B-114472, SEP. 24, 1956

B-114472: Sep 24, 1956

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THE SET-OFF WAS MADE TO RECOVER FOR DAMAGES TO RUBBER SHIPPED FROM PENANG. WE HAVE BEEN ADVISED INFORMALLY THAT THE GOVERNMENT HAS NOTED AN APPEAL IN THE CASE OF ISTHMIAN STEAMSHIP CO. DEDUCTIONS MADE FROM FUNDS SUBSEQUENTLY DUE THE PARTICULAR CARRIERS INVOLVED TO RECOVER FOR DAMAGE TO GOVERNMENT PROPERTY WERE PROPER AND MUST BE SUSTAINED. THAT THE ADMINISTRATIVE OFFICE IN SOME CASES MAY HAVE MADE THE DEDUCTIONS NOT ONLY FROM FUNDS DUE THE PARTICULAR CARRIER TO WHOM THE DAMAGE IS ATTRIBUTED BUT ALSO FROM FUNDS DUE FURNESS. DEDUCTIONS OF THE LATTER TYPE ARE. IF ANY HAVE BEEN MADE. THEY WILL BE CORRECTED AS SOON AS THE PERTINENT COLLECTION RECORDS CAN BE ASSEMBLED AND VERIFIED. TRANSPORTATION DIVISION: YOUR ATTENTION IS INVITED TO OUR LETTER DATED TODAY TO FURNESS.

B-114472, SEP. 24, 1956

TO FURNESS, WITHY AND CO., LTD.:

WE REFER TO YOUR LETTER OF AUGUST 27, 1956, IN WHICH YOU REQUEST FURTHER CONSIDERATION OF OUR DECISION OF MARCH 16, 1955, B-114472, WHICH SUSTAINED THE DEDUCTION OF $160 FROM PAYMENT OF YOUR BILL NO. 1117 AND OUR LETTERS DATED AUGUST 25, 1955, JULY 10, 1956 AND AUGUST 7, 1956, AFFIRMING THAT DECISION. THE SET-OFF WAS MADE TO RECOVER FOR DAMAGES TO RUBBER SHIPPED FROM PENANG, BRITISH MALAYA, TO NEW YORK, NEW YORK, ABOARD THE "CINGALESE PRINCE" IN 1951.

WE MUST REITERATE OUR CONCLUSION THAT NOTWITHSTANDING THE PROVISIONS OF SUBSECTION 3 (6) OF THE CARRIAGE OF GOODS BY SEA ACT, 46 U.S.C. 1303 (6), THE UNITED STATES GOVERNMENT MAY RECOVER FOR DAMAGES SUSTAINED BY GOVERNMENT CARGO WHILE IN THE POSSESSION OF AN OCEAN CARRIER BY DEDUCTING THE AMOUNT INVOLVED FROM SUBSEQUENT PAYMENTS DUE THE CARRIER, EVEN THOUGH IT DOES NOT BRING SUIT WITHIN ONE YEAR FROM THE OUTTURN. WE HAVE BEEN ADVISED INFORMALLY THAT THE GOVERNMENT HAS NOTED AN APPEAL IN THE CASE OF ISTHMIAN STEAMSHIP CO. V. THE UNITED STATES, 134 F.SUPP. 854, CITED AS HOLDING TO THE CONTRARY; HENCE, WE DO NOT REGARD THAT CASE IN ITS PRESENT STATUS AS HAVING FINALLY RESOLVED THE ISSUE. ACCORDINGLY, DEDUCTIONS MADE FROM FUNDS SUBSEQUENTLY DUE THE PARTICULAR CARRIERS INVOLVED TO RECOVER FOR DAMAGE TO GOVERNMENT PROPERTY WERE PROPER AND MUST BE SUSTAINED.

IT HAS NOW COME TO OUR ATTENTION, HOWEVER, THAT THE ADMINISTRATIVE OFFICE IN SOME CASES MAY HAVE MADE THE DEDUCTIONS NOT ONLY FROM FUNDS DUE THE PARTICULAR CARRIER TO WHOM THE DAMAGE IS ATTRIBUTED BUT ALSO FROM FUNDS DUE FURNESS, WITHY AND CO., LTD., IN ITS OWN RIGHT AND IN ITS CAPACITY AS AGENT FOR OTHER CARRIERS. DEDUCTIONS OF THE LATTER TYPE ARE, IN OUR OPINION, MPROPER; AND IF ANY HAVE BEEN MADE, THEY WILL BE CORRECTED AS SOON AS THE PERTINENT COLLECTION RECORDS CAN BE ASSEMBLED AND VERIFIED.

DIRECTOR, TRANSPORTATION DIVISION:

YOUR ATTENTION IS INVITED TO OUR LETTER DATED TODAY TO FURNESS, WITHY AND CO., LTD., REGARDING SET-OFFS MADE BY THE ADMINISTRATIVE OFFICE TO RECOVER FOR DAMAGE TO CERTAIN SHIPMENTS OF RUBBER PURCHASED BY THE UNITED STATES GOVERNMENT. IT IS A BROAD GENERAL RULE OF PRACTICALLY UNIVERSAL APPLICATION THAT, IN THE ABSENCE OF STATUTES PROVIDING OTHERWISE, AND SUBJECT TO CERTAIN EXCEPTIONS NOT HERE INVOLVED, A SET-OFF MAY BE MADE ONLY WHERE THE DEMANDS ARE MUTUAL AND SUBSISTING BETWEEN THE SAME PARTIES IN THE SAME CAPACITY OR RIGHT. SEE DAKIN V. BAYLY, 290 U.S. 143; UNITED STATES V. BUTTERWORTH-JUDSON CORP., 267 U.S. 387; MOLINE MALLEABLE IRON CO. V. YORK IRON CO., 83 F. 66, AND THOMAS V. POTTER TITLE AND TRUST CO., 2 F.SUPP. 12. SEE, ALSO, 80 C.J.S. 74,"SET-OFF AND COUNTERCLAIM," SECTION 48. ALTHOUGH WE ARE UNABLE, FROM THE PRESENT RECORD, TO VERIFY THAT THE ADMINISTRATIVE OFFICE HAS MADE SET-OFFS AGAINST FUNDS DUE FURNESS, WITHY AND CO., LTD., IN ITS OWN RIGHT AND IN ITS CAPACITY AS AGENT OF OTHER CARRIERS IN ORDER TO RECOVER FOR DAMAGES ATTRIBUTED TO THE CARRIERS WHICH TRANSPORTED THE RUBBER, ANY SUCH SET-OFFS WOULD SEEM TO HAVE BEEN ERRONEOUS. YOUR DIVISION SHOULD THEREFORE ASSEMBLE THE COLLECTION RECORDS PERTAINING TO THE SET-OFFS MADE IN THESE CASES, AND WHERE IT IS FOUND THAT AN ERRONEOUS SET-OFF HAS BEEN MADE, SETTLEMENTS IN FAVOR OF THE CLAIMANT SHOULD BE ISSUED.

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