B-182216, MAR 10, 1975, 54 COMP GEN 742

B-182216: Mar 10, 1975

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WHICH WAS READILY APPARENT TO CARRIER'S DRIVER. WAS PROPER BECAUSE IMPROPER LOADING BY SHIPPER CAN CONSTITUTE COMPLETE DEFENSE TO DAMAGE CLAIMS ONLY WHEN SHIPPER LOADING IS NOT APPARENT ON ORDINARY OBSERVATION BY CARRIER. TRANSPORTATION - MOTOR CARRIER SHIPMENTS - PAYMENT - SET-OFF SETOFF OF MONIES DUE CARRIER AGAINST GOVERNMENT CLAIMS FOR LOSS AND DAMAGE NEITHER NOTED ON DELIVERY RECEIPT BECAUSE OF MISUNDERSTANDING AS TO NATURE OF GOODS NOR ON GOVERNMENT BILL OF LADING (GBL) WHEN CARRIER RECEIVED THE GOODS WAS PROPER BECAUSE CLEAR DELIVERY RECEIPT DOES NOT PREVENT ESTABLISHING BY OTHER EVIDENCE RECEIPT OF GOODS IN DAMAGED CONDITION. GBL WITH NO EXCEPTION IS PRIMA FACIE EVIDENCE THAT PARTS OF SHIPMENT OPEN TO INSPECTION AND VISIBLE WERE RECEIVED BY CARRIER IN GOOD ORDER.

B-182216, MAR 10, 1975, 54 COMP GEN 742

SET-OFF - TRANSPORTATION - PROPERTY DAMAGE, ETC. - SET-OFF COMMON LAW RIGHT SETOFF OF MONIES DUE CARRIER AGAINST GOVERNMENT CLAIMS FOR LOSS AND DAMAGE CAUSED BY IMPROPER LOADING BY SHIPPER OF CARTONS OF FOLDING BEDS UNDER CARRIER'S TRAILER, WHICH WAS READILY APPARENT TO CARRIER'S DRIVER, WAS PROPER BECAUSE IMPROPER LOADING BY SHIPPER CAN CONSTITUTE COMPLETE DEFENSE TO DAMAGE CLAIMS ONLY WHEN SHIPPER LOADING IS NOT APPARENT ON ORDINARY OBSERVATION BY CARRIER. TRANSPORTATION - MOTOR CARRIER SHIPMENTS - PAYMENT - SET-OFF SETOFF OF MONIES DUE CARRIER AGAINST GOVERNMENT CLAIMS FOR LOSS AND DAMAGE NEITHER NOTED ON DELIVERY RECEIPT BECAUSE OF MISUNDERSTANDING AS TO NATURE OF GOODS NOR ON GOVERNMENT BILL OF LADING (GBL) WHEN CARRIER RECEIVED THE GOODS WAS PROPER BECAUSE CLEAR DELIVERY RECEIPT DOES NOT PREVENT ESTABLISHING BY OTHER EVIDENCE RECEIPT OF GOODS IN DAMAGED CONDITION, GBL WITH NO EXCEPTION IS PRIMA FACIE EVIDENCE THAT PARTS OF SHIPMENT OPEN TO INSPECTION AND VISIBLE WERE RECEIVED BY CARRIER IN GOOD ORDER, AND DAMAGE DONE WAS TO CONTAINERS WHICH WERE OPEN TO INSPECTION AND VISIBLE RATHER THAN TO GOODS CONCEALED INSIDE CONTAINERS.

IN THE MATTER OF GULF PACIFIC AGRICULTURAL COOP., INC., MARCH 10, 1975:

THIS DECISION IS TO GULF PACIFIC AGRICULTURAL COOP., INC., (GULF PACIFIC) IN RESPONSE TO ITS REQUEST OF JANUARY 7, 1975, FILE G-9570 002, THROUGH ITS ATTORNEY TODD M. SLOAN, OF HILL, FARRER, AND BURRILL, FOR REVIEW OF THE ACTION INITIATED BY OUR TRANSPORTATION AND CLAIMS DIVISION (TCD) RESULTING IN THE COLLECTION BY SETOFF OF CLAIMS FOR $2,893.69 AND $201.34 RESPECTIVELY, REPRESENTING DAMAGES TO SHIPMENTS CARRIED BY GULF PACIFIC. TCD'S CLAIM FILE NUMBERS ARE TK-967251 AND TK 967254.

WE NOTE THAT GULF PACIFIC APPARENTLY TRANSPORTED THESE SHIPMENTS AS A SO- CALLED AGRICULTURE COOPERATIVE AS DEFINED IN SECTION 15 OF THE AGRICULTURE MARKETING ACT, AS AMENDED, 12 U.S.C. 1141J (1970); UNDER 49 U.S.C. 303(B)(5) (SUPP. III, 1973), WITH EXCEPTIONS NOT PERTINENT HERE, IT THUS IS EXEMPT FROM THE PROVISIONS OF PART II OF THE INTERSTATE COMMERCE ACT, 49 U.S.C. 301, ET SEQ., INCLUDING THE STATUTORY PROVISIONS IN 49 U.S.C. 20(11) AND 319 (1970) RELATING TO CARRIER LIABILITY FOR THE LOSS OF OR DAMAGE TO PROPERTY TRANSPORTED BY IT. HOWEVER, THE SUPREME COURT HAS STATED THAT 49 U.S.C. 20(11) CODIFIES THE COMMON LAW RULE MAKING A CARRIER LIABLE, WITHOUT PROOF OF NEGLIGENCE, FOR ALL DAMAGES TO THE GOODS TRANSPORTED BY IT, UNLESS IT AFFIRMATIVELY SHOWS THAT THE DAMAGE WAS OCCASIONED BY THE SHIPPER, ACTS OF GOD, THE PUBLIC ENEMY, PUBLIC AUTHORITY OR THE INHERENT VICE OR NATURE OF THE COMMODITY. SECRETARY OF AGRICULTURE V. UNITED STATES, 350 U.S. 162, 165, NOTE 9 (1956); LOSS AND DAMAGE CLAIMS, 340 I.C.C. 515, 522 (1972). THUS, IN AN ACTION TO RECOVER FROM GULF PACIFIC FOR DAMAGES TO A SHIPMENT, THE SHIPPER ESTABLISHES A PRIMA FACIE CASE WHEN HE SHOWS RECEIPT AT ORIGIN IN GOOD CONDITION, ARRIVAL AT DESTINATION IN A DAMAGED CONDITION AND THE AMOUNT OF DAMAGES. THEREUPON, THE BURDEN OF PROOF IS UPON GULF PACIFIC TO SHOW BOTH THAT IT WAS FREE FROM NEGLIGENCE AND THAT THE DAMAGE TO THE CARGO WAS DUE TO ONE OF THE EXCEPTED CAUSES RELIEVING IT OF LIABILITY. SEE MISSOURI PACIFIC R.R. V. ELMORE & STAHL, 377 U.S. 134, 138 (1964).

CLAIM TK-967251 COVERS A SHIPMENT OF 576 CARTONS OF ADJUSTABLE HOSPITAL FOLDING FIELD BEDS MOVING FROM PARRON INDUSTRIES, SUMNER, WASHINGTON, TO THE DEFENSE DEPOT, MECHANICSBURG, PENNSYLVANIA, UNDER GOVERNMENT BILL OF LADING (GBL) NO. H-1879678. GULF PACIFIC'S TRAILER EK-2 (A CLOSED VAN) WAS LOADED TO CAPACITY BY THE SHIPPER ON APRIL 20, 1973, WITH 517 CARTONS; 29 CARTONS WERE LOADED IN A RACK BENEATH THE TRAILER AND 30 CARTONS WERE LOADED ON APRIL 26, 1973, ON A SECOND TRAILER FURNISHED AT THE CARRIER'S CONVENIENCE. UPON ARRIVAL AT DESTINATION ON MAY 4, 1973, TRAILER EK-2 WAS DELIVERED WITH AN EXCEPTION SHOWING THAT THE 29 CARTONS LOADED BENEATH THE TRAILER HAD SUSTAINED WATER DAMAGE RENDERING THE CONTENTS A TOTAL LOSS. CARRIER REPRESENTATIVE WAIVED INSPECTION AND AUTHORIZED DESTRUCTION OF THE 29 BEDS.

A CLAIM FOR DAMAGES OF $2,893.69 WAS FILED AGAINST GULF PACIFIC CONSISTING OF $2,813 FOR THE BEDS PLUS UNEARNED FREIGHT CHARGES OF $80.69. GULF PACIFIC DENIS LIABILITY AND CLAIMS THAT TCD'S SETOFF ACTION WAS IMPROPER, BECAUSE THE SHIPPER LOADED THE TRAILER.

GULF PACIFIC DOES NOT DENY THAT THE BEDS WERE IN GOOD CONDITION WHEN DELIVERED TO IT. FURTHER, THE EVIDENCE ESTABLISHES THAT THE BEDS WERE DAMAGED UPON ARRIVAL AND THE AMOUNT OF THE DAMAGES. THEREFORE, A PRIMA FACIE CASE OF CARRIER LIABILITY HAS BEEN ESTABLISHED. GULF PACIFIC ASSERTS, HOWEVER, THAT IT IS NOT LIABLE AND RELIES UPON THE ACT OF THE SHIPPER IN LOADING THE TRAILER, ONE OF THE EXCEPTIONS TO CARRIER LIABILITY.

WHEN THE SHIPPER ASSUMES RESPONSIBILITY FOR LOADING HE IS LIABLE FOR DEFECTS WHICH ARE LATENT AND CONCEALED AND WHICH CANNOT BE DISCERNED BY ORDINARY OBSERVATION BY THE AGENTS OF THE CARRIER. HOWEVER, IF THE IMPROPER LOADING IS APPARENT, THE CARRIER WILL BE LIABLE NOTWITHSTANDING THE NEGLIGENCE OF THE SHIPPER. UNITED STATES V. SAVAGE TRUCK LINE, INC., 209 F.2D 442, 445 (4TH CIR. 1953), CERT. DENIED, 347 U.S. 952 (1954).

IT IS UNCLEAR FROM THE RECORD WHETHER GULF PACIFIC'S DRIVER WAS PRESENT DURING THE LOADING PERIOD; HOWEVER, HE WAS THERE TO PICK UP THE TRAILER AND COULD HAVE OBJECTED TO THE MANNER OF LOADING, WHICH WAS PERFECTLY APPARENT, AT THAT TIME. HE DID NOT OBJECT, HOWEVER. THE CARRIER, THEREFORE, WOULD APPEAR TO BE LIABLE.

IT HAS NEVER BEEN OUR POSITION THAT SHIPPER LOADING CONSTITUTES AN ABSOLUTE DEFENSE. RATHER, WE ASSERT THAT IMPROPER LOADING BY THE SHIPPER CAN CONSTITUTE A COMPLETE DEFENSE TO DAMAGE CLAIMS ONLY WHEN THE IMPROPER LOADING IS NOT APPARENT ON ORDINARY OBSERVATION BY THE CARRIER. MODERN TOOL CORPORATION V. PENNSYLVANIA R.R., 100 F. SUPP. 595 (D.N.J. 1951); MINNEAPOLIS ST. P. & S.S.M. R.R. V. METAL-MATIC, INC., 323 F.2D 903 (8TH CIR. 1963); LEWIS MACHINE CO. V. AZTEC LINES, INC., 172 F.2D 746 (7TH CIR. 1949).

IN TCD'S LETTER OF OCTOBER 31, 1974, TO GULF PACIFIC, IT SAID:

*** YOUR DRIVER MUST HAVE KNOWN OF THE USE OF THE RACK BENEATH THE TRAILER. IF USE OF THAT RACK COULD POTENTIALLY RESULT IN DAMAGE, IT WAS THE DRIVER'S DUTY TO OBJECT TO THE MANNER OF LOADING BEFORE MOVING THE TRUCK.

GULF PACIFIC STILL DOES NOT DENY THAT ITS DRIVER KNEW OR MUST HAVE KNOWN OF THE USE OF THE RACK BENEATH THE TRUCK. RATHER, IT ASSERTS THAT THE CASES TCD CITES "*** DO NOT BEAR OUT YOUR (ITS) ASSERTION THAT OUR DRIVER HAS A DUTY TO OBJECT TO THE MANNER OF LOADING BEFORE MOVING HIS VEHICLE." HOWEVER, EVEN THE QUOTATION THAT GULF PACIFIC CITES FROM MODERN TOOL, SUPRA AT 598, CLEARLY SUPPORTS OUR POSITION. THEREIN IT IS STATED THAT THE CARRIER SHOULD NOT BE HELD LIABLE IF THE SHIPPER'S DEFECTIVE LOADING "*** IS NOT APPARENT TO THE ORDINARY OBSERVATION OF THE CARRIER ***." THE CARRIER IN MODERN TOOL, HOWEVER, WAS NOT HELD LIABLE BECAUSE THE SHIPPER LOADED AND SEALED A RAILROAD CAR ON ITS OWN PRIVATE SIDING. THE DEFECTIVE LOADING, THEREFORE, WAS NOT APPARENT. THE COURT IN METAL-MATIC, SUPRA AT 907 ALSO AGREES THAT THE CARRIER CAN BE LIABLE IF THE ACT OF THE SHIPPER IN LOADING THE CAR IS PATENT AND APPARENT BY ORDINARY OBSERVATION. HERE, HOWEVER, THE LOADING OF ORDINARY CARDBOARD CARTONS WITH BEDDING INSIDE ON A RACK BENEATH A TRAILER, WHERE WATER, MUD, AND ALL MANNER OF ROAD GRIME COULD EASILY BE SPLASHED ONTO AND THROUGH THE CARTONS WAS APPARENT TO THE ORDINARY OBSERVATION OF THE CARRIER'S DRIVER. GULF PACIFIC CAN, THEREFORE, BE HELD LIABLE.

SOUTH CAROLINA ASPARAGUS GROWERS ASS'N. V. SOUTHERN R. CO., 46 F.2D 452 (4TH CIR. 1931), CITED BY GULF PACIFIC, DOES NOT HELP ITS POSITION, BECAUSE IT INVOLVED A "SHIPPER'S LOAD AND COUNT" BILL OF LADING, AND THE COURT REFUSED EVEN TO ALLOW TESTIMONY THAT THE CARRIER SAW THE CAR BEFORE SHIPMENT.

ASSOCIATION OF MARYLAND PILOTS V. BALTIMORE & O. R.R., 304 F. SUPP. 548 (D. MD. 1969) IS EQUALLY UNPERSUASIVE. IN THIS CASE THE COURT HOLDS THE CARRIER LIABLE DESPITE THE SHIPPER'S OBVIOUS NEGLIGENCE IN LOADING A MACHINE BECAUSE THE MACHINE WAS IN GOOD CONDITION WHEN DELIVERED TO THE CARRIER (AND EVEN AFTER A DERAILMENT BY THE RAILROAD), BUT ARRIVED IN DAMAGED CONDITION. CITING MISSOURI PACIFIC, SUPRA, THE COURT HOLDS THAT A PRIMA FACIE CASE AGAINST THE CARRIER HAS BEEN ESTABLISHED AND THAT THE CARRIER, THEREFORE, HAS THE BURDEN TO PROVE ITS OWN ABSENCE OF NEGLIGENCE, WHICH IT DID NOT DO. THE CARRIER, THEREFORE, WAS HELD LIABLE.

WE ALSO HAVE CITED LEWIS MACHINE CO. V. AZTEC LINES, INC., SUPRA. IN THIS CASE A LARGE MACHINE CRASHED THROUGH THE WALL OF THE CARRIER'S TRAILER WHEN THE DRIVER WENT AROUND A CURVE. THE CIRCUIT COURT UPHELD THE DISTRICT COURT'S DECISION THAT EVEN IF THE LOADING BY THE CARRIER WAS DEFECTIVE, "*** THE DEFECTS WERE PATENT TO AZTEC (THE CARRIER) THROUGH THE DRIVER OF THE TRUCK AND THE TERMINAL PERSONNEL OF AZTEC IN CHICAGO, WHO ACCEPTED THE SHIPMENT ***." AZTEC, THEREFORE, WAS HELD LIABLE. LEWIS MACHINE CO.. V. AZTEC LINES, INC., SUPRA AT 748. THIS CASE IS PRECISELY ON POINT HERE. ALTHOUGH THE BEDS WERE LOADED DEFECTIVELY BY THE SHIPPER, THIS WAS PATENT TO GULF PACIFIC THROUGH THE DRIVER OF ITS TRUCK. FOLLOWING THE LEWIS MACHINE CASE, GULF PACIFIC SHOULD BE HELD LIABLE FOR THE DAMAGE TO THE FOLDING BEDS. ACCORDINGLY, THE ADMINISTRATIVE SETOFF ACTION INITIATED BY TCD WOULD APPEAR TO HAVE BEEN PROPER AND IS SUSTAINED.

CLAIM TK-967254 COVERS A SHIPMENT OF 27 CHESTS OF COLLAPSIBLE FABRIC TANKS MOVING FROM UNIROYAL, INC., WARSAW, INDIANA, TO TOOELE ARMY DEPOT, UTAH, UNDER GBL NO. H-2807496, DATED JUNE 11, 1973. SHORTLY AFTER THE SHIPMENT HAD BEEN DELIVERED ON JUNE 20, 1973, WITHOUT EXCEPTION, AND AFTER GULF PACIFIC'S DRIVER HAD LEFT THE TERMINAL, DAMAGES WERE NOTED ON SEVEN OF THE CHESTS. A DAMAGE REPORT WAS PREPARED AND THE COST OF REPAIRS WAS ESTIMATED TO BE $201.34. THE SHIPPER CLAIMS THAT LOADING WAS ACCOMPLISHED WITHOUT DAMAGE. FURTHER, GULF PACIFIC ACCEPTED THE CHESTS AT ORIGIN WITHOUT NOTING ANY EXCEPTIONS ON THE GBL. GULF PACIFIC DENIES LIABILITY, HOWEVER, BECAUSE OF THE CLEAR DELIVERY RECEIPT GIVEN TO IT BY THE CONSIGNEE.

IT LONG HAS BEEN HELD THAT A CLEAR DELIVERY RECEIPT IS NOT CONCLUSIVE. CLEAR DELIVERY RECEIPT DOES NOT PREVENT ESTABLISHING, BY OTHER EVIDENCE, THAT A SHIPMENT ACTUALLY WAS RECEIVED IN A DAMAGED CONDITION. SEE RHOADES, INC. V. UNITED AIR LINES, INC., 340 F.2D 481, 486 (3RD CIR. 1965); MEARS V. NEW YORK, N.H. & H. R.R., 52 A. 610 (CONN. 1902). GULF PACIFIC, HOWEVER, CLAIMS THAT "THE FACTUAL SITUATION *** IS CLEARLY WITHIN THE PARAMETERS OF THE CONCEALED LOSS PROBLEM." QUOTING FROM MILLER'S LAW OF FREIGHT LOSS AND DAMAGE CLAIMS (R.SIGMON ED. 3D ED. 1967) AT 143, GULF PACIFIC ASSERTS:

IN THE CASE OF CONCEALED LOSS OR DAMAGE, HOWEVER, THE CARRIER'S RECEIPT INDICATES THAT THE GOODS WERE DELIVERED IN GOOD ORDER SO THE ESSENTIALS OF A PRIMA FACIE CASE OF CARRIER LIABILITY ARE LACKING.

ASSUMING WITHOUT DECIDING THAT THIS IS SO, IT DOES NOT DENIGRATE OUR POSITION BECAUSE WE HAVE NOT TREATED THIS DAMAGE AS A CONCEALED LOSS PROBLEM. THE DAMAGE IN QUESTION WAS DONE TO THE 27 CHEST CONTAINERS OF THE COLLAPSIBLE FABRIC TANKS. THE DAMAGE WAS NOT CONCEALED INSIDE ANY PACKAGE. RATHER IT WAS READILY OBSERVABLE. THE DISCREPANCY REPORT BY THE TRANSPORTATION OFFICER AT THE TOOELE ARMY DEPOT INDICATES THAT THE ISSUANCE OF A CLEAR DELIVERY RECEIPT RESULTED FROM THE CONFUSION OF THE INCHECKER AS TO THE QUALITY OF THE ARTICLES IN THE SHIPMENT. THE RECEIVING DEPARTMENT AT TOOELE APPARENTLY WAS AWARE OF THE DAMAGES BUT MISTAKENLY THOUGHT THAT THE MATERIAL BEING DELIVERED WAS USED RATHER THAN NEW AND THEREFORE NO EXCEPTION WAS NOTED ON THE DELIVERY RECEIPT.

AS NOTED ABOVE, THE ABSENCE OF NOTATIONS ON A DELIVERY RECEIPT IS ONLY EVIDENCE THAT THE GOODS WERE RECEIVED IN PROPER ORDER, BUT DOES NOT CONCLUDE THE ISSUE AND OTHER EVIDENCE MAY BE RECEIVED. RHOADES, INC. V. UNITED AIR LINES, INC., SUPRA.

THE AVAILABLE EVIDENCE ESTABLISHES HERE (1) THAT THE GOODS WERE RECEIVED BY THE CONSIGNEE IN DAMAGED CONDITION; (2) THAT THE DAMAGE WAS NOT CONCEALED BUT RATHER THAT IT WAS NOT NOTED ON THE DELIVERY RECEIPT BECAUSE OF A MISUNDERSTANDING ON THE PART OF THE RECEIVING DEPARTMENT AT TOOELE; AND (3) THAT AT ORIGIN GULF PACIFIC NOTED NO EXCEPTIONS ON THE GBL.

IN CONCEALED DAMAGE CASES, LACK OF NOTATION OF EXCEPTIONS ON A GBL IS NOT PRIMA FACIE EVIDENCE THAT THE GOODS WERE DELIVERED TO THE CARRIER IN GOOD CONDITION, BECAUSE THE BILL OF LADING USUALLY ONLY SAYS THAT THE GOODS WERE RECEIVED "IN APPARENT GOOD ORDER AND CONDITION (CONTENTS AND VALUE UNKNOWN)." THE CARRIER, THEREFORE, ONLY AVERS THAT THE EXTERNAL PARTS OF THE SHIPMENT OPEN TO INSPECTION AND VISIBLE ARE IN GOOD CONDITION.

THIS IS PRECISELY WHAT IS INVOLVED HERE. ONLY THE CONTAINERS OF THE FABRIC TANKS WERE DAMAGED, AND THESE WERE READILY OPEN TO INSPECTION AND WERE VISIBLE. THE LACK OF EXCEPTIONS ON GULF PACIFIC'S GBL, THEREFORE, IS PRIME FACIE EVIDENCE THAT THE 27 CHESTS (ALTHOUGH NOT THEIR CONTENTS) WERE IN GOOD ORDER WHEN RECEIVED BY GULF PACIFIC AT ORIGIN. SEE MONNIER V. UNITED STATES, 16 F.2D 812 (E.D. N.Y. 1925) AFFIRMED, 16 F.2D 815 (2ND CIR. 1926); HOOVER MOTOR EXPRESS CO. V. UNITED STATES, 262 F.2D 832 (6TH CIR. 1959).

THEREFORE, A PRIMA FACIE CASE OF CARRIER LIABILITY HAS BEEN ESTABLISHED. SEE MISSOURI P. R. V. ELMORE AND STAHL, SUPRA, AND CASES CITED THEREIN. AND BECAUSE THE CARRIER HAS PRESENTED NO EVIDENCE, WHATSOEVER, OF ITS FREEDOM FROM NEGLIGENCE AND THAT THE DAMAGE WAS CAUSED SOLELY BY ONE OF THE EXCEPTIONS TO CARRIER LIABILITY, THE SETOFF ACTION INITIATED BY TCD WAS PROPER AND IS SUSTAINED.