B-165435, DECEMBER 23, 1968, 48 COMP. GEN. 435

B-165435, DECEMBER 23, 1968, 48 COMP. GEN. 435

POST OFFICE DEPARTMENT - MAILS - THEFT, LOSS, DAMAGE, ETC. - INSURANCE COVERAGE AN INDEMNITY PAYMENT FOR A LOST PACKAGE VALUED AT $7,448, WHICH IN ADDITION TO BEING FULLY INSURED UNDER THE POSTAL REGISTRY SYSTEM IS COVERED BY A COMMERCIAL INSURANCE POLICY CONTAINING A $10,000 DEDUCTIBLE CLAUSE MAY BE MADE FOR THE FULL VALUE OF THE PACKAGE UNDER 39 U.S.C. 5001, AUTHORIZING INDEMNITY PAYMENTS FOR ARTICLES VALUED AT $1,000 OR LESS "FOR WHICH NO OTHER COMPENSATION OR REIMBURSEMENT HAS BEEN MADE" AND FOR ARTICLES VALUED NOT IN EXCESS OF $10,000 "WHEN THE ARTICLE IS NOT INSURED WITH ANOTHER INSURING AGENCY.' TO HOLD THAT THE INDEMNITY PAYMENT IS LIMITED TO $1,000 BECAUSE THE PACKAGE WAS INSURED BY "ANOTHER INSURING AGENCY," EVEN THOUGH PAYMENT FOR THE LOSS IS PRECLUDED UNDER THE COMMERCIAL INSURANCE POLICY WOULD BE UNREALISTIC, AND READING BOTH QUALIFYING CLAUSES IN SECTION 5001 TOGETHER, PERMITS REIMBURSEMENT FOR THE ACTUAL VALUE OF THE LOSS.

TO THE POSTMASTER GENERAL, DECEMBER 23, 1968:

THIS IS IN REPLY TO YOUR REQUEST OF OCTOBER 11, 1968, FOR OUR OPINION CONCERNING THE INDEMNIFICATION OF SHIMAN BROTHERS-COLONIAL, INC., OF NEW YORK CITY FOR THE LOSS OF A REGISTERED PACKAGE.

ON JUNE 1, 1967, SHIMAN BROTHERS SENT BY REGISTERED MAIL A PACKAGE OF JEWELRY AND PRECIOUS STONES HAVING A DECLARED VALUE OF $7,448. THE ADMINISTRATIVELY PRESCRIBED REGISTRY FEE FOR THAT VALUE, $3.75, AND THE NECESSARY POSTAGE CHARGES WERE PAID. THE PACKAGE WAS NOT DELIVERED TO THE ADDRESSEE AND SHIMAN BROTHERS FILED A CLAIM FOR THE VALUE OF THE LOST ITEMS. ON NOVEMBER 22, 1967, THE CLAIM WAS CERTIFIED FOR PAYMENT, AND ON DECEMBER 1, 1967, A CHECK IN THE AMOUNT OF $7,448 WAS ISSUED.

SUBSEQUENTLY, ON DECEMBER 21, 1967, THE NEW YORK REGIONAL OFFICE OF THE POST OFFICE DEPARTMENT WROTE SHIMAN BROTHERS THAT THE PAYMENT OF $7,448 WAS IN ERROR, IN THAT THE FIRM HAD COMMERCIAL INSURANCE COVERING ITS REGISTERED MAIL "THOUGH SUBJECT TO A $10,000 DEDUCTIBLE EACH AND EVERY LOSS.' THE REGIONAL OFFICE REQUESTED A REFUND OF $6,448 WITH THE EXPLANATION THAT UNDER THE PROVISIONS OF SUBSECTION 5001 (B), TITLE 39 OF THE U.S.C. ANY REGISTERED ARTICLE COVERED IN WHOLE OR IN PART BY COMMERCIAL INSURANCE IS INELIGIBLE FOR MORE THAN $1,000 OF POSTAL INSURANCE. SHIMAN BROTHERS REFUSED TO COMPLY WITH THE REQUEST STATING THE LOST MERCHANDISE WAS NOT COVERED BY COMMERCIAL INSURANCE AND THAT THEY THEREFORE FULLY INSURED THE PACKAGE UNDER THE POSTAL REGISTRY SYSTEM.

THE MAINTENANCE OF THE POSTAL REGISTRY SYSTEM IS AUTHORIZED BY SECTION 5001, TITLE 39 OF THE UNITED STATES CODE. SUBSECTION (A) OF THAT SECTION PROVIDES THAT THE POSTMASTER GENERAL, AS A PART OF THE REGISTRY SYSTEM, "MAY INDEMNIFY THE SENDERS OR OWNERS OF REGISTERED ARTICLES FOR THEIR LOSS, RIFLING, OR DAMAGE, IN THE MAILS.' SUBSECTION (B), THE PROVISIONS OF WHICH PRESCRIBE THE LIMITS OF INDEMNITY AND ARE OF PRIMARY SIGNIFICANCE HEREIN, IS COMPOSED OF TWO SENTENCES:

(1) THE MAXIMUM LIMIT OF INDEMNITY PAYABLE FOR A REGISTERED ARTICLE IS $1,000, OR THE ACTUAL VALUE WHEN THAT IS LESS THAN $1,000, AND FOR WHICH NO OTHER COMPENSATION OR REIMBURSEMENT HAS BEEN MADE. (2) HOWEVER, THE POSTMASTER GENERAL MAY PROVIDE FOR THE PAYMENT OF INDEMNITY FOR THE ACTUAL VALUE OF A REGISTERED ARTICLE, OR INSURED ARTICLE TREATED AS A REGISTERED ARTICLE, IN EXCESS OF $1,000, BUT NOT IN EXCESS OF $10,000 WHEN THE ARTICLE IS NOT INSURED WITH ANOTHER INSURING AGENCY. SUBSECTION (C) OF SECTION 5001 AUTHORIZES THE POSTMASTER GENERAL TO HAVE ,UNDERWRITTEN OR REINSURED IN WHOLE OR IN PART, WITH A COMMERCIAL INSURANCE COMPANY," A LIABILITY OR RISK ASSUMED BY THE DEPARTMENT IN CONNECTION WITH THE MAILING OF A PARTICULAR REGISTERED ARTICLE. ALSO OF SOME SIGNIFICANCE IS SECTION 5011, DEALING WITH INDEMNITY IN THE SITUATION OF CO-INSURANCE. THAT SECTION STATES: "CLAIMS FOR INDEMNITY INVOLVING REGISTERED MAIL * * * WHICH IS ALSO INSURED WITH ANOTHER INSURING AGENCY SHALL BE ADJUSTED BY THE POSTMASTER GENERAL ON A PRO RATA BASIS AS A CO-INSURER WITH THE OTHER INSURING AGENCY.'

WHETHER THE INDEMNITY PAYMENT HEREIN OF THE TOTAL VALUE OF THE LOST PACKAGE WAS PRECLUDED BY STATUTE TURNS UPON THE INTERPRETATION OF THE SECOND SENTENCE OF SUBSECTION 5001 (B), PARTICULARLY THE CLAUSE "WHEN THE ARTICLE IS NOT INSURED WITH ANOTHER INSURING AGENCY.' THE VIEW THAT AN ARTICLE IS TO BE CONSIDERED AS INSURED, AND THUS INDEMNITY LIMITED TO $1,000, EVEN THOUGH REIMBURSEMENT UNDER THE COMMERCIAL INSURANCE POLICY IS PRECLUDED BY THE EXISTENCE OF A DEDUCTIBLE CLAUSE, APPEARS TO US UNREALISTIC AND NOT IN KEEPING WITH THE OTHERWISE PRACTICAL TENOR OF THE REFERRED TO STATUTORY PROVISIONS DEALING WITH INDEMNIFICATION FOR THE LOSS, RIFLING, OR DAMAGE OF REGISTERED ARTICLES IN THE MAIL.

THAT THE FIRST SENTENCE OF SUBSECTION 5001 (B), ESTABLISHING AN INDEMNITY LIMIT OF $1,000 OR THE ACTUAL VALUE WHEN LESS, CONTAINS THE CLAUSE,"FOR WHICH NO OTHER COMPENSATION OR REIMBURSEMENT HAS BEEN MADE," A CLAUSE NOT REITERATED IN THE SECOND SENTENCE OF THE SUBSECTION PERMITTING INDEMNITY IN EXCESS OF $1,000, DOES NOT WARRANT THE CONCLUSION THAT IT IS IMMATERIAL FOR THE PURPOSES OF THE SECOND SENTENCE WHETHER THE LOSS IS THE SUBJECT OF ACTUAL REIMBURSEMENT UNDER THE EXISTING INSURANCE POLICY. MOREOVER, WE ARE OF THE VIEW THAT THE SECOND SENTENCE MUST BE READ IN CONJUNCTION WITH THE FIRST AND THAT THE QUALIFYING CLAUSE "FOR WHICH NO OTHER COMPENSATION OR REIMBURSEMENT HAS BEEN MADE," IS ALSO APPLICABLE TO INDEMNITY PAYMENTS IN EXCESS OF $1,000 UNDER THE SECOND SENTENCE OF THE SUBSECTION. THE EFFECT OF THE CLAUSE PRECLUDING THE POSTMASTER GENERAL FROM PROVIDING FOR THE PAYMENT OF INDEMNITY IN EXCESS OF $1,000 WHEN THE ARTICLE IS INSURED WITH ANOTHER INSURING AGENCY IS TO PREVENT, OR RESTRICT, THE POST OFFICE FROM BECOMING A CO-INSURER, UNDER SECTION 5011, OF ARTICLES HAVING A VALUE OVER $1,000. THAT SITUATION DOES NOT EXIST IN THIS CASE.

NOR DO WE FIND ANYTHING IN THE LEGISLATIVE HISTORY OF THE SECOND SENTENCE OF SUBSECTION (B) OF SECTION 5001 TO SUPPORT AN UNREALISTIC INTERPRETATION OF THE CLAUSE "WHEN THE ARTICLE IS NOT INSURED WITH ANOTHER INSURING AGENCY.' THE SENTENCE STEMS FROM THE ADMINISTRATIVELY SPONSORED ACT OF JUNE 28, 1932, 47 STAT. 338, WHICH, AS DISCLOSED BY THE DEBATE ON THE FLOOR OF THE HOUSE (75 CONG. REC. 5571-5575), HAD FOR ITS PRIMARY PURPOSE THE INCREASE OF THE REVENUES OF THE POSTAL REGISTRY SYSTEM TO REDUCE THE RECURRING DEFICIT OF THE SYSTEM. IT WOULD APPEAR THAT AN INTERPRETATION OF THE SECOND SENTENCE OF SUBSECTION (B) OF SECTION 5001 TO PRECLUDE INDEMNITY COVERAGE WHERE THE POSTAL PATRON DOES NOT ACTUALLY HAVE INSURANCE WOULD NOT BE IN KEEPING WITH THE HISTORICAL LEGISLATIVE PURPOSE OF THE SECOND SENTENCE.

IN VIEW OF THE FOREGOING, AND AS WE FIND NOTHING IN THE POSTAL REGISTRY REGULATIONS (39 CFR PART 161) PRECLUDING IN THIS CASE THE INCURRENCE OF POSTAL INSURANCE LIABILITY FOR THE ACTUAL VALUE OF THE LOST PACKAGE, WE ARE OF THE OPINION THAT THE PAYMENT TO SHIMAN BROTHERS OF THE SUM OF $7,448 WAS WARRANTED AND THAT A LEGAL BASIS FOR THE RECOVERY OF ANY PART OF THAT AMOUNT IS NOT APPARENT.