B-176615, SEP 6, 1972

B-176615: Sep 6, 1972

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IS WITHOUT AUTHORITY TO ALLOW CLAIMS BASED ON EQUITABLE CONSIDERATIONS TO WHICH THERE ARE SUBSTANTIAL DEFENSES AT LAW. 42 COMP. IS AGAINST THE FREIGHT FORWARDER. INC.: REFERENCE IS MADE TO YOUR LETTER OF JUNE 13. THE SHIPMENT WAS DELIVERED TO THE CONSIGNEE ON SEPTEMBER 8. THAT ONE OF THE CABINETS WAS DAMAGED AND REQUESTED AN INSPECTION WHICH THE CARRIER PERFORMED ON SEPTEMBER 15. NOTED ON ITS INSPECTION REPORT THAT THE DAMAGE WAS CONCEALED SO AS NOT TO HAVE BEEN NOTICEABLE AT THE TIME OF DELIVERY. THE CONSIGNEE NOTIFIED THE DELIVERING CARRIER THAT ANOTHER CABINET HAD SUSTAINED DAMAGE AND REQUESTED AN INSPECTION WHICH WAS PERFORMED ON OCTOBER 9. THIS INSPECTION REPORT ALSO REFLECTS THAT THE DAMAGE WAS CONCEALED SO AS NOT TO HAVE BEEN NOTICEABLE AT THE TIME OF DELIVERY.

B-176615, SEP 6, 1972

CLAIM AGAINST U.S. - BURDEN OF PROOF - EQUITABLE CLAIM DECISION REGARDING A REQUEST BY HILLSIDE METAL PRODUCTS, INC., FOR REVIEW OF A SETTLEMENT CERTIFICATE DATED JUNE 8, 1972, WHICH DENIED THEIR CLAIM FOR $111.89. UPON CONSIDERATION OF THE INFORMATION SUBMITTED, CLAIMANT HAS NOT SATISFACTORILY MET THE BURDEN OF ESTABLISHING A LEGAL OBLIGATION ON THE PART OF THE GOVERNMENT. 23 COMP. GEN. 907 (1944). FURTHER, THE COMP. GEN. IS WITHOUT AUTHORITY TO ALLOW CLAIMS BASED ON EQUITABLE CONSIDERATIONS TO WHICH THERE ARE SUBSTANTIAL DEFENSES AT LAW. 42 COMP. GEN. 124, 142 (1962). CLAIMANT'S REMEDY, IF HE HAS ONE, IS AGAINST THE FREIGHT FORWARDER.

TO HILLSIDE METAL PRODUCTS, INC.:

REFERENCE IS MADE TO YOUR LETTER OF JUNE 13, 1972, REQUESTING REVIEW OF A SETTLEMENT CERTIFICATE DATED JUNE 8, 1972 (IN CLAIM Z-2466192), ISSUED BY OUR TRANSPORTATION AND CLAIMS DIVISION OF THIS OFFICE. THE SETTLEMENT DISALLOWED YOUR CLAIM FOR $111.89.

THE RECORD INDICATES THE DEPARTMENT OF THE INTERIOR, U.S. GEOLOGICAL SURVEY, SALT LAKE CITY, UTAH, BY PURCHASE ORDER NO. 56296-71, UNDER CONTRACT NO. GS-00S-86502, REQUESTED YOUR COMPANY TO SHIP F.O.B. DESTINATION, THREE MAP FILE CABINETS HAVING A UNIT PRICE OF $60.79. THE SHIPMENT WAS DELIVERED TO THE CONSIGNEE ON SEPTEMBER 8, 1970, WHO RECEIPTED THEREFOR BY SIGNING THE COVERING FREIGHT BILL WITHOUT EXCEPTION.

ON SEPTEMBER 14, 1970, THE CONSIGNEE NOTIFIED THE DELIVERING CARRIER, THE DENVER AND RIO GRANDE WESTERN RAILROAD COMPANY, THAT ONE OF THE CABINETS WAS DAMAGED AND REQUESTED AN INSPECTION WHICH THE CARRIER PERFORMED ON SEPTEMBER 15, 1972, AND NOTED ON ITS INSPECTION REPORT THAT THE DAMAGE WAS CONCEALED SO AS NOT TO HAVE BEEN NOTICEABLE AT THE TIME OF DELIVERY. AGAIN, ON OCTOBER 7, 1970, THE CONSIGNEE NOTIFIED THE DELIVERING CARRIER THAT ANOTHER CABINET HAD SUSTAINED DAMAGE AND REQUESTED AN INSPECTION WHICH WAS PERFORMED ON OCTOBER 9, 1970. THIS INSPECTION REPORT ALSO REFLECTS THAT THE DAMAGE WAS CONCEALED SO AS NOT TO HAVE BEEN NOTICEABLE AT THE TIME OF DELIVERY.

YOUR COMPANY WAS NOTIFIED OF THE DAMAGE AND THE FREIGHT FORWARDER, NATIONAL CARLOADING CORPORATION, REIMBURSED YOU IN THE AMOUNT OF $47.40 (REPRESENTING 50 PERCENT OF THE LOSS PLUS SALVAGE PROCEEDS) FOR ONE OF THE DAMAGED CABINETS BUT DISALLOWED YOUR CLAIM FOR THE SECOND CABINET BECAUSE THE DAMAGE INSPECTION WAS NOT REQUESTED WITHIN 15 DAYS OF THE DELIVERY DATE.

IN YOUR REQUEST FOR RECONSIDERATION, YOU ACKNOWLEDGE THAT THE GOVERNMENT, AS AN F.O.B. DESTINATION CONSIGNEE, HAD NO CONTRACTUAL OBLIGATION TO PROVIDE NOTIFICATION OF SHIPMENT DAMAGE WITHIN A SPECIFIED TIME. NOTWITHSTANDING THIS ACKNOWLEDGMENT, IT IS YOUR CONTENTION THAT THE GOVERNMENT BY (1) "SIGNING A CLEAR BILL OF LADING WITHOUT EXCEPTION" AND (2) FAILING TO GIVE NOTICE OF CONCEALED DAMAGE WITHIN THE FREIGHT FORWARDER'S 15-DAY TIME LIMIT, MADE IT IMPOSSIBLE FOR YOU TO ESTABLISH CARRIER LIABILITY AND ACCORDINGLY THE GOVERNMENT SHOULD BEAR THE LOSS ON EQUITABLE GROUNDS.

UPON CONSIDERATION OF THE INFORMATION SUBMITTED, WE DO NOT FIND THAT YOU HAVE SATISFACTORILY MET YOUR BURDEN OF ESTABLISHING A LEGAL OBLIGATION ON THE PART OF THE GOVERNMENT TO SUPPORT YOUR CLAIM. 23 COMP. GEN. 907 (1944) AND 31 COMP. GEN. 341 (1952). FURTHER, THE COMPTROLLER GENERAL IS WITHOUT AUTHORITY TO ALLOW CLAIMS BASED ON EQUITABLE CONSIDERATIONS TO WHICH THERE ARE SUBSTANTIAL DEFENSES AT LAW. 42 COMP. GEN. 124, 142 (1962).

WE ARE OF THE OPINION THAT YOUR REMEDY, IF YOU HAVE ONE, IS AGAINST YOUR FREIGHT FORWARDER SINCE FREIGHT FORWARDER INSTITUTE RULES REQUIRING INSPECTION WITHIN 15 DAYS OF DELIVERY AND PRORATING LIABILITY IN CONCEALED DAMAGE CASES WERE RECENTLY INVALIDATED BY THE INTERSTATE COMMERCE COMMISSION. SEE LOSS AND DAMAGE CLAIMS, 340 I.C.C. 515 (1972). FOR YOUR INFORMATION THE RULES, WHICH WERE PUBLISHED IN APPENDIX C OF THE ABOVE DECISION, ARE SET FORTH BELOW:

"3. FREIGHT FORWARDERS. - THE RULE ADOPTED BY THE FREIGHT FORWARDER INSTITUTE TO BECOME EFFECTIVE ON ALL SHIPMENTS FORWARDED ON AND AFTER AUGUST 1, 1969:

THESE PROCEDURES PROVIDE FOR AN EQUAL DISTRIBUTION OF RESPONSIBILITY FOR ALL FACTORS INVOLVED IN THE MOVEMENT OF SHIPMENTS. THEY RECOGNIZE HANDLINGS BY THE SHIPPER, FORWARDER, WAREHOUSE, AND CONSIGNEE.

EFFECTIVE WITH SHIPMENTS ORIGINATING ON AND AFTER AUGUST 1, 1969, CONCEALED LOSS OR DAMAGE CLAIMS WILL BE HANDLED AS FOLLOWS:

A. MAXIMUM PAYMENT OF CLAIMS BY FORWARDERS FOR CONCEALED LOSS OR DAMAGE TO SHIPMENTS HANDLED UNDER A CLEAR RECORD WILL BE FIFTY PERCENT OF THE NET MONETARY LOSS.

B. FORWARDERS WILL NOT HONOR CLAIMS FOR CONCEALED LOSS OR DAMAGE WHEN INSPECTION IS NOT REQUESTED WITHIN FIFTEEN DAYS AFTER DELIVERY TO CONSIGNEE.

C. FORWARDERS WILL NOT HONOR CLAIMS FOR CONCEALED LOSS OR DAMAGE WHEN FORWARDER IS NOT GIVEN AN OPPORTUNITY TO MAKE INSPECTION AT THE PREMISES TO WHICH FORWARDER MADE DELIVERY OF SHIPMENT.

D. FORWARDERS WILL NOT HONOR CLAIMS FOR CONCEALED LOSS OR DAMAGE WHEN CONTAINERS AND PACKING ARE NOT RETAINED BY CONSIGNEE FOR INSPECTION BY FORWARDER.

E. FORWARDERS WILL NOT HONOR CLAIMS FOR CONCEALED LOSS OR DAMAGE TO SHIPMENTS WHICH HAVE BEEN MOVED FROM POINT OF FORWARDER'S DELIVERY TO OTHER LOCATIONS, PRIOR TO DISCOVERY AND REPORTING OF LOSS OR DAMAGE."

IN THE AFOREMENTIONED DECISION, THE COMMISSION INVALIDATED SUCH RULES, STATING AT PAGE 615:

"(10) THAT THE RULES ADOPTED BY THE ASSOCIATION OF AMERICAN RAILROADS AND THE FREIGHT FORWARDERS INSTITUTE, FOR AND ON BEHALF OF THEIR RESPECTIVE MEMBERS, SET FORTH OR DESCRIBED IN APPENDIX C, HERETO, VIOLATE SECTIONS 20(11) AND 413 OF THE ACT IN THAT THEY UNLAWFULLY LIMIT CARRIER LIABILITY."

FOR THE REASONS SET FORTH, THE DISALLOWANCE OF YOUR CLAIM APPEARS TO BE CORRECT, AND IS SUSTAINED.