B-31936, FEBRUARY 24, 1943, 22 COMP. GEN. 832

B-31936: Feb 24, 1943

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" AND THIS OFFICE WILL INTERPOSE NO OBJECTION TO THE PAYMENT OF POSTAL INDEMNITY FOR VALUABLE ARTICLES SO INSURED WHICH ARE RIFLED IN THE MAILS. 1943: I HAVE YOUR LETTER OF JANUARY 21. AS FOLLOWS: CLAIMS FOR INDEMNITY HAVE BEEN FILED WITH THIS DEPARTMENT ON ACCOUNT OF THE ALLEGED RIFLING OF SIX ARTICLES MAILED BY THE UNITED STATES MINT AT DENVER. THESE ARTICLES WERE ACCEPTED AS INSURED MAIL BUT WERE GIVEN TREATMENT AS REGISTERED MAIL IN ACCORDANCE WITH THE POSTMASTER GENERAL'S ORDER NO. 3433. NO COMMERCIAL INSURANCE WAS CARRIED ON THESE PARCELS. HAVE BEEN CITED IN SUPPORT OF THE VIEW THAT THE PROHIBITION OF THE GOVERNMENT LOSSES IN SHIPMENT ACT WOULD NOT BAR THE PAYMENT OF LIMITED INDEMNITY ON A GOVERNMENT SHIPMENT OF VALUABLE PROPERTY WHERE THE INSURANCE OR REGISTRY FEATURES OF THE POSTAL SERVICE HAVE BEEN RESORTED TO WITH A VIEW OF MINIMIZING THE RISK OF LOSS IN THE SHIPMENT OF SUCH ARTICLES.

B-31936, FEBRUARY 24, 1943, 22 COMP. GEN. 832

POSTAL INSURANCE - GOVERNMENT SHIPMENT OF VALUABLES THE PROCUREMENT, ON A GOVERNMENT SHIPMENT OF "VALUABLES," OF POSTAL INSURANCE INVOLVING NOT ONLY INDEMNITY AGAINST LOSS OR DAMAGE BUT A SPECIAL SERVICE WHICH MINIMIZES THE RISK OF LOSS MAY BE CONSIDERED AS NOT CONTRAVENING THE GOVERNMENT LOSSES IN SHIPMENT ACT OF JULY 8, 1937, WHICH PROHIBITS THE PROCUREMENT OF INSURANCE IN THE SHIPMENT OF "VALUABLES," AND THIS OFFICE WILL INTERPOSE NO OBJECTION TO THE PAYMENT OF POSTAL INDEMNITY FOR VALUABLE ARTICLES SO INSURED WHICH ARE RIFLED IN THE MAILS.

COMPTROLLER GENERAL WARREN TO THE POSTMASTER GENERAL, FEBRUARY 24, 1943:

I HAVE YOUR LETTER OF JANUARY 21, 1943, AS FOLLOWS:

CLAIMS FOR INDEMNITY HAVE BEEN FILED WITH THIS DEPARTMENT ON ACCOUNT OF THE ALLEGED RIFLING OF SIX ARTICLES MAILED BY THE UNITED STATES MINT AT DENVER, COLORADO, ADDRESSED TO THE FEDERAL RESERVE BANK, AT HELENA, MONTANA. THESE ARTICLES WERE ACCEPTED AS INSURED MAIL BUT WERE GIVEN TREATMENT AS REGISTERED MAIL IN ACCORDANCE WITH THE POSTMASTER GENERAL'S ORDER NO. 3433, DATED APRIL 14, 1933. NO COMMERCIAL INSURANCE WAS CARRIED ON THESE PARCELS. HOWEVER, QUESTION HAS BEEN RAISED AS TO THE PROPRIETY OF PAYING INDEMNITY--- THE TOTAL LOSS AMOUNTING TO $76.20--- BY REASON OF THE APPARENT VIOLATION OF THE PROVISIONS OF THE GOVERNMENT LOSSES IN SHIPMENT ACT (5 U.S.C. 134, ET SEQ.) WHICH PRESCRIBES THAT NO EXECUTIVE DEPARTMENT OR AGENCY SHALL INCUR ANY OBLIGATION OR EXPEND ANY MONEY FOR INSURANCE ON AND AFTER THE EFFECTIVE DATE OF REGULATIONS AUTHORIZED BY THE ACT (5 U.S.C. 134C).

DECISIONS OF YOUR OFFICE REPORTED IN 17 C.G. 139, AND 741, HAVE BEEN CITED IN SUPPORT OF THE VIEW THAT THE PROHIBITION OF THE GOVERNMENT LOSSES IN SHIPMENT ACT WOULD NOT BAR THE PAYMENT OF LIMITED INDEMNITY ON A GOVERNMENT SHIPMENT OF VALUABLE PROPERTY WHERE THE INSURANCE OR REGISTRY FEATURES OF THE POSTAL SERVICE HAVE BEEN RESORTED TO WITH A VIEW OF MINIMIZING THE RISK OF LOSS IN THE SHIPMENT OF SUCH ARTICLES. IN SHORT, THE OPINION HAS BEEN EXPRESSED--- BASED UPON YOUR DECISIONS- - THAT POSTAL INDEMNITY MAY BE CONTRACTED FOR AND PAID IN CASES OF THIS KIND, WHEREAS PRIVATE INSURANCE WITH COMMERCIAL COMPANIES MAY NOT BE CONTRACTED FOR BY REASON OF THE LIMITATIONS OF THE ACT CITED ABOVE.

YOUR DECISION IN THE MATTER WILL BE APPRECIATED.

SECTION 4 OF THE GOVERNMENT LOSSES IN SHIPMENT ACT, AS AMENDED, 50 STAT. 479--- HEREINAFTER REFERRED TO AS THE ACT--- PROVIDES:

SEC. 4. ON AND AFTER THE EFFECTIVE DATE OF THE REGULATIONS PRESCRIBED UNDER SECTION 1, NO EXECUTIVE DEPARTMENT, INDEPENDENT ESTABLISHMENT, AGENCY, WHOLLY OWNED CORPORATION, OFFICER, OR EMPLOYEE SHALL EXPEND ANY MONEY, OR INCUR ANY OBLIGATION, FOR INSURANCE, OR FOR THE PAYMENT OF PREMIUMS ON INSURANCE, AGAINST LOSS, DESTRUCTION, OR DAMAGE IN THE SHIPMENT OF VALUABLES EXCEPT AS SPECIFICALLY AUTHORIZED BY THE SECRETARY OF THE TREASURY. THE SECRETARY OF THE TREASURY MAY GIVE SUCH AUTHORIZATION IF HE SHALL FIND THAT THE RISK OF LOSS, DESTRUCTION, OR DAMAGE IN SUCH SHIPMENT CANNOT BE ADEQUATELY GUARDED AGAINST BY THE FACILITIES OF THE UNITED STATES OR THAT THE CIRCUMSTANCES ARE SUCH THAT ADEQUATE REPLACEMENT CANNOT BE PROVIDED UNDER THIS ACT.

IT IS CLEAR THAT THE PRIMARY PURPOSE OF THE ACT WAS TO ABROGATE THE EXISTING PRACTICE OF THE GOVERNMENT OF CARRYING COMMERCIAL INSURANCE WITH PRIVATE INSURANCE COMPANIES TO OBTAIN PROTECTION AGAINST LOSS IN THE SHIPMENT OF "VALUABLES," AND TO EFFECT THE SAVING OF AMOUNTS WHICH OTHERWISE WOULD BE EXPENDED IN THE PAYMENT OF PREMIUMS TO SAID COMPANIES. SEE SENATE REPORT NO. 738, 75TH CONGRESS. HENCE, IT WOULD SEEM TO BE AT LEAST DOUBTFUL THAT THE TERM "INSURANCE" APPEARING IN THE ACT, SUPRA, WAS INTENDED TO INCLUDE POSTAL INSURANCE. HOWEVER, A DETERMINATION OF THE QUESTION HERE INVOLVED DOES NOT ENTIRELY REST ON THAT POINT.

IT HAS BEEN HELD (17 COMP. GEN. 741; ID. 139, CITED IN YOUR SUBMISSION) THAT THE AMOUNT PAID A CARRIER TO HANDLE A GOVERNMENT SHIPMENT CONSISTING OF ARTICLES OF PECULIAR OR UNUSUAL VALUE, AS DISTINGUISHED FROM ARTICLES OF ORDINARY MERCHANDISE, WITH A CARE COMMENSURATE WITH ITS REAL VALUE, SHOULD NOT BE CONSIDERED AS PAYMENT OF PREMIUMS OR INSURANCE WITHIN THE MEANING OF THE ACT, BUT AS FAIR AND JUST COMPENSATION TO THE CARRIER FOR THE CHARACTER OF THE SERVICE REQUIRED AND RENDERED IN HANDLING AND TRANSPORTING SAFELY SUCH VALUABLE ARTICLE OR ARTICLES.

THERE WOULD APPEAR TO BE FOR APPLICATION HERE THE STATEMENT IN 3 COMP. GEN. 391, AT PAGE 392, AS FOLLOWS:

INSURANCE ON GOVERNMENT PROPERTY HAS HAD FREQUENT CONSIDERATION AND A SETTLED POLICY FORMULATED THAT THE GOVERNMENT WOULD NOT INSURE ITS PROPERTY. PARCEL/POST INSURANCE, HOWEVER, IS NOT OF THAT GENERAL CLASS, BUT MAY BE CONSIDERED MORE AS AN ADDITIONAL SERVICE PERFORMED BY ONE BRANCH OF THE GOVERNMENT, THE POST OFFICE DEPARTMENT, FOR THE OTHER BRANCHES OF THE GOVERNMENT. IT IS ALSO DISTINGUISHED FROM INSURANCE ON OTHER PROPERTY OF THE GOVERNMENT ON THE BASIS OF THE GREATLY INCREASED HANDLING THROUGH THE PARCEL POST, INVOLVING THE HUMAN ELEMENT AND THE WIDE AREA OVER WHICH THE PROPERTY MUST BE TRANSPORTED, ALL OF WHICH INCREASES THE HAZARD AND JUSTIFIES A DIFFERENT REASONING IN DETERMINING THE NECESSITY FOR INSURANCE.

THIS ADDITIONAL SERVICE CALLS FOR A REGISTRATION, A MORE CAREFUL HANDLING INSURING SAFE DELIVERY IN A GREATER PERCENTAGE OF SHIPMENTS, AND INDEMNITY AGAINST LOSS OR THEFT. * * *

ACCORDINGLY, ON THE BASIS THAT POSTAL INSURANCE INVOLVES NOT ONLY INDEMNITY AGAINST LOSS OR DAMAGE BUT A SPECIAL SERVICE WHICH MINIMIZES THE RISK OF LOSS, IT MAY BE CONSIDERED THAT THE PROCUREMENT OF SUCH INSURANCE IN THIS CASE DOES NOT CONTRAVENE THE PROVISIONS OF THE GOVERNMENT LOSSES IN SHIPMENT ACT, AS AMENDED, AND, SO FAR AS THIS OFFICE IS CONCERNED, NO OBJECTION WILL BE INTERPOSED TO PAYMENT OF THE INDEMNITY CLAIMS SUCH AS REFERRED TO IN YOUR LETTER.