B-126324, JAN. 26, 1956

B-126324, JAN. 26, 1956

TO CHESAPEAKE INDUSTRIES, INC.:

FURTHER REFERENCE IS MADE TO YOUR LETTER DATED DECEMBER 5, 1955, RELATIVE TO YOUR CLAIM IN THE AMOUNT OF $12,968.14, REPRESENTING TERMINAL SERVICE CHARGES UNDER CONTRACT NO. DA-44-046-TC-119, DATED DECEMBER 21, 1953, WHICH WAS DISALLOWED IN OUR SETTLEMENT OF NOVEMBER 22, 1955. REQUESTING A REHEARING IN THE MATTER YOUR ATTORNEY SUGGESTS THAT THE SETTLEMENT IS ERRONEOUS AND REFLECTS AS IMPROPER INTERPRETATION OF CERTAIN TERMS OF THE SUBJECT CONTRACT. YOU HAVE BEEN ADVISED AS TO OUR OFFICE POLICY REGARDING CLAIM MATTERS ORALLY PRESENTED AND WHILE YOU MAY CALL HERE AS PREVIOUSLY INDICATED WITH THE UNDERSTANDING THAT THE SUBSTANCE OF ANY MATTER PRESENTED ORALLY WILL BE REDUCED BY YOU TO WRITING, IT APPEARS THAT THE CURRENT FILE CONTAINS SUFFICIENT EVIDENCE TO SUPPORT A PROPER INTERPRETATION OF THE DISPUTED CONTRACT PROVISIONS.

UNDER THE SUBJECT CONTRACT YOUR SUBSIDIARY FIRM WAS REQUIRED TO PERFORM "ALL STEVEDORE AND TERMINAL CHECKING AND CLERKING AND VESSEL DOCUMENTATION SERVICES" IN CONNECTION WITH ALL CONTRACT CARGO. NORMALLY THE CARGO ARRIVED AT THE CONTRACT SITE ON COMMERCIAL RAIL CARS FROM WHICH IT WAS UNLOADED INTO VARIOUS STORAGE AREAS. THE CONTRACT PROVIDED FOR THE PAYMENT OF A TERMINAL CHECKING RATE FOR THIS SERVICE AND FOR PAYMENT OF A SECOND TERMINAL RATE FOR CHECKING THE CARGO OUT OF VARIOUS STORAGE AREAS AND WAREHOUSES INTO AN ASSEMBLY AREA AT SHIPSIDE. PAYMENT OF A THIRD TERMINAL RATE (VESSEL) WAS PROVIDED FOR CHECKING CARGO FROM THE ASSEMBLY AREA INTO THE SHIP.

IN CERTAIN INSTANCES, HOWEVER, ARRIVING CARGO WAS REMOVED FROM RAIL CARS AND PLACED FOR TEMPORARY STORAGE ON ARMY-OWNED RAILROAD CARS (USAX/--- ALSO REFERRED TO AS HIGH TRACK CARGO--- TO AVOID DEMURRAGE. PAYMENT FOR SERVICES RENDERED IN CHECKING AND CLERKING SUCH CARGO INTO THE TERMINAL WAS MADE AT THE TERMINAL RATE SHOWN AT PAGE 10, SCHEDULE 8 OF THE CONTRACT, SAID OPERATION COMING WITHIN THE PROVISIONS OF ITEM III, PARAGRAPH B, PAGE 5, OF THE CONTRACT. THEREAFTER, THE CONTRACTOR WAS AUTHORIZED TO TRANSFER THE SAME CARGO, WITHOUT DISTURBING IT IN ITS PLACE OF TEMPORARY STORAGE IN THE USAX CARS, TO SHIPSIDE BY MEANS OF A RAIL CAR. AT THIS TIME THE CARGO WAS PLACED ABOARD SHIP DIRECTLY FROM THE USAX CARS. THE REPORTS DISCLOSE THAT THERE WAS NO INTERVENING PLACEMENT OF THE CARGO INTO AN ASSEMBLY AREA AT SHIPSIDE. PAYMENT FOR THE CHECKING AND CLERKING SERVICES INVOLVED IN LOADING THE CARGO ON VESSELS WAS MADE AS PROVIDED UNDER SCHEDULE 2, PAGE 9 OF THE CONTRACT, SAID OPERATION BEING DESCRIBED UNDER ITEM II, PARAGRAPHS B AND D OF THE CONTRACT. IT IS YOUR CONTENTION THAT THE CONTRACTOR IS ENTITLED TO PAYMENT FOR CHECKING AND CLERKING SUCH CARGO OUT OF THE TERMINAL TO SHIPSIDE TO THE SAME EXTENT AS ALLOWED FOR CARGO UNLOADED INTO REGULAR STORAGE AREAS AND MOVED TO ASSEMBLY AREAS AT SHIPSIDE.

THERE APPEARS NO DISPUTE THAT THE CARGO IN QUESTION WAS TAKEN FROM ITS ORIGINAL PLACE OF REST INTO WHICH IT HAD BEEN CHECKED (ARMY-OWNED CARS) AND PLACED DIRECTLY ABOARD SHIP IN A SINGLE, OR ONE CONTINUOUS OPERATION-- - THERE HAVING BEEN NO TRANSFER OF THE CARGO FIRST TO BE PIER AND LATER ABOARD SHIP. IT FOLLOWS THAT A SINGLE PAYMENT FOR THIS OPERATION UNDER THE CONTRACT IS CONFINED TO THE RATE PRESCRIBED UNDER SCHEDULE 1, PAGE 9 OF THE CONTRACT. IN SUCH AN INSTANCE, WHILE ADDITIONAL FUNCTIONS NO DOUBT WERE PERFORMED BY THE CONTRACTOR, SUCH SERVICES WERE MERELY INCIDENTAL TO THE SECOND TERMINAL STEP OF SUCH CARGO AND WERE PERFORMED FOR THE PURPOSES OF CLEARING THE TERMINAL RECORDS, A STEP NECESSARY TO THE CONTRACTOR'S PERSONAL PROTECTION AND OTHERWISE IN ORDER TO FURNISH AT ITS OWN EXPENSE THOSE REPORTS STIPULATED UNDER ITEM 1, PARAGRAPH C, PAGE 1, OF THE CONTRACT. THE CONTRACTOR'S RESPONSIBILITIES ARE SPECIFICALLY REFLECTED IN THE LIST OF CARGO REPORTS APPEARING ON PAGE 1 OF THE CONTRACT, AS WELL AS IN THE PROVISIONS OF ITEM III, PARAGRAPH A, B, AND C, WHICH STIPULATE THAT THE CONTRACTOR SHALL, AT HIS OWN EXPENSE, MAINTAIN ADEQUATELY STAFFED FREIGHT OFFICES TO PROPERLY PERFORM THE ENTIRE SERVICE OPERATION INCLUDING THE PROPER AND PROMPT DISTRIBUTION OF SUCH FREIGHT AND CARGO DOCUMENTS "AS SHALL BE REQUIRED BY THE CONTRACTING OFFICER, OR HIS REPRESENTATIVE.'

AS STATED BY THE CONTRACTING OFFICER IN HIS LETTER OF JULY 23, 1954, TO THE CONTRACTOR "CARGO LOADED TO USAX RAIL CARS AT THE PORT AND ARRIVING AT THE PIERS DOES NOT REQUIRE A CONSOLIDATED LOADING LIST INSOFAR AS THE ARMY IS CONCERNED.' IN THAT LETTER IT WAS STATED THAT THE CONTRACTOR'S PERSONNEL HAS BEEN ADVISED VERBALLY ON NUMEROUS OCCASIONS THAT THIS WORK WAS NOT REQUIRED. ALSO, THE FILE CONTAINS REPORTS OF SUCH EARLIER DISCUSSIONS BETWEEN THE CONTRACTING PARTIES REGARDING THE DISTINCTION BETWEEN THE TRANSFER OF THE SO-TERMED "HIGH TRACK" CARGO AND ,NORMAL" CARGO, AS WELL AS THE CONTRACT TERMINAL RATE APPLICABLE THERETO. THE AWARENESS OF THIS DISTINCTION IS EVIDENCED BY THE CONTRACTOR'S REPRESENTATIVE IN HIS LETTERS DATED MARCH 16 AND 27, 1954, TO THE ADMINISTRATIVE OFFICIALS. IN SPITE OF THE FAILURE TO AGREE ON THIS MATTER IT WAS NOT UNTIL OCTOBER 29, 1954, THAT THE CONTRACTOR EXERCISED ITS RIGHT TO TERMINATE THE CONTRACT. IT IS NOTED THAT ON PAGE 8 OF AN UNDATED BRIEF SUBMITTED BY YOUR ATTORNEY IN SUPPORT OF THE CLAIM EMPHASIS HAS BEEN PLACED ON THE FACT THAT IN THE SUBSEQUENT CONTRACT FOR THE YEAR 1955 THE GOVERNMENT INSERTED A PROVISION TO SPECIFICALLY INFORM THE CONTRACTOR THAT NO PAYMENTS WOULD BE MADE FOR SERVICES RENDERED IN CONNECTION WITH "HIGH- TRACK" SHIPMENTS. THIS DOES NOT NECESSARILY MEAN THAT THE CONTRACTING OFFICER'S INTERPRETATION OF THE PROVISIONS OF THE 1954 CONTRACT WERE UNWARRANTED BUT SINCE A QUESTION HAD BEEN RAISED, THE LANGUAGE SHOULD BE MADE MORE DEFINITE.

IT IS A FUNDAMENTAL RULE OF CONTRACT CONSTRUCTION THAT A CONTRACT MUST BE CONSTRUED AS A WHOLE AND WHERE, AS HERE, THE CONTRACT IS DIVIDED INTO SEPARATE ITEMS UNDER CLAUSES SEEMING INCONSISTENT OR CONFLICTING, THEY MUST BE CONSTRUED SO AS TO GIVE EFFECT TO THE INTENTION OF THE PARTIES AS COLLECTED FROM THE ENTIRE INSTRUMENT AND ANY INCONSISTENT OR CONFLICTING PROVISIONS MUST BE RECONCILED, IN THE CIRCUMSTANCE, BY ANY REASONABLE INTERPRETATION. UNITED STATES V. ANSONIA BRASS AND COPPER CO., 218 U.S. 452; GREEN COMPANY V. QUINLAN, 211 U.S. 582; HEARIN V. STANDARD LIFE INSURANCE COMPANY, 8 F.2D 203; CF. RUSHING V. MANHATTAN LIFE INSURANCE COMPANY OF NEW YORK, 224 F. 74, 76.

ACCORDINGLY, THE ACTION TAKEN IN THE SETTLEMENT OF NOVEMBER 22, 1955, IS SUSTAINED.