE AFTER THE SHIPMENTS HAD MOVED IS NOT ADEQUATE TO SUPPORT SUCH AN ADJUSTMENT. THE GOVERNMENT'S FAILURE TO GIVE NOTICE PRIOR TO SHIPMENT CANNOT BE CONSIDERED A MATERIAL DEVIATION IF THE CARRIER WAS AWARE THAT THE ENGINES WERE BEING SENT TO CONTINENTAL FOR REPAIRS AND RECONDITIONING. ALTHOUGH IT IS POSSIBLE THAT THE CORRECTION NOTICES ALONE MIGHT NOT BE TECHNICALLY SUFFICIENT TO ESTABLISH COMPLIANCE WITH THE CLASSIFICATION TERMS. SINCE THERE IS NO QUESTION THAT A SECTION 22 AGREEMENT MAY BE RETROACTIVE. THE FACT THAT THE DESCRIPTION WAS CHANGED AFTER THE SHIPMENTS WERE TRANSPORTED IS IMMATERIAL. THE ACTION OF THE TRANSPORTATION DIVISION WAS PROPER AND THE CLAIM FOR REFUND OF THE SETOFF MUST BE DENIED.

B-174694, FEB 29, 1972

GOVERNMENT BILLS OF LADING - CHANGE OF CLASS TRUCKLOAD RATING - NOTICE OF OVERCHARGE - REQUEST FOR REFUND OF SETOFF DECISION DENYING CLAIM OF CAMPBELL "66" EXPRESS, INC., FOR REFUND OF A SETOFF BASED ON A NOTICE OF OVERCHARGE ISSUED BY THE GAO TRANSPORTATION DIVISION ON VARIOUS SHIPMENTS OF INTERNAL COMBUSTION ENGINES TRANSPORTED UNDER GOVERNMENT BILLS OF LADING FROM THE RED RIVER ARMY DEPOT AT DEFENSE, TEX., TO THE CONTINENTAL MOTORS CORPORATION, BROOKLEY AFB, ALA. CLAIMANT ORIGINALLY BILLED AND COLLECTED CHARGES ON THE BASIS OF THE CLASS 45 TRUCKLOAD RATING. SUBSEQUENTLY, THE GOVERNMENT ISSUED A NOTICE OF OVERCHARGE COMPUTED ON THE BASIS OF A CLASS 37 1/2 TRUCKLOAD RATING APPLICABLE TO USED AUTOMOBILE ENGINES. CAMPBELL CONTENDS THAT THE ISSUANCE OF A CORRECTION NOTICE AFTER THE SHIPMENTS HAD MOVED IS NOT ADEQUATE TO SUPPORT SUCH AN ADJUSTMENT. THE GOVERNMENT'S FAILURE TO GIVE NOTICE PRIOR TO SHIPMENT CANNOT BE CONSIDERED A MATERIAL DEVIATION IF THE CARRIER WAS AWARE THAT THE ENGINES WERE BEING SENT TO CONTINENTAL FOR REPAIRS AND RECONDITIONING. SEE UNION PACIFIC R. R. V UNITED STATES, 172 F. SUPP. 668 (CT. CL. 1959). ALTHOUGH IT IS POSSIBLE THAT THE CORRECTION NOTICES ALONE MIGHT NOT BE TECHNICALLY SUFFICIENT TO ESTABLISH COMPLIANCE WITH THE CLASSIFICATION TERMS, THE CONCURRENCE OF THE STRICKLAND TRANSPORTATION COMPANY AS THE ORIGIN CARRIER FOR ALL SHIPMENTS IN THE AMENDATORY CORRECTION NOTICES, AS AUTHORIZED UNDER 49 U.S.C. 22 AND 317(B), HAD THE EFFECT OF A SECTION 22 QUOTATION WHICH AFFORDED THE GOVERNMENT THE BENEFIT OF THE USED AUTOMOBILE CLASSIFICATION BASIS AS OF THE TIME OF SHIPMENT. SINCE THERE IS NO QUESTION THAT A SECTION 22 AGREEMENT MAY BE RETROACTIVE, THE FACT THAT THE DESCRIPTION WAS CHANGED AFTER THE SHIPMENTS WERE TRANSPORTED IS IMMATERIAL. ACCORDINGLY, THE ACTION OF THE TRANSPORTATION DIVISION WAS PROPER AND THE CLAIM FOR REFUND OF THE SETOFF MUST BE DENIED.

TO CAMPBELL "66" EXPRESS, INC.:

YOUR LETTER OF FEBRUARY 16, 1971, FILE NO. O/C 1170-42, WITH ENCLOSURES, TO OUR TRANSPORTATION DIVISION, IS A CLAIM FOR $605.45, AN AMOUNT DEDUCTED FROM CURRENT FREIGHT CHARGES TO SATISFY CERTAIN CLAIMS OF THAT DIVISION AGAINST YOUR COMPANY. OUR RECORDS INDICATE THAT SETOFF OF THE CLAIM WAS MADE NOVEMBER 17, 1970, AGAINST AN AMOUNT DUE ON YOUR BILL NO. 462-100.

THE SETOFF WAS BASED ON A NOTICE OF OVERCHARGE (FORM 1003) ISSUED OCTOBER 21, 1970, BY OUR TRANSPORTATION DIVISION ON VARIOUS SHIPMENTS OF INTERNAL COMBUSTION ENGINES TRANSPORTED UNDER GOVERNMENT BILLS OF LADING (GBL) FROM THE RED RIVER ARMY DEPOT AT DEFENSE, TEXAS, TO THE CONTINENTAL MOTORS CORPORATION, BROOKLEY AIR FORCE BASE, ALABAMA. THE ORIGIN CARRIER FOR ALL SHIPMENTS WAS STRICKLAND TRANSPORTATION COMPANY, AND THE DESTINATION CARRIER WAS CAMPBELL "66" EXPRESS, INC. THE PROPERTY WAS DESCRIBED ON THE COVERING GBLS AS "ENGINES INTERNAL COMBUSTION (AUTO), 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 NOTICE OF OVERCHARGE WAS COMPUTED ON THE BASIS OF A CLASS 37 1/2 TRUCKLOAD RATING ON USED AUTOMOBILE ENGINES NAMED IN ITEM 18630 OF THE CLASSIFICATION. SUPPORT FOR THIS RATING 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 AN AGENT OR REPRESENTATIVE OF STRICKLAND TRANSPORTATION COMPANY, AS THE ORIGIN CARRIER 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."

IT APPARENTLY IS YOUR VIEW THAT 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 CARRIER OBVIOUSLY KNEW THAT THE SHIPMENTS CONSISTED OF USED AUTOMOBILE ENGINES INASMUCH AS THEIR REPRESENTATIVE 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 CARRIER'S REPRESENTATIVE 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 STRICKLAND TRANSPORTATION COMPANY IN THE AMENDATORY CORRECTION NOTICES WAS AUTHORIZED UNDER SECTIONS 22 AND 317(B), 49 U.S.C. 22 AND 317(B). THAT COMPANY'S 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.