B-127034, MAR. 21, 1956

B-127034, MAR. 21, 1956

TO DENVER AND RIO GRANDE WESTERN RAILROAD COMPANY:

REFERENCE IS MADE TO LETTER DATED JULY 14, 1955, FROM E. E. NEWELL, AUDITOR, REQUESTING A REVIEW OF THE SETTLEMENT ACTION OF OUR OFFICE IN APPLYING THE AMOUNTS DUE UNDER FREIGHT BILLS F-46748, AMOUNT $548.22, AND F-46748-A, AMOUNT $27.38, OR A TOTAL OF $476.05, IN PAYMENT OF AND F-46748 -A, AMOUNT $27.38, OR A TOTAL OF $576.05, IN PAYMENT OF DAMAGES SUFFERED BY THE UNITED STATES IN CONNECTION WITH THE SHIPMENT OF EGGS FROM MINNEAPOLIS, MINNESOTA, TO SALT LAKE CITY, UTAH.

THE RECORD SHOWS THAT 570 CASES OF SHELL EGGS WERE ORIGINALLY SHIPPED ON SEPTEMBER 11, 1952, BY THE MERCHANTS COLD STORAGE COMPANY, MINNEAPOLIS, MINNESOTA, AS AGENT FOR THE PRODUCTION MARKETING ADMINISTRATION OF THE DEPARTMENT OF AGRICULTURE, IN CAR ART-28690, GBL NO. A-1898521, AND CONSIGNED TO THE DEPARTMENT OF PUBLIC INSTRUCTION, SALT LAKE CITY, UTAH, AS PART OF THE SCHOOL LUNCH PROGRAM AUTHORIZED UNDER THE PROVISIONS IN 7 U.S.C. 1431. THE REPORT OF SHIPMENT RECEIVED SHORT AND/OR DAMAGES EXECUTED BY THE CONSIGNEE, MR. RODNEY W. ASHBY, STATE DIRECTOR, SCHOOL LUNCH PROGRAM, ON DECEMBER 2, 1952, INDICATED THAT THE DAMAGE WAS DUE TO IMPROPER BRACING AND SHIFTING. MR. ASHBY FURTHER STATED IN A LETTER DATED JANUARY 16, 1953, AS FOLLOWS:

"RELATING TO OUR REPORT INDICATING "IMPROPER BRACING" I BELIEVE THE BRACING MATERIAL USED WAS PROBABLY ADEQUATE, HOWEVER, THERE WERE APPARENTLY NOT ENOUGH BRACING USED TO SECURE THE CASES AS THEY SHOULD HAVE BEEN. AS I REMEMBER THE REPORT MADE BY OUR AGENT, THEY HAD LOADED EACH END AND IN THE CENTER OF THE CAR THERE WAS A SECTION WHICH WAS FILLED WITH STRAW AND APPARENTLY NOT SUFFICIENT BRACING BETWEEN THE LOADING OF EACH END, AND AS THE BRACING BROKE, THE CASES WERE ALLOWED TO LOOSEN BECAUSE THE BRACING AND STRAW IN THE MIDDLE WAS NOT SUFFICIENT TO WITHSTAND THE PRESSURE.

"AS WE FORMERLY REPORTED, THE MATERIAL IN THE CASES WAS NOT VERY GOOD BEING VERY SOFT GREEN LUMBER AND MANY OF THE NAILS WERE DRIVEN SO CLOSE TO THE END OF THE SIDE PIECES THAT IT WAS A WONDER THAT THEY HELD TOGETHER AS WELL AS THEY DID.'

SINCE THE MERCHANTS COLD STORAGE COMPANY PREPARED THIS CAR FOR SHIPMENT, A REPORT WAS SOLICITED FROM THEM AS TO THE BRACING OF THE SHELL EGGS IN THE CAR. BY LETTER DATED JANUARY 13, 1953, THE FOLLOWING COMMENTS WERE MADE BY THAT COMPANY:

"LUMBER AND STRAW WAS USED FOR THE BRACING OF THIS CAR. THE STRAW WAS PACKED INTO THE CAR AS TIGHT AS HUMANLY POSSIBLE. ALL CARS WE HAVE LOADED OUT OF THIS PLANT FOR THE PAST MANY YEARS HAVE BEEN BRACED IN THIS MANNER. THIS IS THE FIRST INSTANCE WHERE ANY ONE HAS MADE THE STATEMENT THAT ANY CAR OF SHELL EGGS THAT WE LOADED WAS NOT PROPERLY BRACED. HAVE SHIPPED MANY HUNDREDS OF SHELL EGG CARS IN THE PAST SEVERAL YEARS AND IF OUR METHOD OF BRACING THESE CARS WAS NOT PROPER WE WOULD HAVE HEAD ABOUT IT LONG BEFORE THIS TIME. BUT AS STATED ABOVE THIS IS THE FIRST TIME ANYONE HAS SAID A SHELL EGG CAR WAS NOT PROPERLY BRACED. BEFORE A CAR GOES OUT WE ALSO TACK EGG CARDS ON THE CAR. THESE CARDS ARE PRINTED IN BIG TYPE AND CAUTIONS THE CARRIER TO HANDLE THE CAR CAREFULLY.

"WE HAVE UNLOADED MANY CARS AT OUR WAREHOUSE BRACED IN THIS MANNER. THE CARS ARE HANDLED WITH ORDINARY CARE THEY ARRIVE IN GOOD CONDITION, IF THE CAR IS ROUGHLY HANDLED THERE WILL BE BAD ORDER EGGS IN THE CAR. THIS IS TRUE REGARDLESS OF WHAT MANNER OF BRACING IS USED. IT IS OUR FIRM OPINION THAT THIS CAR MUST HAVE RECEIVED ROUGH HANDLING.

"P.S. YEARS AGO THE WESTERN WEIGHING AND INSPECTION BUREAU MADE FINAL INSPECTIONS OF ALL SHELL EGG CARS LOADED. THE FORM OF BRACING THAT WE USED WAS THEIR APPROVED METHOD OF BRACING.'

THEREAFTER PAYMENT OF THE CARRIER'S CLAIM UNDER THE ABOVE-MENTIONED FREIGHT BILLS WAS WITHHELD PENDING ACTION BY THE CARRIER ON THE GOVERNMENT'S CLAIM FOR DAMAGE TO THE EGGS WHICH WAS STATED IN THE AMOUNT OF $632.18. BY LETTER DATED SEPTEMBER 28, 1953, YOUR COMPANY DISALLOWED THE CLAIM ON THE BASIS OF THE INFORMATION CONTAINED IN THE STATEMENTS OF MR. RODNEY W. ASHBY AND IN LETTER DATED NOVEMBER 2, 1953, YOU STATE THAT A THOROUGH INVESTIGATION WAS CONDUCTED OF THE RUNNING AND HANDLING RECORDS ON ALL CARRIERS INVOLVED IN THE MOVE AND YOU WERE ADVISED THAT THIS CAR WAS NOT SUBJECTED TO ROUGH HANDLING NOR WAS IT INVOLVED IN ANY ACCIDENTS.

THEREAFTER THE MATTER OF THE GOVERNMENT'S CLAIM FOR DAMAGED PROPERTY AND YOUR CLAIM FOR THE PAYMENT OF THE FREIGHT BILLS IN QUESTION WERE SUBMITTED TO THE GENERAL ACCOUNTING OFFICE FOR APPROPRIATE ACTION. BY SETTLEMENT DATED JUNE 15, 1955, YOUR CLAIM FOR THE PAYMENT OF THE FREIGHT ON THE BILLS MENTIONED ABOVE WAS CERTIFIED TO BE DUE IN THE SUM OF $476.05 WHICH SUM WAS APPLIED IN PARTIAL SATISFACTION OF THE GOVERNMENT'S CLAIM FOR THE DAMAGED EGGS IN THE SUM OF $632.18, LEAVING A BALANCE DUE THE GOVERNMENT OF $56.13. YOU NOW REQUEST A REVIEW AND RECONSIDERATION OF THE ACTION TAKEN IN THIS MATTER.

THE RESPONSIBILITIES OF THE RESPECTIVE PARTIES WITH RESPECT TO THE DAMAGE TO THE EGGS DEPENDS UPON THE RESPECTIVE LIABILITIES IMPOSED UPON COMMON CARRIERS AND SHIPPERS IN THE TRANSPORTATION OF GOODS. UNDER THE COMMON LAW, COMMON CARRIERS WERE REGARDED AS INSURERS OF THE GOODS THEY TRANSPORTED. WITH RESPECT TO SHIPMENTS IN INTERSTATE COMMERCE, THIS RESPONSIBILITY HAS BEEN MODIFIED UNDER SECTION 20, PARAGRAPH 11, OF THE INTERSTATE COMMERCE ACT, 49 U.S.C. 20 (11), TO THE EXTENT OF MAKING THE CARRIER RESPONSIBLE ONLY FOR LOSS OR DAMAGE CAUSED BY IT OR ANY CONNECTING CARRIER. ATLANTIC COAST LINE RAILWAY COMPANY V. SANDLIN, 78 SO. 667. THUS, ONLY IN CASES WHERE THE LOSS OR DAMAGE RESULTS PROXIMATELY FROM AN ACT OR FAULT OF THE SHIPPER AND THE CARRIER IS WITHOUT FAULT IN THE MATTER WOULD THE CARRIER BE RELIEVED FROM LIABILITY. 9 AM.JR., CARRIERS, SECTION 728.

IN THE PRESENT CASE, IT IS REPORTED THAT THE SHIPPER, THE MERCHANTS COLD STORAGE COMPANY, ASSUMED RESPONSIBILITY FOR THE LOADING OF THE CAR. THESE CIRCUMSTANCES, LOSS OR DAMAGE TRACEABLE TO FAULTY LOADING SHIFTS RESPONSIBILITY FROM THE CARRIER TO THE SHIPPER. 9 AM.JUR., CARRIERS, SECTION 730. THE MERCHANTS COLD STORAGE COMPANY HAS REPORTED, AS INDICATED ABOVE, THAT THE LOADING AND BRACING OF THE CAR WAS ACCOMPLISHED IN THE MANNER USED FOR MANY YEARS IN THE PAST AND THAT THE FORM OF BRACING WAS APPROVED BY THE WESTERN WEIGHING AND INSPECTION BUREAU. THE STATEMENTS MADE BY MR. ASHBY THAT THE DAMAGE WAS CAUSED BY INSUFFICIENT BRACING ARE STATEMENTS OF HIS OPINION ONLY AND ARE NOT TO BE REGARDED AS CONTRAVENING THE CONTRARY REPORT FURNISHED BY THE MERCHANTS COLD STORAGE COMPANY PARTICULARLY SINCE NO FORMAL SURVEY OF THE CAUSE OF THE DAMAGES WAS CONDUCTED. THEREFORE, IT IS THE OPINION OF OUR OFFICE THAT THE LOADING OF THE CAR IN QUESTION WAS PROPER AND THUS THE BURDEN OF SHOWING FAULT OR NEGLIGENCE BY THE SHIPPER HAS NOT BEEN MAINTAINED. SINCE THE EGGS WHEN LOADED ABOARD THE CAR WERE IN GOOD CONDITION AND WERE RECEIVED AT DESTINATION IN A DAMAGED CONDITION, A PRIMA FACIE CASE OF CARRIER LIABILITY ATTACHES THERETO. REIDER V. THOMPSON, 116 F.SUPP. 279.

IT IS NOTED THAT AS A MATTER AFFECTING THE VALUE OF THE EGGS DAMAGED YOU ENCLOSED A COPY OF THE DECISION UNITED STATES V. NORTHERN PACIFIC RAILWAY COMPANY REPORTED IN 116 F.SUPP. 277, AS EXPRESSING THE VIEW THAT THE VALUE OF GOODS OR COMMODITIES SHIPPED UNDER THE PRICE SUPPORT PROGRAM OF THE DEPARTMENT OF AGRICULTURE COULD NOT BE MEASURED BY THE MARKET VALUE SINCE SUCH COMMODITIES WERE REMOVED FROM THE COMMERCIAL MARKET BY THE SUPPORT PROGRAM. IN THE CASE OF UNITED STATES V. NEW YORK, NEW HAVEN AND HARTFORD RAILROAD COMPANY, 211 F.2D 404, THE CIRCUIT COURT HELD TO THE CONTRARY, UPHOLDING THE LONG-ESTABLISHED RULE OF MEASURING DAMAGES BY THE MARKET VALUE AT THE DESTINATION, WHICH RULE, ACCORDING TO THE COURT, WAS NOT TO BE VARIED BY SPECIAL AGREEMENT OR BY SPECIAL CIRCUMSTANCES OF ONE OF THE PARTIES. THE COURT CITED CHICAGO, MILWAUKEE AND ST. PAUL RAILWAY COMPANY V. MCCAULL DINSMORE COMPANY, 253 US. 97; ILLINOIS CENTRAL RAILROAD COMPANY V. CRAIL, 281 U.S. 57. THE COURT ALSO REFERRED TO THE NORTHERN PACIFIC RAILWAY COMPANY CASE AND ANOTHER UNREPORTED IOWA CASE AND STATED "IT IS DOUBTFUL IF THESE DECISIONS ACCORD WITH CHICAGO, MILWAUKEE AND ST. PAUL RAILWAY COMPANY V. MCCAULL-DINSMORE, SUPRA.'

THE FULL ACTUAL LOSS OR DAMAGE, AS THAT LANGUAGE IS USED IN THE PROVISIONS OF 49 U.S.C. 20 (11), TO THE EGGS IN QUESTION WAS NOT THE PRICE TO BE PAID FOR SUCH EGGS BY THE STATE OF UTAH SINCE, UNDER THE PROVISIONS OF LAW (7 U.S.C. 1341), THE SECRETARY OF AGRICULTURE IS PERMITTED TO DISPOSE OF COMMODITIES SUBJECT TO DETERIORATION AND SPOILAGE AT NO COST SAVE HANDLING AND TRANSPORTATION COSTS. OBVIOUSLY THE DAMAGED EGGS HAD VALUE AND THE FACT THAT THE COMMODITY WAS PERMITTED UNDER LAW TO BE DISPOSED OF WITHOUT COST DOES NOT MEAN THAT UPON LOSS OR DAMAGE THERETO THE GOVERNMENT SUFFERED NO LOSS. THE TEST WOULD APPEAR TO BE, NOT WHAT THE GOVERNMENT WOULD RECEIVE FOR THE DAMAGED EGGS, BUT WHAT VALUE THEY HAD AT THE DESTINATION, THAT IS, THEIR REPLACEMENT COST IN THE OPEN MARKET. IN VIEW THEREOF AND OF THE HOLDING IN THE NEW YORK, NEW HAVEN AND HARTFORD RAILROAD COMPANY CASE AND THE CASES CITED THEREIN, WE ARE OF THE OPINION THAT THE NORTHERN PACIFIC RAILWAY COMPANY DECISION IS NOT DECISIVE OF THE MATTER INVOLVED.

CONSIDERING THE STATEMENTS MADE ABOVE, IT IS OUR OPINION THAT THE LOSS INVOLVED RESULTED FROM THE FAULT OF THE CARRIER AND, THEREFORE, THE ACTION TAKEN BY OUR OFFICE IN COLLECTING A PORTION OF THE CLAIM OF THE UNITED STATES ($576.05) FROM THE AMOUNT OTHERWISE DUE ON THE FREIGHT BILLS F- 46748 AND F-47648-A WAS CORRECT. IT IS REQUESTED THAT THE BALANCE OF $56.13 BE REMITTED AS SOON AS POSSIBLE TO THE TRANSPORTATION DIVISION, GENERAL ACCOUNTING OFFICE; OTHERWISE, IT WILL BE NECESSARY TO COLLECT THIS AMOUNT BY APPROPRIATE DEDUCTION FROM CURRENT PAYMENTS.