B-142761, JUL. 11, 1960

B-142761, JUL. 11, 1960

TO MR. EUGENE E. HUNT:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF APRIL 27, 1960, REQUESTING THAT WE WITHHOLD MAKING DEDUCTIONS FOR OVERPAYMENTS ARISING FROM THE AUDIT OF GOVERNMENT SHIPMENTS INVOLVING THE SO-CALLED DOUBLE TRANSIT QUESTION, I.E., SHIPMENTS SAID TO BE STORED IN TRANSIT UNDER ASSOCIATION OF AMERICAN RAILROADS SECTION 22 QUOTATIONS NO. 31-SERIES AND NO. 40-SERIES.

THE INVOLVED OVERPAYMENTS TO THE NEW HAVEN AND BOSTON AND MAIN RAILROADS CONCERN THE AVAILABILITY OF THE TRANSIT PRIVILEGES IN QUOTATION NO. 40- SERIES AT THE HUDSON-MAYNARD, MASSACHUSETTS, BACK-UP DEPOT ON SHIPMENTS OF AMMUNITION PREVIOUSLY ACCORDED TRANSIT PRIVILEGES AT INTERIOR POINTS UNDER THE PROVISIONS OF QUOTATION NO. 31-SERIES, AND WHICH MOVED FROM INITIAL POINTS OF ORIGIN PRIOR TO FEBRUARY 1, 1944. A SIMILAR SITUATION, INVOLVING THE SAME QUOTATIONS AND CONCERNING THE AVAILABILITY OF TRANSIT PRIVILEGES ON SHIPMENTS OF AMMUNITION AT THE SPANN, LOUISIANA, BACK-UP DEPOT, IS BEING CONSIDERED IN GULF, MOBILE AND OHIO RAILROAD COMPANY V. UNITED STATES, COURT OF CLAIMS NO. 9-55, AND YOU ANTICIPATE THAT A DECISION IN THAT CASE WILL CONTROL THE ULTIMATE DISPOSITION OF THE ISSUE INVOLVING THE TRANSIT PRIVILEGES AT THE HUDSON-MAYNARD BACK-UP DEPOT. YOU INDICATE YOUR UNDERSTANDING THAT THE FINDINGS IN THE "RIALTO" CASE (UNION PACIFIC RAILROAD COMPANY V. UNITED STATES, 142 C.CLS. 340) RESOLVED THE DIFFICULTIES UNDERLYING THIS DISPUTE AND THAT THERE IS SOME LANGUAGE IN THE COURT'S DECISION IN SUPPORT OF YOUR VIEW.

THE SO-CALLED "RIALTO" CASE TO WHICH YOU REFER CONCERNED PRIMARILY THE QUESTION WHETHER THE SERVICE OF STOPPING CARLOADS OF AMMUNITION AND EXPLOSIVES AT THE RIALTO AMMUNITION BACK-UP STORAGE DEPOT CONSTITUTED A "STORAGE-IN-TRANSIT" PRIVILEGE AVAILABLE ONLY UNDER THE PROVISIONS OF ASSOCIATION OF AMERICAN RAILROADS SECTION 22 QUOTATION 40-B, OR WHETHER THIS SERVICE WAS A ,STOPPING FOR ORDERS" AVAILABLE UNDER THE CARRIERS' STANDARD RECONSIGNING RULES, AND ASSOCIATION OF AMERICAN RAILROADS SECTION 22 QUOTATION NO. 31-C.

THE COURT OF CLAIMS HELD THAT THE SERVICE IN QUESTION WAS A"STORAGE IN- TRANSIT" PRIVILEGE AVAILABLE ONLY UNDER QUOTATION NO. 40-B. ONE OF THE STATEMENTS IN THE CASE THAT MIGHT BE CONSTRUED AS APPLYING TO THE PRESENT SITUATION IS THAT MADE BY THE COURT IN ITS FINDING NO. 19, WHICH IS TO THE EFFECT THAT PRIOR TO FEBRUARY 1, 1944, A THOROUGH EXPORT SHIPMENT COULD NOT BE GIVEN A FURTHER TRANSIT PRIVILEGE AT THE RIALTO DEPOT UNDER QUOTATION NO. 40-B. THE GOVERNMENT RAISED NO OBJECTION TO THAT FINDING FOR THE REASONS THAT THE RIALTO DEPOT WAS NOT LISTED AS A TRANSIT POINT IN QUOTATION NO. 40-SERIES UNTIL FEBRUARY 1, 1944.

IN THE PRESENT SITUATION, AS WELL AS IN THE PENDING GULF, MOBILE AND OHIO RAILROAD CASE, THE BACK-UP STORAGE DEPOTS (MAYNARD, MASSACHUSETTS, AND SPANN, LOUISIANA) WERE NAMED IN QUOTATION NO. 40 SERIES AT THE TIME THE SHIPMENTS MOVED FROM THE INITIAL POINTS OF ORIGIN. THE QUESTION FOR DETERMINATION IN THESE SITUATIONS IS WHETHER THE PROVISION IN BOTH QUOTATION NO. 31-SERIES AND QUOTATION NO. 40 SERIES TO THE EFFECT THAT EACH SHIPMENT SHALL BE ENTITLED TO BUT ONE TRANSIT PRIVILEGE AUTHORIZES A TOTAL OF TWO PRIVILEGES ON A SINGLE THROUGH MOVEMENT, OR WHETHER THE PROVISION IN QUESTION PROHIBITS THE APPLICATION OF TRANSIT UNDER QUOTATION NO. 40-SERIES AFTER APPLICATION OF TRANSIT UNDER QUOTATION NO. 31-SERIES. IT APPEARS TO US THAT SINCE THE RIALTO BACK-UP DEPOT WAS NOT LISTED AS A TRANSIT STATION IN QUOTATION NO. 40-SERIES PRIOR TO FEBRUARY 1, 1944, THE "RIALTO" CASE IS NOT DETERMINATIVE OF THE PRESENT QUESTION.

CONCERNING YOUR REQUEST THAT WE FORBEAR FROM MAKING DEDUCTIONS TO EFFECT COLLECTION OF THE OVERPAYMENTS IN QUESTION, WE GENERALLY DO NOT POSTPONE COLLECTION PROCEDURES SIMPLY BECAUSE THE BASIS FOR DETERMINATION OF THE OVERPAYMENTS IN QUESTION MAY BE CONTESTED IN PENDING LITIGATION. ALSO, WHERE FINANCIAL JEOPARDY IS SUGGESTED IT WOULD BE HELPFUL IF A STATEMENT OF INABILITY TO ABSORB THE DRAIN ON FUNDS CAUSED BY DEDUCTIONS FROM CURRENT EARNINGS WERE SUPPORTED BY DOCUMENTARY EVIDENCE TO THAT EFFECT.

IN THE PRESENT SITUATION, HOWEVER, IN VIEW OF THE FACT THAT THE QUESTION HERE IS ONE OF LONG STANDING ON WHICH THE PRESENT UNCOLLECTED REQUESTS FOR REFUND HAVE BEEN MADE AT A COMPARATIVELY RECENT DATE, AND SINCE THE QUESTION SHOULD BE DECIDED BY THE COURT OF CLAIMS IN LITIGATION WHICH HAS PROGRESSED MATERIALLY TOWARD THE TRIAL STAGE, WE WILL GIVE CONSIDERATION TO STAYING COLLECTION OF THE INDICATED OVERPAYMENTS FOR THE TIME BEING. AS A CONDITION PRECEDENT TO SUCH POSTPONEMENT WE ASK THAT YOU INFORM US OF YOUR AGREEMENT TO ACCEPT, ON BEHALF OF THE NEW HAVEN AND THE BOSTON AND MAINE RAILROADS, THE FINAL JUDICIAL DETERMINATION IN GULF, MOBILE AND OHIO RAILROAD COMPANY V. UNITED STATES, C.CLS.NO. 9-55, AS CONTROLLING ON THE QUESTION OF WHETHER TWO TRANSITS ARE AVAILABLE UNDER THE RESPECTIVE QUOTATIONS ON SHIPMENTS WHICH MOVED FROM INITIAL ORIGIN POINTS PRIOR TO FEBRUARY 1, 1944. 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.

ACTION TOWARD COLLECTION OF THE OVERPAYMENTS IN QUESTION WILL BE HELD IN ABEYANCE PENDING RECEIPT OF YOUR PROMPT REPLY.