B-149932, MAR. 4, 1963

B-149932, MAR. 4, 1963

TO THE SOUTHERN PACIFIC COMPANY:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF SEPTEMBER 14, 1962, FILE V- 345500, WITH ENCLOSURE, RELATIVE TO THE DEDUCTION OF AMOUNTS DUE THE UNITED STATES FOR LOSS OR DAMAGE TO GOVERNMENT FREIGHT IN TRANSIT, FROM AMOUNTS OTHERWISE DUE YOUR COMPANY. IN THIS CONNECTION YOU REFER TO SECTION 322 OF THE TRANSPORTATION ACT OF 1940, 54 STAT. 955, AS AMENDED BY THE ACT OF AUGUST 26, 1958, 72 STAT. 860, 49 U.S.C. 66, AND EXPRESS THE VIEW THAT THE AMENDED STATUTE RESTRICTS THE RIGHT OF THE GOVERNMENT TO MAKE DEDUCTIONS FROM CURRENT CARRIERS' BILLS OF AMOUNTS DUE THE UNITED STATES AND THAT THE GOVERNMENT NOW HAS NO RIGHT TO MAKE DEDUCTIONS IN AMOUNTS NOT MUTUALLY AGREED UPON BY THE UNITED STATES AND THE CARRIERS INVOLVED FOR LOSS OR DAMAGE TO PUBLIC PROPERTY IN TRANSIT. YOU REQUEST US TO REVIEW YOUR INTERPRETATION OF THE STATUTE AND THAT WE FURNISH CITATIONS TO THE STATUTES PERMITTING SUCH DEDUCTION.

THE JURISDICTION OF THIS OFFICE IS SUCH AS NOT TO AUTHORIZE OR REQUIRE US TO RENDER AN AUTHORITATIVE DECISION ON SUCH A BROAD GENERAL SUBJECT AT YOUR REQUEST. HOWEVER, AS THE QUESTION IS MATERIAL TO THE SETOFF MADE ON THE DAMAGE CLAIM REFERRED TO IN THE ENCLOSURE TO YOUR LETTER, WE WILL CONSIDER YOUR LETTER AS BEING IN THE NATURE OF A REQUEST FOR REVIEW OF THE BASIS FOR SUCH OFFSET.

SECTION 322 OF THE TRANSPORTATION ACT OF 1940 PRIOR TO ITS AMENDMENT WAS ENACTED TO INSURE PROMPT PAYMENT TO CARRIERS, PRIOR TO AUDIT BY THE GENERAL ACCOUNTING OFFICE, OF TRANSPORTATION CHARGES FOR THE UNITED STATES AND RESERVED TO THE GOVERNMENT THE RIGHT TO DEDUCT ANY OVERPAYMENTS DISCOVERED IN THE POST PAYMENT AUDIT OF SUCH CHARGES FROM ANY AMOUNT OTHERWISE SUBSEQUENTLY FOUND DUE THE CARRIER. SEE UNITED STATES V. NEW YORK, NEW HAVEN AND HARTFORD RAILROAD COMPANY, 355 U.S. 253; UNITED STATES V. DEQUEEN AND EASTERN R.CO., 271 F.2D 597. THE SECTION HAD NO REFERENCE WHATEVER TO OTHER INDEBTEDNESS OF CARRIERS TO THE UNITED STATES SUCH AS THOSE ARISING FROM LOSS AND DAMAGE CLAIMS. THE 1958 AMENDMENT, AS TO TRANSPORTATION PERFORMED AND PAID FOR SUBSEQUENT TO AUGUST 26, 1958, LIMITED THE TIME WITHIN WHICH SUCH DEDUCTIONS SHALL BE MADE TO THREE YEARS (NOT INCLUDING ANY TIME OF WAR) FROM THE TIME OF PAYMENT OF THE CARRIER'S BILLS FOR SUCH CHARGES AND CHANGED THE WORD OVERPAYMENT TO OVERCHARGES WHICH IT DEFINED AS CHARGES IN EXCESS OF THOSE APPLICABLE THERETO UNDER THE TARIFFS LAWFULLY ON FILE WITH THE INTERSTATE COMMERCE COMMISSION AND THE CIVIL AERONAUTICS BOARD AND IN EXCESS OF RATES UNDER SECTION 22 QUOTATIONS. SINCE THE 1940 ACT HAD NO BEARING ON THE GOVERNMENT'S RIGHT TO COLLECT ITEMS OF INDEBTEDNESS ARISING FROM OTHER THAN OVERPAYMENTS OF TRANSPORTATION CHARGES, IT IS OUR VIEW THAT THE GOVERNMENT'S RIGHT TO MAKE DEDUCTIONS FOR LOSS AND DAMAGE ARE NOT AFFECTED BY THAT ACT OR ITS AMENDMENT IN 1958.

CONCERNING THE GOVERNMENT'S GENERAL RIGHT TO SET OFF DEBTS OWING IT AND, WHICH APPEARS SUFFICIENTLY BROAD TO COVER DEBTS FOR LOSS AND DAMAGE, THE SUPREME COURT OF THE UNITED STATES IN THE CASE OF THE UNITED STATES V. MUNSEY TRUST CO., 332 U.S. 234, 239-240, STATED:

"* * * THE GOVERNMENT HAS THE SAME RIGHT "WHICH BELONGS TO EVERY CREDITOR, TO APPLY THE UNAPPROPRIATED MONEYS OF HIS DEBTOR, IN HIS HANDS, IN EXTINGUISHMENT OF THE DEBTS DUE HIM.' GRATIOT V. UNITED STATES, 15 PET. 336, 370; MCKNIGHT V. UNITED STATES, 98 U.S. 179, 186. MORE THAN THAT, FEDERAL STATUTE GIVES JURISDICTION TO THE COURT OF CLAIMS TO HEAR AND DETERMINE "ALL SET-OFFS, COUNTER-CLAIMS, CLAIMS FOR DAMAGES, WHETHER LIQUIDATED OR UNLIQUIDATED, OR OTHER DEMANDS WHATSOEVER ON THE PART OF THE GOVERNMENT OF THE UNITED STATES AGAINST ANY CLAIMANT AGAINST THE GOVERNMENT IN SAID COURT * * *" JUDICIAL CODE SECTION 145, 28 U.S.C. SECTION 250 (2). THIS POWER GIVEN TO THE COURT OF CLAIMS TO STRIKE A BALANCE BETWEEN THE DEBTS AND CREDITS OF THE GOVERNMENT, BY LOGICAL IMPLICATION GIVES POWER TO THE COMPTROLLER GENERAL TO DO THE SAME, SUBJECT TO REVIEW BY THAT COURT * * *.'

FURTHER IN THE CASE OF BARRY V. UNITED STATES, 229 U.S. 47 AT 53, INVOLVING OFFSET OF AN AMOUNT DUE UNDER A CONTRACT AGAINST THE CONTRACTOR'S INDEBTEDNESS ARISING UNDER ANOTHER CONTRACT, THE SUPREME COURT STATED:

"THE LIABILITY MIGHT HAVE BEEN ASSERTED BY THE GOVERNMENT IN AN ACTION; BUT IT MIGHT, AS IT DID, CHARGE IT UP AS A SET-OFF AGAINST ITS OWN LIABILITY. IT WOULD BE FOLLY TO REQUIRE THE GOVERNMENT TO PAY UNDER THE ONE CONTRACT WHAT IT MUST EVENTUALLY RECOVER FOR A BREACH OF THE OTHER.'

SEE ALSO IN THIS CONNECTION CHERRY COTTON MILLS, INC. V. UNITED STATES, 327 U.S. 536, AND SECTION 305 OF THE ACT OF JUNE 10, 1921, 42 STAT. 24, 31 U.S.C. 71.

ACCORDINGLY, WE DO NOT AGREE THAT 49 U.S.C. 66 PRECLUDES RECOVERY OF INDEBTEDNESS OF CARRIERS ARISING FROM DAMAGES TO GOVERNMENT SHIPMENTS FOR WHICH THEY ARE LIABLE FROM AMOUNTS OTHERWISE PAYABLE TO THEM FOR TRANSPORTATION SERVICES RENDERED.

THERE IS ATTACHED, FOR YOUR INFORMATION, A COPY OF A REPORT DATED SEPTEMBER 27, 1962, FROM THE TRANSPORTATION DIVISION, FINANCE CENTER, U.S. ARMY, INDIANAPOLIS 49, INDIANA, RELATIVE TO THE DAMAGE CLAIM REFERRED TO IN THE ENCLOSURE TO YOUR LETTER.