B-159457, AUGUST 23, 1966, 46 COMP. GEN. 164

B-159457, AUGUST 23, 1966, 46 COMP. GEN. 164

TRANSPORTATION - OCEAN CARRIERS - FREIGHT CHARGES - SEIZURE OF CARGO AS CONTRABAND. UPON SEIZURE AS CONTRABAND OF A SHIPMENT CONSIGNED TO A MILITARY MISSION OVERSEAS, THE OCEAN FREIGHT CHARGES ARE NOT PAYABLE TO THE CARRIER UNTIL THE CARGO IS DELIVERED AND THE GOVERNMENT BILL OF LADING PROPERLY ACCOMPLISHED, AND THE FACT THAT THE GOVERNMENT IS SEEKING RETURN OF, OR COMPENSATION FOR THE SHIPMENT DOES NOT EFFECT THE PAYMENT OF THE FREIGHT CHARGES UNLESS AND UNTIL THE SHIPMENT IS RELEASED AND DELIVERY OF THE CARGO ACCOMPLISHED, AND TO OPERATE AS A DISCHARGE FROM THE OBLIGATION TO MAKE DELIVERY AT THE ORIGINAL DESTINATION, PROOF OF ACCEPTANCE OF THE CARGO BY THE SHIPPER AT ANOTHER PORT MUST BE CLEAR AND SATISFACTORY.

TO THE SECRETARY OF DEFENSE, AUGUST 23, 1966:

REFERENCE IS MADE TO THE LETTER DATED JULY 14, 1966, FILE (C-309) SER 376M7, FROM THE COUNSEL, MILITARY SEA TRANSPORTATION SERVICE, REQUESTING A DECISION RELATIVE TO THE CLAIM OF AMERICAN-ORIENTAL FAR EAST LINES, INC., FOR FREIGHT IN THE AMOUNT $69,479.85, ON A SHIPMEN OF 44 TRACTORS AND PARTS TRANSPORTED ABOARD THE SS. OLGA UNDER GOVERNMENT BILL OF LADING C- 1050384. MR. MORSE INDICATES UNDER THE DECISION IN ALCOA STEAMSHIP COMPANY, INC. V. UNITED STATES, 338 U.S. 421 (1949), THAT THE FREIGHT WOULD NOT BE PAYABLE, BUT ASKS WHETHER THE FACTS OF THE CLAIM WARRANT AN EXCEPTION TO THE GENERAL RULE SIMILAR TO THAT GRANTED IN 21 COMP. GEN. 909.

THE TRACTORS WERE LOADED AT BALTIMORE, MARYLAND, ON JULY 26, 1965, CONSIGNED TO TRANSPORTATION OFFICER, U.S. MILITARY SUPPLY MISSION, APO 09675, NEW YORK, NEW YORK (BOMBAY, INDIA) AND WERE PART OF OTHER CARGO DESTINED FOR PAKISTAN AND INDIA. IN EARLY SEPTEMBER 1965, THE MILITARY SEA TRANSPORTATION SERVICE (MSTS) WAS ADVISED THAT AS A RESULT OF HOSTILITIES BETWEEN PAKISTAN AND INDIA, THE GOVERNMENTS OF BOTH COUNTRIES WERE SEIZING CERTAIN TYPES OF CARGOES AS CONTRABAND. SOME VESSELS, WITH UNITED STATES GOVERNMENT CARGO ABOARD, WERE DIVERTED TO OTHER PORTS, HOWEVER, OTHER VESSELS WERE ALREADY IN PORTS OF INDIA AND PAKISTAN OR IN COASTAL WATERS OF THESE COUNTRIES. MSTS EXPECTED THAT NO SEIZURE WOULD BE EFFECTED IF ASSURANCES WERE GIVEN THAT, WHILE A VESSEL MIGHT HAVE CONTRABAND TYPE CARGO ABOARD, IT WOULD NOT BE DISCHARGED IN EITHER OF THE COUNTRIES THEN INVOLVED IN THE HOSTILITIES BUT WOULD BE SENT TO A NEUTRAL COUNTRY.

THE SS. OLGA, WITH AN EXPECTED TIME OF ARRIVAL ON SEPTEMBER 11, 1965, AT KARACHI, PAKISTAN, WAS INSTRUCTED BY MSTS NOT TO DISCHARGE ANY KARACHI OR BOMBAY DESTINED CARGO AND PARTICULARLY TO DISCHARGE BOMBAY DESTINED CARGO AT MANILA IF THE VESSEL WAS PROCEEDING EASTWARD OR PIRAEUS, GREECE, IF THE VESSEL WAS PROCEEDING WESTWARD. THE SS. OLGA PROCEEDED INTO KARACHI, PAKISTAN, WHERE PAKISTAN OFFICIALS SEIZED THE CARGO IN SPITE OF ASSURANCES THAT THE BOMBAY DESTINED CARGO (INCLUDING THE 44 TRACTORS) SHIPPED UNDER GOVERNMENT BILL OF LADING C 1050384 WOULD NOT BE DISCHARGED AT BOMBAY.

MSTS HAS DECLINED TO MAKE PAYMENT OF THE FREIGHT TO AMERICAN ORIENTAL FAR EAST LINES, INC., BECAUSE THE CARGO WAS NOT DELIVERED AND THE GOVERNMENT BILL OF LADING WAS NOT PROPERLY ACCOMPLISHED. IT WAS ANTICIPATED THAT PAKISTAN WOULD RELEASE THE TRACTORS TO THE UNITED STATES AUTHORITIES AT PAKISTAN SO THAT THE BILL OF LADING COULD BE AMENDED TO SHOW THE CONSIGNEE AS THE MILITARY ASSISTANCE ADVISORY GROUP AND THE DESTINATION AS KARACHI, AND THIS CONSIGNEE COULD THEN EXECUTE THE NECESSARY RECEIPT THUS PROPERLY ACCOMPLISHING THE BILL OF LADING. HOWEVER, THE TRACTORS HAVE NOT BEEN RELEASED BY PAKISTAN, THE GOVERNMENT OF WHICH HAS ADVISED THAT THEY ARE NOT PRESENTLY AVAILABLE AND NEGOTIATIONS FOR THEIR RECOVERY OR VALUE BY THE DEPARTMENT OF STATE HAVE SO FAR BEEN FRUITLESS.

THE UNITED STATES SUPREME COURT IN HOLDING THAT THE GOVERNMENT BILL OF LADING'S SPECIFIC CONDITIONS FOR PAYMENT CAN ONLY BE SATISFIED UPON DELIVERY OF THE SHIPMENT TO DESTINATION, STATED THAT:

IT IS A PRINCIPLE OF AMERICAN MARITIME LAW THAT OCEAN CARRIER FREIGHT CHARGES ARE NOT EARNED UNLESS AND UNTIL THE GOODS ARE DELIVERED TO DESTINATION.

ALCOA STEAMSHIP COMPANY, INC. V. UNITED STATES, 338 U.S. 421, 422 (1949). SEE, ALSO STRICKLAND TRANSPORTATION CO. V. UNITED STATES, 223 F. 2D 466 (1955), HOLDING THAT DELIVERY TO THE CONSIGNEE UNDER A GOVERNMENT BILL OF LADING IS CONDITION PRECEDENT TO SHIPPER'S LIABILITY FOR FREIGHT CHARGES; UNITED STATES V. AMERICAN TRADING CO. OF SAN FRANCISCO, 138 F. SUPP. 536, 539-540 (1956); W.A. STACKPOLE MOTOR TRANSPORTATION, INC. V. MALDEN SPINNING AND DYEING CO., 263 F. 2D 47, 51 (1958); NATIONAL TRAILER CONVOY, INC. V. UNITED STATES, 170 CT. CL. 823, 345 F. 2D 573 (1965).

AS TO WHETHER FREIGHT IN THE PRESENT SITUATION SHOULD BE ALLOWED AS AN EXCEPTION TO THE GENERAL RULE REGARDING THE EARNING OF OCEAN FREIGHT, THE DECISION IN 21 COMP. GEN. 909 ANTEDATED THE ALCOA DECISION. ALSO, ITS APPLICATION TO A CASE WHERE DELIVERY WAS NOT MADE AT DESTINATION WAS SPECIFICALLY REJECTED BY THE MAJORITY OF UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT IN ALCOA S.S. CO. V. UNITED STATES, 175 F. 2D 661 (1949) WHICH OPINION WAS AFFIRMED BY THE SUPREME COURT IN 338 U.S. 421. MOREOVER, 21 COMP. GEN. 909 IS DISTINGUISHABLE FROM THE PRESENT SITUATION. IN 21 COMP. GEN. 909, IT APPEARED THAT THE DIFFICULTY WAS:

NOT THAT THESE PARTICULAR SHIPMENTS WERE NOT TRANSPORTED TO DESTINATION BUT RATHER THAT DUE TO CONDITIONS OF WAR PREVAILING IN THE PHILIPPINE ISLANDS AND GUAM, IT IS NOT POSSIBLE TO ESTABLISH OF RECORD THAT SAID SHIPMENTS WERE RECEIVED BY THE CONSIGNEE FROM THE CARRIER AT DESTINATION.

IN OTHER WORDS, IN THAT CASE INABILITY ON THE PART OF THE CONSIGNEE TO RECEIVE RATHER THAN FAILURE OF THE CARRIER TO COMPLETE CARRIAGE OF THE GOODS WAS THE BASIC CAUSE OF THE LACK OF A ,PROPERLY ACCOMPLISHED" BILL OF LADING. SUCH IS NOT THE SITUATION HERE AND IT WAS INCUMBENT UPON THE CARRIER TO DELIVER THE TRACTORS AT DESTINATION IN ORDER TO EARN THE FREIGHT.

THE ATTORNEY FOR THE CLAIMANT, AMERICAN-ORIENTAL FAR EAST LINES, INC., SUGGESTS THAT THE FREIGHT IS PAYABLE BECAUSE THE TRACTORS ALTHOUGH NOT IN THE GOVERNMENT'S POSSESSION MAY STILL BE IN EXISTENCE AND PRESUMABLY IN PAKISTAN'S POSSESSION. THIS POINT APPEARS IRRELEVANT, HOWEVER, SINCE THE ALCOA CASE TURNS UPON DELIVERY OF THE GOODS TO THE CONSIGNEE AT DESTINATION, THAT IS, COMPLETION OF THE CONTRACT OF CARRIAGE AND IS NOT PREDICATED UPON THE CONDITION OF THE GOODS OR THEIR WHEREABOUTS. AND THE FACT THAT THE UNITED STATES GOVERNMENT MAY BE ACTIVELY SEEKING THEIR RETURN OR COMPENSATION FOR THEIR SEIZURE WOULD NOT EFFECT THE PAYMENT OF FREIGHT UNLESS AND UNTIL THEY ARE RELEASED AND DELIVERY OF THE CARGO ACTUALLY ACCOMPLISHED.

THE ATTORNEY ALSO INDICATES THAT THE FREIGHT IS PAYABLE SINCE THE CARRIER REQUESTED MSTS TO FURNISH PROCEDURAL INSTRUCTIONS RELATIVE TO THE CONTRABAND SEIZURES BEING CARRIED ON BY THE GOVERNMENTS OF INDIA AND PAKISTAN PRIOR TO ARRIVAL OF THE VESSEL AT KARACHI. AS TO ANY INSTRUCTIONS RELATIVE TO THE ULTIMATE DISCHARGE OF THE CARGO, MSTS REPORTS THAT MANY VESSELS WERE ALREADY IN PORTS OF INDIA AND PAKISTAN OR IN COASTAL WATERS OF THESE COUNTRIES. MSTS INSTRUCTED THE SS. OLGA WITH AN EXPECTED TIME OF ARRIVAL ON SEPTEMBER 11, 1965, AT KARACHI, PAKISTAN, NOT TO DISCHARGE ANY KARACHI OR BOMBAY DESTINED CARGO AND PARTICULARLY TO DISCHARGE BOMBAY DESTINED CARGO AT MANILA IF THE VESSEL WAS PROCEEDING EASTWARD OR PIRAEUS, GREECE, IF THE VESSEL WAS PROCEEDING WESTWARD. THE PAKISTAN GOVERNMENT SEIZED THE CARGO IN SPITE OF THE INSTRUCTIONS AND SUCH GOVERNMENT SEIZURE WAS A SUPERVENING CAUSE FOR WHICH NEITHER THE SHIP NOR MSTS WERE RESPONSIBLE. IT DOES NOT APPEAR THAT MSTS WAS NEGLIGENT OR TARDY IN FURNISHING INSTRUCTIONS CONCERNING THE THREATENED SEIZURE TO SHIPS AT OR NEAR THE PORTS OF THE BELLIGERENT COUNTRIES.

IN THIS CONNECTION IT HAS BEEN HELD THAT IF THE RESTRAINT OF PRINCES OR GOVERNMENTS MAKE IT IMPOSSIBLE FOR THE SHIP TO CONTINUE ITS VOYAGE TO THE PORT OF DESTINATION, THE SHIP OWNER IS NOT ENTITLED TO FREIGHT PAYABLE FOR DELIVERY AT SUCH PORT, UNLESS HE BRINGS THE CARGO FORWARDED IN OTHER VESSELS OR IS PREVENTED FROM DOING SO BY THE CARGO OWNER. LINEA SUD- AMERICANA, INC. V. 7,295.40 TONS OF LINSEED, 29 F. SUPP. 210 (1939), CERTIORARI DENIED, 309 U.S. 672. MOREOVER, IT CANNOT BE SAID THAT THE UNITED STATES BY SEEKING TO RECOVER THE TRACTORS SEIZED BY PAKISTAN HAS ACQUIESCED IN ACCEPTING DELIVERY AT KARACHI SHORT OF DESTINATION. THE LINEA SUB-AMERICANA CASE POINTS OUT THAT PROOF OF ACCEPTANCE OF THE CARGO BY SHIPPER AT ANOTHER PORT MUST BE CLEAR AND SATISFACTORY IN ORDER TO OPERATE AS DISCHARGE OF THE VESSEL FROM ITS OBLIGATION TO CARRY TO THE ORIGINAL DESTINATION, HERE, BOMBAY, INDIA.

ACCORDINGLY, ON THE PRESENT RECORD, THE CLAIM OF AMERICAN-ORIENTAL FAR EAST LINES FOR FREIGHT IN THE AMOUNT OF $69,479.85 IS NOT ALLOWABLE.

A COPY OF THIS DECISION IS BEING FURNISHED THE AMERICAN-ORIENTAL FAR EAST LINES IN CARE OF ITS ATTORNEY, SUCH MATTER ALSO HAVING BEEN BROUGHT TO OUR ATTENTION DIRECTLY BY HIM.