B-177604, APR 8, 1974, 53 COMP GEN 747

B-177604: Apr 8, 1974

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THE SUBSEQUENT DENIAL OF A CLAIM FOR THE AMOUNT DEDUCTED BY THE GENERAL ACCOUNTING OFFICE IS SUSTAINED WHERE THE CONTRACT OF CARRIAGE IS COMPLETE AND UNEQUIVOCAL ON ITS FACE AS TO THE CONTRACTED RATE. WHERE THE CONTRACTED RATE WAS THE ONLY ONE AVAILABLE TO THE GOVERNMENT. ACKNOWLEDGED ON THE BILL OF LADING THAT THE SHIPMENT WAS RECEIVED IN GOOD CONDITION WHEN PRESENTED AT ORIGIN AND THE ADMINISTRATIVE OFFICE SHOWS THAT IT WAS RECEIVED IN DAMAGED CONDITION WHEN DELIVERED AT DESTINATION. OF THE NUMBER OF CARTONS OF DRUGS DAMAGED AND DEMAND WAS MADE FOR THEIR INVOICE COST OF $1. IT WAS COLLECTED BY ADMINISTRATIVE DEDUCTION. CONTENDS THAT THE EXTENT OF ITS LIABILITY IS LIMITED TO $.50 PER POUND FOR THE 96 POUNDS OF THE DRUG DELIVERED DAMAGED AND UNUSABLE.

B-177604, APR 8, 1974, 53 COMP GEN 747

PROPERTY - PUBLIC - DAMAGE, LOSS, ETC. - MEASURE OF DAMAGES - VALUE OF ITEM THE DEDUCTION BY THE GOVERNMENT OF THE FULL VALUE OF GOODS DAMAGED IN TRANSIT, AND THE SUBSEQUENT DENIAL OF A CLAIM FOR THE AMOUNT DEDUCTED BY THE GENERAL ACCOUNTING OFFICE IS SUSTAINED WHERE THE CONTRACT OF CARRIAGE IS COMPLETE AND UNEQUIVOCAL ON ITS FACE AS TO THE CONTRACTED RATE, AND WHERE THE CONTRACTED RATE WAS THE ONLY ONE AVAILABLE TO THE GOVERNMENT.

IN THE MATTER OF O.K. TRUCKING COMPANY, APRIL 8, 1974:

THE O.K. TRUCKING COMPANY (O.K.) TRANSPORTED ON MAY 6, 1971, A TRUCKLOAD SHIPMENT DESCRIBED ON GOVERNMENT BILL OF LADING (GBL) NO. F 5371835 AS 2,045 PIECES OF "FREIGHT ALL KINDS & FOODSTUFFS FROZEN" FROM CHICAGO, ILLINOIS, TO CHILLICOTHE, OHIO. O.K. ACKNOWLEDGED ON THE BILL OF LADING THAT THE SHIPMENT WAS RECEIVED IN GOOD CONDITION WHEN PRESENTED AT ORIGIN AND THE ADMINISTRATIVE OFFICE SHOWS THAT IT WAS RECEIVED IN DAMAGED CONDITION WHEN DELIVERED AT DESTINATION. THE ADMINISTRATIVE OFFICE NOTIFIED O.K. OF THE NUMBER OF CARTONS OF DRUGS DAMAGED AND DEMAND WAS MADE FOR THEIR INVOICE COST OF $1,091. UPON O.K.'S FAILURE TO REFUND THE AMOUNT CLAIMED, IT WAS COLLECTED BY ADMINISTRATIVE DEDUCTION.

O.K. CONTENDS THAT THE EXTENT OF ITS LIABILITY IS LIMITED TO $.50 PER POUND FOR THE 96 POUNDS OF THE DRUG DELIVERED DAMAGED AND UNUSABLE, OR $48, RATHER THAN FOR THE ACTUAL VALUE OF THE DRUGS. BY LETTER OF APRIL 26, 1973, FROM THE TRANSPORTATION AND CLAIMS DIVISION, UNITED STATES GENERAL ACCOUNTING OFFICE, O.K.'S CLAIM FOR THE AMOUNT ADMINISTRATIVELY DEDUCTED WAS DENIED.

O.K. SUBMITTED TO THE GOVERNMENT A TENDER OR OFFER (I.C.C. NO. 28) TO TRANSPORT FREIGHT ALL KINDS AND FROZEN FOODSTUFFS AT A RATE OF $1.10 PER HUNDRED POUNDS, WITH A MINIMUM WEIGHT OF 40,000 POUNDS PER VEHICLE USED. O.K. STATES THAT ITEM 15 OF ITS TENDER INCORPORATES BY REFERENCE THE RULES OF NATIONAL MOTOR FREIGHT CLASSIFICATION A-11, MF-I.C.C. 13 (NMFC A-11) AND THAT NMFC A-11 PROVIDES A RELEASED VALUATION OF $.50 PER POUND FOR DRUGS OR MEDICINES.

TENDERS, SUCH AS I.C.C. 28, WHICH WAS APPLICABLE AT THE TIME OF THE TRANSPORTATION MOVEMENT, ARE RATE QUOTATIONS MADE TO THE UNITED STATES UNDER SECTION 22 OF THE INTERSTATE COMMERCE ACT, AS AMENDED, 49 U.S.C. 22, MADE APPLICABLE TO MOTOR CARRIERS BY 49 U.S.C. 317 (B), AND ARE CONTINUING UNILATERAL OFFERS TO PERFORM TRANSPORTATION SERVICES AT NAMED RATINGS OR RATES SUBJECT TO THE TERMS AND CONDITIONS NAMED THEREIN. SEE C. & H. TRANSPORTATION CO. V. UNITED STATES, 436 F.2D 480, 481; 193 CT. CL. 872 (1971). THE OFFER RIPENS INTO AN AGREEMENT OR CONTRACT WHEN ACCEPTED BY THE GOVERNMENT BY MAKING ANY SHIPMENT UNDER ITS TERMS.

O.K. OFFERED IN I.C.C. NO. 28 TO TRANSPORT FREIGHT ALL KINDS AND FROZEN FOODSTUFFS AT A SPECIFIC RATE AND SPECIFIC MINIMUM WEIGHT. WHEN O.K. ISSUED THE BILL OF LADING PREPARED BY THE GOVERNMENT, THE OFFER RIPENED INTO A CONTRACT OF CARRIAGE WHICH APPEARS COMPLETE AND UNEQUIVOCAL ON ITS FACE BECAUSE THE RATE THE PARTIES CONTRACTED FOR IS SPECIFICALLY STATED AND IT IS NOT NECESSARY OR APPROPRIATE TO GO BEYOND THE FACE OF THAT CONTRACT FOR THE APPLICABLE RATE. O.K.'S TENDER, LIKE MOST TENDERS INVOLVING FREIGHT ALL KINDS, DOES NOT CONTAIN A LIST OF EXCEPTED COMMODITIES; IT THEREFORE APPEARS THAT IT WAS O.K.'S INTENTION TO TRANSPORT ALL COMMODITIES, WITHOUT EXCEPTION, AT THE ONE STATED RATE AND TO ASSUME ON THOSE COMMODITIES ITS FULL COMMON LAW LIABILITY.

ONLY BY GRANTING ITS CUSTOMERS A FAIR OPPORTUNITY TO CHOOSE BETWEEN HIGHER OR LOWER LIABILITY BY PAYING A CORRESPONDINGLY GREATER OR LESSER CHARGE CAN A CARRIER LAWFULLY LIMIT RECOVERY TO AN AMOUNT LESS THAN THE ACTUAL LOSS SUSTAINED. NEW YORK, N.H. & H.R.R. V. NOTHNAGLE, 346 U.S. 128, 135 (1953). THE DECISIONS IN THIS AREA ARE BASED ON THE PREMISE THAT THE SHIPPER SHOULD RECEIVE CONSIDERATION IN THE FORM OF A LOWER RATE FOR THE CORRESPONDINGLY GREATER RISK OF LOSS THAT HE MUST BEAR. HERE, THE PARTIES CONTRACTED FOR ONE SPECIFIC RATE, AND THIS RATE WAS THE ONLY ONE OFFERED TO THE GOVERNMENT.

O.K. STATES THAT ITEM 15 OF ITS TENDER INCORPORATES BY REFERENCE THE RULES OF NMFC A-11, AND THAT IT PROVIDES A RELEASED VALUATION OF $.50 PER POUND FOR DRUGS OR MEDICINES. HOWEVER, THERE IS NOTHING IN THE RULES OF NMFC A-11 RELATIVE TO RELEASED VALUATION. WHILE ITEM 60002 OF NMFC A-11 MAKES THE TRANSPORTATION OF CERTAIN DRUGS OR MEDICINES SUBJECT TO RELEASED VALUATION WHEN PROPERLY AGREED TO AND NOTED ON THE BILL OF LADING, THERE IS NOTHING ON GBL NO. F-5371835 TO INDICATE THE GOVERNMENT AGREED TO THE APPLICATION OF RELEASED VALUATION ON THE SHIPMENT.

O.K. FURTHER STATES THAT LANGUAGE IN THE C. & H. CASE, SUPRA, SUPPORTS ITS CONTENTION THAT THE PROVISIONS OF CONDITION 5 ON THE BACK OF THE GOVERNMENT BILL OF LADING OPERATE TO LIMIT O.K.'S LIABILITY TO A RELEASED VALUATION OF $.50 PER POUND.

THE LANGUAGE IN C. & H. REFERRED TO IS THIS:

IT SHOULD BE MENTIONED HERE THAT IF THE RATE UNDER ITEM NO. 187 OF TARIFF NO. 2-G FOR THE SHIPMENT INVOLVED IN CASE NO. 373-65 HAD BEEN LOWER THAN THE RATE PRESCRIBED IN TENDER NO. 100-L FOR SUCH SHIPMENT, THEN THE ITEM 187 RATE, TOGETHER WITH THE ANCILLARY RELEASED VALUE LIMITATION IN THAT ITEM, WOULD HAVE BEEN APPLICABLE TO THE SHIPMENT. THIS WOULD HAVE BEEN SO IN VIEW OF A STANDARD CONDITION WHICH WAS CONTAINED IN THE GOVERNMENT BILL OF LADING COVERING THIS SHIPMENT AND WHICH STATED AS FOLLOWS:

5. THIS SHIPMENT IS MADE 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.

FOR THE PURPOSES OF EXPLANATION WE QUOTE THE TWO PARAGRAPHS FOLLOWING THOSE RELIED ON BY O.K.:

THE PURPOSE OF THE QUOTED CONDITION WAS TO OBTAIN FOR THE GOVERNMENT THE LOWEST AVAILABLE RATE, EVEN IF THE LOWEST RATE WAS AVAILABLE ONLY UPON THE BASIS OF A RELEASED VALUE. HOWEVER CONDITION 5 DID NOT COME INTO OPERATION WITH RESPECT TO THE SHIPMENT INVOLVED IN CASE NO. 373-65 BECAUSE THE RELEASED-VALUE RATE QUOTED IN ITEM NO. 187 OF TARIFF NO. 2 G ($6.91 PER HUNDRED POUNDS) WAS NOT LOWER THAN THE RATE QUOTED IN TENDER NO. 100-L ($6.60 PER HUNDRED POUNDS) FOR THIS SHIPMENT.

IN THIS CONNECTION, IT WAS NOT NECESSARILY INCONGRUOUS FOR THE PLAINTIFF, WITHOUT IMPOSING ANY REQUIREMENT REGARDING RELEASED VALUES, TO QUOTE TO THE GOVERNMENT IN TENDER NO. 100-L RATES THAT WERE LOWER THAN THOSE WHICH THE PLAINTIFF OFFERED TO THE GENERAL PUBLIC IN ITEM NO. 187 OF TARIFF NO. 2-G FOR SIMILAR TRANSPORTATION SERVICES, ON THE BASIS OF RELEASED VALUES ONLY. PERTINENT SECTIONS OF THE INTERSTATE COMMERCE ACT AUTHORIZED THE PLAINTAIFF AND OTHER CARRIERS TO OFFER THE GOVERNMENT TRANSPORTATION SERVICES UNDER ARRANGEMENTS THAT WERE DIFFERENT FROM, AND MORE ADVANTAGEOUS THAN, THOSE OFFERED TO THE GENERAL PUBLIC.

O.K.'S SUPPORT IS MISPLACED: IF THE APPLICABLE RATE IS A TARIFF RATE, CONDITION 5 SATISFIES THE BILL OF LADING NOTATION REQUIREMENTS THAT MAY BE REQUIRED BY THE RELEASED VALUATION PROVISION OF THE TARIFF; IF THE APPLICABLE RATE WERE A TENDER OR QUOTATION RATE, CONDITION 5 DOES NOT SATISFY THE BILL OF LADING NOTATION REQUIREMENTS THAT MAY BE REQUIRED BY THE TENDER OR QUOTATION. THIS IS THE REASON: AS STATED ABOVE, RATE QUOTATIONS ARE CONTINUING UNILATERAL OFFERS AND IT IS AN ELEMENTARY PRINCIPLE OF CONTRACT LAW THAT OFFERS, TO BE ACCEPTED, MUST BE ACCEPTED IN THE PRECISE TERMS IN WHICH THEY ARE MADE. ANY MATERIAL VARIANCE IN AN OFFER CONSTITUTES A COUNTER OFFER WHICH REQUIRES ACCEPTANCE BY THE OFFEROR TO BECOME OPERATIVE. THUS, AND DESPITE CONDITION 5, TO TAKE ADVANTAGE OF THE RELEASED VALUATION PROVISIONS OFFERED IN RATE QUOTATIONS, THE GOVERNMENT AS OFFEREE AND SHIPPER, MUST COMPLY WITH THE OFFER'S REQUIREMENTS AS TO THE NOTATIONS TO BE PLACED ON THE BILLS OF LADING.

HERE IN O.K.'S CASE THE LOWER TENDER RATE WAS APPLICABLE TO GBL NO. F 5371835 AND THE TENDER INCORPORATED BY REFERENCE THE RULES OF NMFC A 11. BUT AS STATED ABOVE THOSE RULES CONTAINED NOTHING RELATIVE TO RELEASED VALUATION NOTATIONS. ITEM 60000 (ACTUALLY, ITEM 60002) RELIED ON BY O.K., IS A RATING, NOT A RULE. FURTHERMORE, THE TENDER RATE WAS THE ONLY RATE AVAILABLE TO THE GOVERNMENT FOR A SHIPMENT RATED AS FREIGHT ALL KINDS AND FROZEN FOODSTUFFS.

O.K. STATES THAT THE SHIPPER COULD HAVE DECLARED A VALUE ON THE BILL OF LADING AND STILL HAVE OBTAINED THE RATE TENDERED. BUT THIS WOULD PUT AN UNDUE BURDEN ON THE GOVERNMENT AND DEFEAT THE PURPOSE OF A FREIGHT ALL KINDS RATE. ONE OF THE MAJOR ADVANTAGES TO SHIPPER AND CARRIER ALIKE IN THE USE OF FREIGHT ALL KINDS RATES IS THE ELIMINATION OF THE NECESSITY TO DESCRIBE AND RATE THE VARIOUS ARTICLES COMPRISING MIXED-TRUCKLOAD SHIPMENTS. THIS ADVANTAGE WAS REFERRED TO BY THE SUPREME COURT OF THE UNITED STATES IN PUBLIC UTILITIES COMMISSION OF CALIFORNIA V. UNITED STATES, 355 U.S. 534, 544-545 (1958), AND APPARENTLY WAS AN IMPORTANT ELEMENT AFFECTING THE DECISION REACHED THERE. THIS ADVANTAGE OBVIOUSLY WOULD BE NEGATED IF THE SHIPPER WERE REQUIRED TO ASCERTAIN ITEMS SUBJECT TO A VALUATION IN THE CLASSIFICATION, LIST THEM, AND DECLARE A VALUATION.

WE HAVE ALSO SAID THAT FREIGHT ALL KINDS RATES ARE APPLICABLE AND WILL NOT BE OBJECTED TO ALTHOUGH PARTICULAR ITEMS COULD BE SHIPPED AT LOWER CHARGES UNDER APPLICABLE TARIFFS, IF OVERALL THE FREIGHT ALL KINDS RATES PROVIDE LOWER CHARGES. THUS, A SHIPPER CANNOT SELECT CERTAIN ARTICLES IN HIS SHIPMENT AND APPLY ON THEM A LOWER CLASS RATE, LOWER THAN THE QUOTATION RATE, OR VICE VERSA.

THE DEDUCTION ACTION TAKEN BY THE GOVERNMENT AND THE ACTION TAKEN BY THE TRANSPORTATION AND CLAIMS DIVISION IN DENYING THE CLAIM IS HEREBY SUSTAINED.