B-129524, DEC. 26, 1956

B-129524, DEC. 26, 1956

TO SOUTHERN PACIFIC COMPANY:

REFERENCE IS MADE TO YOUR LETTER OF OCTOBER 11, 1956, FILE YG-85 600651- W, REQUESTING REVIEW OF OUR SETTLEMENT CERTIFICATE DATED SEPTEMBER 17, 1956 (CLAIM NO. TK-528936), WHICH DISALLOWED YOUR SUPPLEMENTAL BILL NO. D- 600651 FOR $612.62, REPRESENTING ADDITIONAL CHARGES CLAIMED TO BE DUE FOR THE TRANSPORTATION OF TWO CARLOADS OF INTERNAL COMBUSTION ENGINES TRANSITED AT SAN ANTONIO, TEXAS, AND FORWARDED TO ALAMEDA, CALIFORNIA, ON GOVERNMENT BILLS OF LADING NOS. WV-1183855 AND WV-1183991, DATED JUNE 20 AND 21, 1945.

THE POINT IN ISSUE IS WHETHER OR NOT THE PRIVILEGE OF RECONDITIONING INTERNAL COMBUSTION ENGINES AT THE TRANSIT POINT WAS AVAILABLE TO THE GOVERNMENT UNDER ASSOCIATION OF AMERICAN RAILROADS SECTION 22 QUOTATION NO. 16-F. THIS QUOTATION WAS IN EFFECT AND APPLICABLE TO SHIPMENTS MOVING FROM ORIGINAL POINT OF ORIGIN ON AND AFTER MARCH 21, 1945, AND TO SHIPMENTS IN STORAGE ON THAT DATE UNDER THE PROVISIONS OF A.A.R. SECTION 22 QUOTATION NO. 16-E. ITEM NO. 5/B) OF QUOTATION 16-F PROVIDED THAT SHIPMENTS OF MACHINERY OR MACHINES ACCORDED THE TRANSIT PRIVILEGE COULD BE RECONDITIONED AT THE TRANSIT POINT. THE ENGINES WHICH MOVED OUTBOUND ON BILL OF LADING NO. WV-1183991 WERE SHIPPED FROM POINT OF ORIGIN, PAULINE, KANSAS, ON APRIL 4 AND MAY 23, 1945. THE ENGINES WHICH MOVED OUTBOUND ON BILL OF LADING NO. WV-1183855 WERE IN STORAGE AT PAULINE, KANSAS, ON MARCH 21, 1945, UNDER THE PROVISIONS OF QUOTATION 16-E. THE RECORD SHOWS THAT ALL OF THE ENGINES HAD ARRIVED AT THE TRANSIT POINT, SAN ANTONIO, TEXAS, BY JUNE 1, 1945, AND WERE THERE RECONDITIONED WHILE IN STORAGE.

ON JULY 5, 1946--- MORE THAN ONE YEAR AFTER THE INVOLVED TRANSPORTATION WAS COMPLETED--- ITEM NO. 5/B) WAS AMENDED BY AMENDMENT NO. 11 TO QUOTATION 16-F TO PRECLUDE THE RECONDITIONING OF MACHINES OR MACHINERY AT THE TRANSIT POINT. THIS AMENDMENT WAS MADE RETROACTIVE TO MARCH 21, 1945, THE ORIGINAL DATE OF QUOTATION 16-F. IN YOUR REQUEST FOR REVIEW, YOU CONTEND THAT ITEM NO. 5/B) OF THE ORIGINAL SECTION 22 QUOTATION 16-F CANNOT BE APPLIED TO THE SHIPMENTS INVOLVED BECAUSE ITEM NO. 5/B) WAS AMENDED BY AMENDMENT NO. 11 WHICH WAS ACCEPTED BY BOTH THE CARRIERS AND THE GOVERNMENT.

IT IS WELL ESTABLISHED THAT GOVERNMENT AGENTS OR OFFICERS HAVE NO AUTHORITY TO AMEND OR MODIFY AN EXISTING GOVERNMENT CONTRACT SO AS TO INCREASE THE GOVERNMENT'S LIABILITY UNLESS A COMPENSATING BENEFIT RESULTS TO THE UNITED STATES. J. J. PREIS AND CO. V. UNITED STATES, 58 C. CLS. 81; YALE AND TOWNE MFG. CO. V. UNITED STATES, 67 C. CLS. 618; VULCANITE CEMENT CO. V. UNITED STATES, 74 C. CLS. 692, 705. THIS WOULD APPEAR TO BE ESPECIALLY TRUE WHERE A CONTRACT HAS BEEN FULLY EXECUTED AND MODIFICATION IS ATTEMPTED TO BE MADE RETROACTIVELY. IF YOUR CONTENTION BE GIVEN EFFECT INSOFAR AS THESE SHIPMENTS ARE CONCERNED, IT WOULD, WITHOUT ANY APPARENT CONSIDERATION BEING EXTENDED TO THE GOVERNMENT, MATERIALLY MODIFY THE CONTRACT OF TRANSPORTATION AS FORMED WHEN THESE SHIPMENTS WERE MADE FROM THE ORIGINAL POINT OF ORIGIN OR POINT OF STORAGE UNDER THE CONTRACTUAL TERMS AND CONDITIONS THEN IN FORCE. THUS, AMENDMENT NO. 11, TO THE EXTENT THAT IT PURPORTS TO INCREASE THE CHARGES ON SHIPMENTS OF THIS KIND, CANNOT BE GIVEN EFFECT IN OUR AUDIT.

ACCORDINGLY, THE SETTLEMENT ACTION BY OUR TRANSPORTATION DIVISION IS SUSTAINED.