B-142761, FEB. 8, 1961

B-142761, FEB. 8, 1961

TO MR. EUGENE E. HUNT:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF AUGUST 8, 1960, FILE NO. 437, IN WHICH YOU RAISE ADDITIONAL QUESTIONS CONCERNING OVERPAYMENTS ARISING FROM THE AUDIT OF GOVERNMENT SHIPMENTS INVOLVING THE DOUBLE TRANSIT QUESTION; I.E., SHIPMENTS WHICH WERE STORED IN TRANSIT UNDER ASSOCIATION OF AMERICAN RAILROADS SECTION 22 QUOTATIONS NO. 31-SERIES AND NO. 40- SERIES. BASED ON THE REPRESENTATIONS IN YOUR LETTER OF APRIL 27, 1960, THE COLLECTION OF THESE OVERPAYMENTS HAS BEEN HELD IN ABEYANCE PENDING CONSIDERATION OF THE CONDITION TO OUR POSTPONEMENT OF COLLECTION ACTION WHICH WAS SET FORTH IN OUR LETTER OF JULY 11, 1960.

IN YOUR LETTER OF APRIL 27 YOU GAVE THESE REASONS TO SUBSTANTIATE YOUR REQUEST THAT WE FORBEAR COLLECTING BY DEDUCTION ACTION OVERPAYMENTS INVOLVING THE "HIGHLY ARGUABLE" DOUBLE TRANSIT QUESTION: (1) THE FINANCIAL INABILITY OF THE NEW HAVEN AND THE BOSTON AND MAINE RAILROADS TO ABSORB THE DEDUCTIONS; (2) THE FACT THAT THE DOUBLE TRANSIT QUESTION IS INVOLVED IN THE PENDING CASE OF GULF, MOBILE AND OHIO RAILROAD COMPANY V. UNITED STATES, COURT OF CLAIMS NO. 9-55, WHICH YOU ANTICIPATE WILL "PUT TO REST" THE DISPUTE HERE INVOLVED; AND (3) THE FACT THAT, IN YOUR VIEW, THE FINDINGS IN THE "RIALTO" CASE (UNION PACIFIC RAILROAD COMPANY V. UNITED STATES, 142 CT.CLS. 340), TOGETHER WITH SOME LANGUAGE IN THE COURT'S OPINION, RESOLVES IN THE CARRIERS' FAVOR THE DIFFICULTIES UNDERLYING THE DISPUTE.

AFTER DISCUSSING THE REASONS WHY THE FINDINGS OF FACT IN THE "RIALTO" CASE, PARTICULARLY FINDING NO. 19, ARE NOT NECESSARILY DISPOSITIVE OF THE DOUBLE TRANSIT QUESTION, AND BELIEVING THAT THE PRIMARY PURPOSE OF YOUR APRIL 27 LETTER WAS TO REQUEST THE WITHHOLDING OF DEDUCTION ACTION BECAUSE OF THE CARRIERS' FINANCIAL DIFFICULTIES, WE SAID IN OUR LETTER OF JULY 11 THAT WE WOULD RECONSIDER YOUR REQUEST PROVIDED THAT WE WERE NOTIFIED OF THE AGREEMENT OF THE NEW HAVEN AND THE BOSTON AND MAINE RAILROADS TO ACCEPT AS CONTROLLING ON THE QUESTION OF DOUBLE TRANSIT THE FINAL JUDICIAL DETERMINATION IN THE GULF, MOBILE AND OHIO CASE.

YOU NOW ALLEGE THAT THE U.S. GENERAL ACCOUNTING OFFICE IS NOT HONORING AN AGREEMENT CONCERNING THE ADMINISTRATIVE SETTLEMENT OF THE CLAIMS INVOLVED IN THE NEW YORK, NEW HAVEN AND HARTFORD RAILROAD COMPANY, ET AL. V. UNITED STATES, COURT OF CLAIMS NO. 358-54. YOU SAY THAT IN AGREEING TO SETTLE THAT CASE THE DEPARTMENT OF JUSTICE, WITH OUR CONCURRENCE, AND THE NEW HAVEN RAILROAD AGREED THAT THE "RIALTO" DECISION WAS DISPOSITIVE OF THE DOUBLE TRANSIT QUESTION. ALSO, YOU NOW PRESENT FURTHER ARGUMENT IN SUPPORT OF YOUR VIEW AS TO THE DECISIVE EFFECTS OF FINDING NO. 19 IN THE "RIALTO" CASE.

AS YOU ARE AWARE, THE "RIALTO," "OYSTER POINT" (CHESAPEAKE AND OHIO RAILWAY COMPANY V. UNITED STATES, 161 F.SUPP. 403), AND ONE OF THE ISSUES IN THE NEW HAVEN (COURT OF CLAIMS NO. 358-54) CASES CONCERNED THE QUESTION WHETHER OPERATIONS AT THE BACK-UP DEPOTS THERE INVOLVED CONSTITUTED A STORAGE IN TRANSIT UNDER QUOTATION NO. 40-SERIES OR A HOLDING FOR ORDERS UNDER CARRIER RECONSIGNMENT TARIFFS. THE COURT IN THE "RIALTO" AND "OYSTER POINT" CASES HELD THAT A STORAGE IN TRANSIT WAS INVOLVED AND AS TO THAT QUESTION THE PROSPECT OF A CONTRARY HOLDING IN THE NEW HAVEN CASE APPEARED DOUBTFUL. FOR THAT REASON, AS THE PARTIES SEEM TO HAVE UNDERSTOOD, ON OCTOBER 28, 1958, THE DEPARTMENT OF JUSTICE AGREED TO ACCEPT THE NEW HAVEN RAILROAD'S OFFER TO WITHDRAW ITS CASE FROM COURT FOR ADMINISTRATIVE SETTLEMENT ON THE BASIS OF THE DECISION IN THE "RIALTO" AND ,OYSTER POINT" CASES. THE GOVERNMENT'S ENTITLEMENT TO TWO TRANSIT PRIVILEGES, ONE UNDER QUOTATION NO. 31 SERIES, AND THE OTHER UNDER QUOTATION NO. 40-SERIES, ON SHIPMENTS OF AMMUNITION MOVING FROM INTERIOR POINTS OF ORIGIN PRIOR TO FEBRUARY 1, 1944, WAS NOT RAISED; CONSEQUENTLY, THOSE CASES, AND THE AGREEMENT TO SETTLE THE NEW HAVEN CASE, ARE NOT DISPOSITIVE OF THE QUESTION OF THE AVAILABILITY OF TWO TRANSIT PRIVILEGES AT A THROUGH RATE FROM INITIAL POINT OF ORIGIN TO THE FINAL DESTINATION. FURTHERMORE, ON JANUARY 5, 1959, REPRESENTATIVES OF THE NEW HAVEN AND THE BOSTON AND MAINE RAILROADS, INCLUDING THEIR ATTORNEYS, ATTENDED A CONFERENCE HELD IN OUR TRANSPORTATION DIVISION TO DISCUSS THE SETTLEMENT ARRANGEMENTS ON THE CLAIMS WITHDRAWN FROM SUIT IN COURT OF CLAIMS NO. 358- 54. IT IS REPORTED THAT THOSE REPRESENTATIVES DEFINITELY UNDERSTOOD THAT CLAIMS INVOLVING STORAGE IN TRANSIT AT THE HUDSON-MAYNARD BACK-UP DEPOT WOULD BE SETTLED ON THE BASIS OF THE "RIALTO" AND "OYSTER POINT" DECISIONS. IT IS ALSO REPORTED THAT THEY UNDERSTOOD--- WITHOUT ANY INSISTENCE THAT THE QUESTION HAD BEEN SETTLED BY THE "RIALTO" DECISION--- THAT THE GENERAL ACCOUNTING OFFICE WOULD, IN THE AUDIT AND SETTLEMENT OF PERTINENT ACCOUNTS, CONTINUE TO APPLY THE PROVISIONS OF QUOTATION NO. 40- SERIES AT THE HUDSON-MAYNARD BACK-UP DEPOT ON SHIPMENTS OF AMMUNITION MOVING FROM POINTS OF ORIGIN PRIOR TO FEBRUARY 1, 1944, AND PREVIOUSLY ACCORDED TRANSIT PRIVILEGES AT INTERIOR POINTS UNDER QUOTATION NO. 31--- SERIES.

IN THESE CIRCUMSTANCES, AND FOR THE REASONS SET FORTH IN OUR LETTER OF JULY 11, 1960, WE DO NOT CONSIDER THE "RIALTO" DECISION TO BE DISPOSITIVE OF THE DOUBLE TRANSIT QUESTION. HOWEVER, BECAUSE OF THE APPARENT CONFLICT IN OUR POINTS OF VIEW AS TO THE SCOPE OF THE AGREEMENT TO WITHDRAW CIVIL ACTION NO. 358-54 FROM COURT AND TO SETTLE THE CLAIMS THEREIN ADMINISTRATIVELY, WE WILL POSTPONE THE COLLECTION OF OVERPAYMENTS INVOLVING THE DOUBLE TRANSIT CHARGE BASIS AT THE MAYNARD BACK-UP DEPOT, PENDING THE FINAL RESOLUTION OF THE DOUBLE TRANSIT QUESTION IN THE GULF, MOBILE AND OHIO CASE. AS WE STATED ON OUR JULY 11 LETTER, POSTPONEMENT OF COLLECTION ACTION IN THIS INSTANCE, AS AN EXCEPTION TO OUR GENERAL PROCEDURE, IS LIMITED TO THE PARTICULAR CIRCUMSTANCES INVOLVED, AND WILL BE CONTINUED SO LONG AS THE INTERESTS OF THE UNITED STATES ARE BEST SERVED BY SUCH ARRANGEMENT.