DECEMBER 20, 1923, 3 COMP. GEN. 386

DECEMBER 20, 1923, 3 COMP. GEN. 386

CONTRACTS - PRICES QUOTED F.O.B. NEW YORK BASIS WHERE A CONTRACT PROVIDES FOR A SPECIFIED PRICE "F.O.B. NEW YORK BASIS," AND THERE ARE TWO ROUTES FROM PLACE OF DELIVERY TO NEW YORK WITH AN ALL- RAIL RATE OF 52 CENTS A HUNDRED POUNDS AND A RAIL-AND-WATER RATE OF 42 CENTS A HUNDRED POUNDS, THE CONTRACTOR IS ENTITLED TO ADJUSTMENT ON THE BASIS OF THE 42 CENT RATE. 3 COMP. GEN., 224, REVERSED.

DECISION BY COMPTROLLER GENERAL MCCARL, DECEMBER 20, 1923:

THE AMERICAN METAL CO. REQUESTED OCTOBER 22, 1923, RECONSIDERATION OF DECISION DATED OCTOBER 18, 1923, 3 COMP. GEN., 224, AFFIRMING DEDUCTION OF $9,847.97 FROM AN AMOUNT OTHERWISE DUE BY REASON OF A PAYMENT MADE BY AN ARMY DISBURSING OFFICER AS THE DIFFERENCE BETWEEN THE ALL-RAIL FREIGHT AND THE COMBINATION RAIL-AND-WATER FREIGHT RATE FROM BARTLESVILLE, OKLA., TO NEW YORK, Y., ON A QUANTITY OF SPELTER DELIVERED TO THE UNITED STATES AT BARTLESVILLE, OKLA., UNDER CONTRACT DATED JULY 6, 1918, AT PRICES RANGING FROM $0.081 TO $0.08625 A POUND "F.O.B. NEW YORK BASIS.' THE DEDUCTION WAS SUSTAINED ON THE GROUND THAT THE DIFFERENCE IN TRANSPORTATION RATES BETWEEN THE TWO POSSIBLE ROUTES DID NOT REFLECT THE DIFFERENCE IN COST OF DELIVERY AND THAT THE DIFFERENCE, IF ANY, VIA THE TWO ROUTES HAD NOT BEEN SHOWN.

THE CONTRACT OF JULY 6, 1918, REQUIRED DELIVERY OF A QUANTITY OF SPELTER AT FROM $0.081 TO $0.08625 A POUND "F.O.B. NEW YORK BASIS.' AS A MATTER OF FACT, THE CONTRACTOR'S SOURCE OF SUPPLY OF SPELTER WAS NOT IN NEW YORK CITY, BUT IN THE ZINC PRODUCING STATE OF THE MIDDLE WEST AND THE UNITED STATES ACCEPTED DELIVERY OF THE SPELTER AT VARIOUS POINTS FOR SHIPMENT TO CONTRACTORS ENGAGED IN THE MANUFACTURE OF AMMUNITION, DEDUCTING FROM THE CONTRACT PRICE THE COST OF TRANSPORTATION FROM POINT OF DELIVERY TO NEW YORK CITY; DURING THE COURSE OF TRANSACTIONS, SPELTER WAS ACCEPTED AT BARTLESVILLE, OKLA., WHICH HAD TWO ROUTES TO NEW YORK, ONE BEING AN ALL- RAIL ROUTE WITH A RATE OF 52 CENTS A HUNDRED POUNDS AND ONE A COMBINATION RAIL-AND-WATER ROUTE VIA THE GULF OF MEXICO AND ALONG THE ATLANTIC SEABOARD WITH A RATE OF 42 CENTS A HUNDRED POUNDS. THE LATTER ROUTE CONSUMED LONGER TIME IN TRANSIT, AND ITS RATE APPLIED ONLY WHEN THE VALUE DECLARED BY THE SHIPPER DID NOT EXCEED $100 A TON. AS TO DELIVERIES MADE AT BARTLESVILLE, THE CONTRACTOR SUBMITTED ITS INVOICES FOR THE CONTRACT PRICE LESS DEDUCTION AT 42 CENTS A HUNDRED POUNDS AS TRANSPORTATION CHARGES, AND ARMY DISBURSING OFFICERS CALLED UPON TO MAKE PAYMENT INCREASED THE DEDUCTION TO 52 CENTS A HUNDRED POUNDS, AND THE CONTRACTOR ACCEPTED PAYMENT ON THAT BASIS.

AFTER CERTAIN PAYMENTS HAD BEEN MADE, AN ARMY DISBURSING OFFICER SUBMITTED UNDER THE ACT OF JULY 31, 1894, 28 STAT., 207, A VOUCHER INVOLVING THE QUESTION TO THE COMPTROLLER OF THE TREASURY AND HE DECIDED DECEMBER 24, 1918, THAT THE ADJUSTMENT SHOULD BE MADE ON THE BASIS OF THE LOWEST FREIGHT RATE AT WHICH THE SERVICE COULD BE SECURED. ON APRIL 22, 1919, A DIFFERENT ARMY DISBURSING OFFICER PAID THE CONTRACTOR $9,847.79 AS THE DIFFERENCE BETWEEN THE 52 CENTS AND 42 CENTS A HUNDRED POUNDS ON THE DELIVERIES MADE PRIOR TO THE DATE OF THE DECISION. CREDIT FOR THE PAYMENT WAS DISALLOWED IN THE ACCOUNTS OF THE DISBURSING OFFICER AND THE AMOUNT THEREOF WAS DEDUCTED FROM AN AMOUNT OF $14,324.12 OTHERWISE DUE THE CONTRACTOR.

THE EXPRESS TERM OF THE CONTRACT WAS "F.O.B. NEW YORK BASIS" AND WAS CONSTRUED BY THE PARTIES TO MEAN THE CONTRACT PRICE LESS THE TRANSPORTATION RATE FROM POINTS OF DELIVERY TO NEW YORK, N.Y. SEE DETROIT SOUTHERN RAILROAD V. MALCOLMSON, 107 N.W., 915, FOR A DISTINCTION BETWEEN "PRICES F.O.B., " BASIS ELSEWHERE, AND "DELIVERY F.O.B.' THIS CONSTRUCTION APPEARS TO BE PROPER AND MAY BE GIVEN EFFECT WHERE ONLY ONE TRANSPORTATION RATE APPLIED BETWEEN POINT OF DELIVERY AND NEW YORK CITY. THERE APPEARS TO HAVE BEEN ONLY ONE RATE TO BE APPLIED IN THIS CASE EXCEPT AS TO DELIVERIES MADE AT BATLESVILLE. THERE WAS AN ALL-RAIL RATE OF 52 CENTS, AND A COMBINATION RAILROAD-AND WATER RATE OF 42 CENTS FROM BARTLESVILLE TO NEW YORK CITY. THE CONTRACTOR WAS ENTITLED TO THE BENEFIT OF THE LOWEST RATE AND UPON REVIEW OF THE MATTER, $9,847.97, REPRESENTING THE DIFFERENCE BETWEEN THE RAIL AND COMBINATION RATES DEDUCTED, IS CERTIFIED DUE THE CONTRACTOR.