A-97126, OCTOBER 20, 1938, 18 COMP. GEN. 354

A-97126, OCTOBER 20, 1938, 18 COMP. GEN. 354

TRANSPORTATION - TRANSIT PRIVILEGES AND LAND-GRANT DEDUCTIONS - TITLE TO SHIPMENTS ACQUIRED BY THE UNITED STATES AT TRANSIT POINTS WHERE THE REQUIREMENTS OF TRANSIT TARIFFS HAVE BEEN MET WITH RESPECT TO A GIVEN SHIPMENT SO THAT THERE WOULD BE FOR APPLICATION COMMERCIALLY THE RATES AVAILABLE UNDER TRANSIT PRIVILEGES, THE GOVERNMENT AS PURCHASER, AT THE TRANSIT POINT, OF THE PROPERTY IN THE SHIPMENT, AND AS THE PARTY RESPONSIBLE FOR PAYMENT OF THE TRANSPORTATION CHARGES FROM TRANSIT POINT TO DESTINATION, IS ENTITLED TO DEDUCTION FOR LAND-GRANT FROM THE CHARGES ACCRUING BEYOND THE TRANSIT POINT, AND, IN ARRIVING AT THE EARNINGS BEYOND THE TRANSIT POINT WHERE THE MOVEMENT FROM ORIGIN TO DESTINATION INVOLVES ONLY A SINGLE LINE, THE DISTRIBUTION, OVER THE TRANSIT POINT, OF THE CHARGES ACCRUING AT THE THROUGH RATE AVAILABLE UNDER TRANSIT PRIVILEGES SHOULD BE MADE ON THE BASIS OF A MILEAGE PRORATE, IN THE ABSENCE OF OTHER AUTHORITATIVE BASIS, THE TRANSIT BALANCE NOT BEING THE CHARGE FOR THE SERVICE BEYOND THE TRANSIT POINT. OPERATION AND EFFECT OF CERTAIN TYPICAL TRANSIT TARIFF RULES CONSIDERED WITH RESPECT TO SHIPMENTS OF GOVERNMENT PROPERTY.

ACTING COMPTROLLER GENERAL ELLIOTT TO A. F. CLEVELAND, VICE PRESIDENT, ASSOCIATION OF AMERICAN RAILROADS, OCTOBER 20, 1938:

YOUR LETTER OF AUGUST 24, 1938, FILE 1-185-2, ADVANCES THE VIEW THAT UNDER THE PROVISIONS OF TRANSIT TARIFFS THE GOVERNMENT IS NOT ENTITLED TO THE BENEFIT OF TRANSIT PRIVILEGES, WITH DEDUCTION FOR LAND-GRANT FROM CHARGES FROM THE TRANSIT POINT, WITH RESPECT TO SHIPMENTS TITLE TO WHICH IS ACQUIRED BY THE GOVERNMENT AT THE TRANSIT POINT AND SHIPMENT THENCE TO DESTINATION MADE UNDER GOVERNMENT BILLS OF LADING. THIS VIEW IS PREDICATED APPARENTLY UPON THE ASSUMPTION THAT THE OPERATION OF CERTAIN TRANSIT TARIFF RULES, REFERRED TO BY YOU AS BEING TYPICAL, PRECLUDES THE USE OF A GOVERNMENT BILL OF LADING FROM THE TRANSIT POINT AND RENDERS IMPOSSIBLE A COMPLIANCE BY THE GOVERNMENT WITH TARIFF REQUIREMENTS CONCERNING SHIPPERS FROM TRANSIT POINTS.

THE RULES CONSIDERED AS HAVING SUCH EFFECT AND NUMBERED BY YOU (1) TO (4) FOR REFERENCE PURPOSES, ARE STATED IN YOUR LETTER TO BE AS FOLLOWS:

(1) TO WHOM AND WHEN GRANTED

TRANSIT PRIVILEGES WILL ONLY BE ACCORDED SHIPPERS, TRANSIT HOUSE OWNERS OR OPERATORS WHO COMPLY WITH THESE RULES, KEEP RECORDS IN THE MANNER PRESCRIBED IN RULE --- , AND MAKE STATEMENTS, WHEN REQUESTED AS TO TONNAGE AND REPRESENTATIVE FREIGHT BILLS ON HAND, AND MAKE AFFIDAVIT, WHEN REQUIRED, AS TO THE ACCURACY OF SUCH RECORDS AND STATEMENTS AND PERMIT INSPECTION THEREOF, AT ANY TIME, BY THE INSPECTION AND WEIGHING BUREAU.

TRANSIT PRIVILEGE WILL ONLY BE ACCORDED WHEN TARIFF UNDER WHICH TRANSIT RATE IS APPLIED PERMITS APPLICATION OF SUCH PRIVILEGE ON COMMODITIES MOVING UNDER SUCH TARIFF.

(2) RECORDS

SHIPPERS-, TRANSIT HOUSE OWNERS' OR OPERATORS' RECORDS MUST SHOW ALL COMMODITIES HANDLED, POINT OF ORIGIN AND DESTINATION, AND WHETHER RECEIVED OR FORWARDED BY RAIL, BOAT, WAGON OR OTHERWISE, WHICH RECORDS MUST CLEARLY SHOW THE DIFFERENT COMMODITIES, IN POUNDS, SEPARATELY:

CHART (A) RECEIVED BY RAIL, (G) DISPOSED OF LOCALLY, (B) RECEIVED BY BOAT,

(H) FORWARDED BY RAIL (TRANSIT), (C) RECEIVED BY WAGON, (I) FORWARDED BY BOAT (TRANSIT), (D) TRANSFERRED FROM ONE TRANSIT (J) TRANSFERRED TO (SPECIFY

HOUSE TO ANOTHER TRANSIT HOUSE TRANSIT HOUSE),

(SPECIFY TRANSIT HOUSE). (E) FORWARDED BY RAIL (LOCAL OR (K) COMMODITIES ON HAND,

NONTRANSIT), (L) COMMODITIES CONVERTED INTO (F) FORWARDED BY BOAT (LOCAL OR PRODUCTS AND CHANGE IN WEIGHT

NONTRANSIT), DUE TO SUCH TREATMENT.

(3) SHIPPER'S CERTIFICATE

WHEN COMMODITIES ARE RESHIPPED FROM TRANSIT HOUSE, SHIPPERS WILL BE REQUIRED TO PRESENT TO THE INSPECTION AND WEIGHING BUREAU THE INBOUND CARRIER'S REPRESENTATIVE FREIGHT BILLS AND SHIPPING DIRECTIONS IN DUPLICATE, BEARING SHIPPER'S CERTIFICATE IN THE FOLLOWING FORM:

SHIPPER'S CERTIFICATE

TENDER IS HEREBY MADE TO THE -------------- (OUTBOUND CARRIER) ----- - OF ------------ (INBOUND CARRIER) ------------------ FREIGHT BILL -- ---- AS LISTED ABOVE, FOR THE PURPOSE OF SECURING RESHIPPING PRIVILEGE AND TRANSIT RATE ON COMMODITY COVERED THEREBY. THIS TENDER IS MADE WITH A GUARANTEE ON ------------- PART THAT SUCH PRIVILEGE MAY BE GRANTED IN CONFORMITY WITH RULES OF SAID RAILWAY, AS PUBLISHED IN ITS CIRCULAR NO ----------- I.C.C. NO. ------------- , WHICH HAVE BEEN READ AND WITH WHICH ----------- -- FAMILIAR.

SIGNATURE OF SHIPPER.

(4) TRANSFER OF TONNAGE, OR OF FREIGHT BILLS AND TONNAGE CREDIT SLIPS.

IN ISSUING FREIGHT BILL ON INBOUND SHIPMENTS AGENTS MUST SHOW THEREON THE ELEVATOR, MILL OR WAREHOUSE INTO WHICH THE COMMODITY HAS BEEN UNLOADED.

IN CASE OF CHANGE OF OWNERSHIP OR TRANSFER OF COMMODITIES FROM ONE HOUSE TO ANOTHER (NOT PART OF THE SAME PLANT FACILITIES) FREIGHT BILLS WILL BE TRANSFERRED WHEN ENDORSEMENT IS EXECUTED BY THE OWNER UPON THE FREIGHT BILL AS PROVIDED IN PARAGRAPHS (A), (B), AND (C).

NOTE.--- THE TERM "PLANT FACILITIES" AS USED IN PARAGRAPHS (A) AND (C) IS UNDERSTOOD TO INCLUDE:

TWO OR MORE UNITS UNDER ONE OWNERSHIP AND CONTROL WHETHER LOCATED IN THE SAME OR DIFFERENT SECTIONS OF A CITY WITHIN THE SWITCHING LIMITS.

(A) WHERE COMMODITIES ARE TRANSFERRED FROM ONE HOUSE TO ANOTHER (NOT PART OF THE SAME PLANT FACILITIES) WITHOUT CHANGE OF OWNERSHIP, THE FOLLOWING ENDORSEMENT SHALL BE MADE:

"THE TONNAGE REPRESENTED BY THIS FREIGHT BILL HAS BEEN TRANSFERRED FROM - ---------- (INSERT HERE NAME OF HOUSE) TO ---------- (INSERT HERE NAME OF HOUSE) WITHOUT CHANGE OF OWNERSHIP.

DATE ------------------- SIGNED ---------------------------- "

(B) WHERE THE CHANGE OF OWNERSHIP OF COMMODITIES IN THE SAME HOUSE IS BY A BONA FIDE SALE FROM ONE PARTY TO ANOTHER, THE FOLLOWING ENDORSEMENT SHALL BE MADE:

"THE TONNAGE REPRESENTED BY THIS FREIGHT BILL AT -------- (INSERT HERE NAME OF HOUSE) HAS BEEN SOLD BY ----------------- TO ------------ --- .

SIGNED ---------------- DATE ------------------------------- "

(C) WHERE A CHANGE OF OWNERSHIP IS EFFECTED BY A BONA FIDE SALE AND THE COMMODITY IS TRANSFERRED FROM ONE HOUSE TO ANOTHER (NOT PART OF THE SAME PLANT FACILITIES) THE FOLLOWING ENDORSEMENT SHALL BE MADE:

"THE TONNAGE REPRESENTED BY THIS FREIGHT BILL HAS BEEN SOLD BY ----- TO - ------------- AND MOVED FROM -------------- (INSERT HERE NAME OF HOUSE FROM WHICH TRANSFERRED TO) TO --------- (INSERT HERE NAME OF HOUSE TO WHICH TRANSFER IS MADE).

DATE ------------------ SIGNED ----------------------------- "

CONCERNING THE OPERATION AND EFFECT OF THESE RULES IN RELATION TO THE MATTER OF DEDUCTION FOR LAND-GRANT, YOU STATE:

THE FIRST RULE (TO WHOM AND WHEN GRANTED) INDICATES THAT TRANSIT PRIVILEGES CONTAINED IN THE TARIFF ARE AVAILABLE ONLY TO SHIPPERS, TRANSIT HOUSE OWNERS, OR OPERATORS WHO COMPLY WITH THE RULES. WE DO NOT UNDERSTAND THE GOVERNMENT, IN THE PURCHASE OF THIS GRAIN, COMPLIES WITH THE RULES, KEEPS THE RECORDS IN ACCORDANCE WITH THE SECOND RULE ABOVE (RECORDS), AND MAKES STATEMENTS WHEN REQUESTED AS TO TONNAGE AND REPRESENTATIVE FREIGHT BILLS ON HAND, ETC.

UNDER THE THIRD RULE (SHIPPER'S CERTIFICATE) A CERTIFICATE MUST BE ISSUED AS A CONDITION PRECEDENT TO OBTAINING EITHER A PROPORTIONAL RATE, WHEN IN EFFECT, OR THE BALANCE, AND THIS CERTIFICATE CAN BE EXECUTED ONLY BY ONE WHO HAS QUALIFIED UNDER THE TRANSIT TARIFF. IT IS OUR UNDERSTANDING THAT THE GOVERNMENT HAS NOT SO QUALIFIED. FROM THIS WE ARE OF THE OPINION THAT NEITHER THE BALANCES NOR THE PROPORTIONAL RATES ARE AVAILABLE TO THE GOVERNMENT, BUT THAT IT MUST UNDER THE TARIFF PAY THE LOCAL RATE LESS ANY LAND GRANT AVAILABLE IN CONNECTION WITH THE OUTBOUND MOVEMENT FROM THE TRANSIT POINT.

UNDER THE LAST RULE (TRANSFER OF TONNAGE, OR OF FREIGHT BILLS AND TONNAGE CREDIT SLIPS) IT IS OUR INTERPRETATION, BORNE OUT BY WHAT WE UNDERSTAND TO BE THE PRACTICE (AND OUR AUTHORITY FOR THIS STATEMENT IS MR. J. H. HOWARD, CHAIRMAN OF THE WESTERN WEIGHING AND INSPECTION BUREAU WHO IS IN CHARGE OF THE HANDLING OF TRANSIT FOR ALL CARRIERS IN THE WESTERN TRUNK LINE AND SOUTHWESTERN FREIGHT BUREAU TERRITORIES) THAT UNDER THESE TRANSIT RULES THE PURCHASER AT THE TRANSIT POINT CANNOT BE SHOWN AS THE SHIPPER BUT THE BUSINESS IS BILLED OUT FROM THE TRANSIT POINT IN THE NAME OF THE TRANSIT OPERATOR, AND THEREFORE THERE CANNOT PROPERLY BE USED A GOVERNMENT BILL OF LADING FROM THE TRANSIT STATION AND THE QUESTION OF LAND GRANT DOES NOT BECOME INVOLVED.

AS FURTHER INDICATING THE PROPRIETY OF THE ABOVE INTERPRETATION YOUR ATTENTION IS PARTICULARLY DIRECTED TO THE FOLLOWING:

"TRANSIT IS BASED UPON THE FICTION RECOGNIZED BY THE COURTS AND BY THE INTERSTATE COMMERCE COMMISSION THAT UNDER THE TRANSIT TARIFFS A SHIPMENT IS IN FACT A THROUGH SHIPMENT FROM THE COUNTRY POINT OF ORIGIN OF THE GRAIN THROUGH THE TRANSIT POINT TO THE FINAL DESTINATION, AND AS SUCH MUST TAKE THE RATES THAT WERE IN EFFECT AS OF THE DATE THE SHIPMENT LEFT THE COUNTRY STATION WHETHER THE BASIS THROUGH, OR THE LOCAL, PROPORTIONAL OR BALANCE FROM THE TRANSIT STATION HAD CHANGED PRIOR TO THE FORWARDING OF THE COMMODITY OR THE PRODUCT THEREOF FROM THE TRANSIT POINT. TRANSIT IS NOT AN INHERENT RIGHT BUT IT IS A PRIVILEGE WHICH MAY BE AVAILED OF ONLY WHERE TARIFF AUTHORITY THEREFOR EXISTS, AND THEN ONLY WHEN ALL THE CONDITIONS OF THE TRANSIT HAVE BEEN FULLY AND COMPLETELY COMPLIED WITH. WHEN THE INBOUND SHIPMENT IS REGISTERED FOR TRANSIT IT HAS THE EFFECT OF CREATING A CONTRACT AS BETWEEN THE TRANSIT OPERATOR AND THE RAILROAD THAT IF ALL THE CONDITIONS IN THE TRANSIT TARIFF ARE OBSERVED, UNDER THOSE CIRCUMSTANCES THE TOTAL CHARGE FROM THE ORIGIN POINT TO THE FINAL DESTINATION WILL BE EXACTLY THE SAME AS IF THE SHIPMENT HAD GONE THROUGH ORIGINALLY CONSIGNED TO WHAT LATER BECAME THE NEW OR FINAL DESTINATION, PLUS OF COURSE ANY CHARGES FOR THE PRIVILEGE WHICH THE TARIFF MIGHT CONTAIN.

"THERE IS NOTHING IN THE TARIFFS THAT WOULD AUTHORIZE A CHANGING OF THIS CONTRACT SIMPLY BECAUSE THE GOVERNMENT HAPPENS TO PURCHASE AT THE TRANSIT STATION EITHER THE ORIGINAL COMMODITY OR, WHERE MILLING OR OTHER MANUFACTURING PROCESS IS PERMITTED, THE OUTBOUND MANUFACTURED COMMODITY. WHAT HAS BEEN SAID ABOVE RELATES NOT ONLY TO THE SITUATION AT RATE BREAK POINTS, WHERE EITHER PROPORTIONAL OR RESHIPPING RATES ARE USED OUTBOUND, BUT ALSO APPLIES TO THE OTHER SITUATION WHERE A THROUGH RATE IS PROTECTED AND THE OUTBOUND MOVEMENT FROM THE TRANSIT POINT IS THE BALANCE LEFT AFTER DEDUCTING THE INBOUND LOCAL TO THE TRANSIT STATION.

"MY UNDERSTANDING IS THAT THERE IS ONE FURTHER SITUATION WHERE WE DIFFER WIDELY FROM THE RULINGS OF YOUR DEPARTMENT AND THAT IS WHERE THE ENTIRE SERVICE TO AND FROM THE TRANSIT POINT INVOLVES A SINGLE RAILROAD. IN THIS SITUATION OBVIOUSLY THERE ARE NO DIVISIONS. WE ARE INFORMED THAT UNDER YOUR RULINGS YOU ARE ARBITRARILY DIVIDING THE RATE ON A MILEAGE PRORATE AND CLAIMING LAND GRANT DEDUCTIONS ON THE BASIS OF THE ARBITRARY OUTBOUND FACTOR OBTAINED BY SUCH DIVISION. THIS MEANS REDUCING THE INBOUND FACTOR FOR WHICH NO TARIFF AUTHORITY EXISTS AND IT GIVES A GREATER OUTBOUND FACTOR THAN THE TARIFF PROVIDES ON WHICH THE LAND GRANT IS FIGURED. OBTAINING THE DEDUCTION BY THIS ARBITRARY METHOD IT IS THEN SUBTRACTED FROM THE BALANCE OUT OF THE TRANSIT POINT, PRODUCING A LOWER BASIS FOR THE OUTBOUND SERVICE FROM THE TRANSIT POINT THAN IF THE LAND GRANT WAS FIGURED ON THE BASIS OF THE COMMERCIAL BALANCE FROM THE TRANSIT POINT. WE DENY THAT YOU ARE ENTITLED FOR REASONS HERETOFORE GIVEN TO APPLY LAND GRANT TO THE EXISTING BALANCE SINCE FOR REASONS HERETOFORE STATED WE DO NOT CONSIDER IT PROPER TO USE A GOVERNMENT BILL OF LADING FROM THE TRANSIT POINT.

"THE RAILROAD INDUSTRY IS OF THE OPINION THAT YOU HAVE TWO OPTIONS AVAILABLE WHERE YOU PURCHASE A COMMODITY AT THE TRANSIT STATION, I.E.:

"/1) PROCEED UNDER THE CONTRACT RATE WHICH MEANS NO LAND GRANT DEDUCTION;

"/2) USE THE LOCAL RATE AND APPLY THERETO WHATEVER LAND GRANT IS LAWFULLY APPLICABLE.'

IF CORRECTLY UNDERSTOOD, YOUR OBJECTIONS TO THE DEDUCTION OF ANY LAND- GRANT FROM CHARGES, COMPUTED ON THE BASIS OF TRANSIT PRIVILEGES,WITH RESPECT TO SHIPMENTS ACQUIRED BY THE GOVERNMENT AT TRANSIT POINTS ARE BASED UPON THE SEVERAL ASSUMPTIONS, (A) THAT UNDER THE RULE NUMBERED ONE THE GOVERNMENT, TO BE ENTITLED TO THE BENEFIT OF REDUCED CHARGES GROWING OUT OF TRANSIT PRIVILEGES, MUST BE A SHIPPER, TRANSIT HOUSE OWNER OR OPERATOR, SUCH AS MENTIONED IN SAID RULE, SINCE IT IS TO THESE THE TARIFF PROVIDES TRANSIT "PRIVILEGES" WILL "ONLY BE ACCORDED" AND THE GOVERNMENT CANNOT BE SUCH A SHIPPER WITHIN THE MEANING OF THE TARIFF BECAUSE THE GOVERNMENT DOES NOT KEEP THE RECORDS, MAKE THE STATEMENTS, AFFIDAVITS, ETC., REQUIRED OF SUCH SHIPPERS, TRANSIT HOUSE OWNERS OR OPERATORS BY RULE NUMBERED TWO; (B) THAT AS A CONDITION PRECEDENT TO "OBTAINING EITHER A PROPORTIONAL RATE, WHEN IN EFFECT, OR THE BALANCE" (PRESUMABLY THE TRANSIT BALANCE), A SHIPPER'S CERTIFICATE MUST BE ISSUED, AS REQUIRED BY RULE NUMBERED THREE, WHICH CERTIFICATE YOU CONSIDER MUST BE EXECUTED BY ONE WHO HAS QUALIFIED UNDER THE TRANSIT TARIFF AND SINCE YOU UNDERSTAND THE GOVERNMENT HAS NOT SO QUALIFIED "NEITHER THE BALANCES NOR THE PROPORTIONAL RATES ARE AVAILABLE TO THE GOVERNMENT; " AND (C) THAT UNDER THE RULE NUMBERED FOUR, ACCORDING TO WHAT YOU UNDERSTAND "TO BE THE PRACTICE" A PURCHASER AT THE TRANSIT POINT CAN NOT BE SHOWN AS THE SHIPPER, IT BEING NECESSARY THAT THE BUSINESS BE BILLED OUT FROM THE TRANSIT POINT IN THE NAME OF THE TRANSIT OPERATOR; THAT "THEREFORE" A GOVERNMENT BILL OF LADING CANNOT PROPERLY BE USED FROM THE TRANSIT STATION AND "THE QUESTION OF LAND GRANT DOES NOT BECOME INVOLVED.' CONCERNING THE PROPOSITION THAT THE GOVERNMENT MAY NOT KEEP THE SPECIFIED RECORDS, OR BE IN A POSITION TO MAKE THE STATEMENTS AND AFFIDAVITS, REQUIRED UNDER TRANSIT ARRANGEMENTS, IT IS NOT APPARENT THAT SAID FACT, EVEN IF IT EXISTS, COULD HAVE ANY EFFECT UPON THE AMOUNT OF CHARGES COLLECTIBLE ON TRANSITED SHIPMENTS, PROVIDED EITHER THE "SHIPPERS, TRANSIT HOUSE OWNERS OR OPERATORS" KEEP SUCH RECORDS, MAKE THE REQUIRED STATEMENTS AND AFFIDAVITS, AND OTHERWISE COMPLY WITH RULE TWO CONCERNING "RECORDS.' IN OTHER WORDS WHILE IT IS TRUE THAT, IN ORDER FOR A SHIPMENT TO BE ENTITLED TO THE APPLICATION OF A RATE MADE AVAILABLE UNDER TRANSIT ARRANGEMENTS, THE REQUIREMENTS AS TO THE MATTER OF RECORDS MUST BE MET BY THE SHIPPER, TRANSIT HOUSE OWNER OR OPERATOR, IT DOES NOT FOLLOW THAT THE CHARGES COLLECTIBLE FOR SUCH SHIPMENT AT THE RATES APPLICABLE UNDER THE TRANSIT ARRANGEMENTS ARE, OR CAN BE, RESTRICTED SO AS TO BE AVAILABLE FOR PAYMENT ONLY BY THE SHIPPER, TRANSIT HOUSE OWNER OR OPERATOR, AND NOT BY THE CONSIGNEE OR OTHER PARTY RESPONSIBLE TO THE CARRIER FOR PAYMENT OF THE TRANSPORTATION CHARGES. APPARENTLY THE CONCLUSION TO THE CONTRARY, IMPLIED IN YOUR LETTER, RESTS UPON THE WORDING IN RULE ONE THAT ,TRANSIT PRIVILEGES WILL ONLY BE ACCORDED SHIPPERS, TRANSIT HOUSE OWNERS OR OPERATORS" WHO COMPLY WITH THE RULES AS TO RECORDS, ETC. THE EFFECT OF THIS PROVISION WOULD SEEM CLEARLY TO BE THAT THE RIGHT TO TRANSIT PRIVILEGES FOR A SHIPMENT CAN BE ACQUIRED ONLY WHEN THE REQUIREMENTS AS TO RECORDS HAVE BEEN MET BY THE SHIPPERS, TRANSIT HOUSE OWNERS OR OPERATORS, BUT IT IS ALSO EQUALLY CLEAR THAT, WHEN ONCE A SHIPMENT HAS ACQUIRED A STATUS ENTITLING IT TO TRANSIT PRIVILEGES, CHARGES ON THE BASIS OF RATES AVAILABLE UNDER THE TRANSIT ARRANGEMENTS ARE FOR APPLICATION REGARDLESS OF WHETHER THE CONSIGNOR FROM THE TRANSIT POINT, THE CONSIGNEE, OR OTHER PARTY, IS RESPONSIBLE TO THE CARRIER FOR PAYMENT FOR THE TRANSPORTATION SERVICE.

A SITUATION INVOLVING THESE PRINCIPLES WAS PRESENTED AND CONSIDERED IN SCHREIBER MILLING AND GRAIN COMPANY V. CHICAGO GREAT WESTERN RAILROAD COMPANY, 213 I.C.C. 731. IN THAT CASE THE IMPERIAL MEAL COMPANY, A TRANSIT OPERATOR AT MINNEAPOLIS, MINNESOTA, WAS THE CONSIGNOR OF THE VARIOUS SHIPMENTS INVOLVED WHICH WERE TRANSPORTED FROM MINNEAPOLIS TO ST. JOSEPH, MISSOURI. THE EVIDENCE INDICATED THAT SAID TRANSIT OPERATOR HAD ACQUIRED, ON THE MINNEAPOLIS MARKET, CERTAIN INBOUND SHIPMENTS OF FLAXSEED AND WHEAT SCREENINGS, ALONG WITH THE INBOUND FREIGHT BILLS WHICH IT HAD REGISTERED WITH THE CHICAGO GREAT WESTERN RAILROAD COMPANY FOR TRANSIT. THE SCHREIBER MILLING AND GRAIN COMPANY PURCHASED, F.O.B. MINNEAPOLIS, FROM THE IMPERIAL MEAL COMPANY, THE TRANSIT OPERATOR, THE LINSEED-OIL MEAL AND ANIMAL FEED CONSTITUTING THE OUTBOUND SHIPMENTS WHICH HAD BEEN MILLED AT MINNEAPOLIS FROM THE INBOUND FLAXSEED AND WHEAT SCREENINGS. WHEN THE IMPERIAL MEAL COMPANY, AS CONSIGNOR, TENDERED THE OUTBOUND SHIPMENTS TO THE CARRIER IT SURRENDERED CURRENT FREIGHT BILLS OR TONNAGE SLIPS COVERING THE INBOUND SHIPMENTS INTO MINNEAPOLIS. THE SCHREIBER MILLING AND GRAIN COMPANY, HOWEVER, PAID AND BORE THE TRANSPORTATION CHARGES COLLECTED FOR THE TRANSPORTATION FROM MINNEAPOLIS TO ST. JOSEPH, THE CHARGES SO PAID BEING COMPUTED ON THE BASIS OF THE LOCAL RATE FROM MINNEAPOLIS TO ST. JOSEPH. THE SHIPMENTS, BEING ENTITLED TO TRANSIT PRIVILEGES, THE IMPERIAL MEAL COMPANY THEREAFTER PRESENTED CLAIMS TO THE CARRIER FOR THE DIFFERENCE BETWEEN CHARGES AT THE LOCAL RATES COLLECTED BY THE CARRIER AND THE CHARGES PROPERLY APPLICABLE ON THE BASIS OF TRANSIT BALANCES. THE CLAIMS SO MADE WERE PAID BY THE CARRIER TO THE IMPERIAL MEAL COMPANY. SUBSEQUENTLY, THE SCHREIBER MILLING AND GRAIN COMPANY PRESENTED CLAIMS FOR THE OVERCHARGES WHICH WERE REJECTED BY THE CARRIER ON THE BASIS THAT THE OVERCHARGES HAD ALREADY BEEN REFUNDED. IT IS STATED IN THE CITED REPORT OF THE COMMISSION THAT THE TRANSIT TARIFF CONCERNED HAD PROVIDED THAT "TRANSIT PRIVILEGES WOULD BE ACCORDED ONLY TO SHIPPERS WHO KEPT RECORDS, SUBMITTED STATEMENTS WHEN REQUESTED, AND OTHERWISE CONFORMED TO THE REQUIREMENTS OF THE CARRIER.' IN PASSING UPON THE CARRIER'S POSITION THAT REFUND TO THE CONSIGNOR WAS PROPER, AND THAT THE SCHREIBER MILLING AND GRAIN COMPANY HAD NO RIGHT TO A REFUND, THE COMMISSION SAID:

IN JUSTIFICATION OF ITS ACTION IN MAKING REFUND OF THE OVERCHARGES TO THE IMPERIAL MEAL COMPANY, DEFENDANT ASSERTS THAT IT DID SO IN GOOD FAITH UNDER A WELL-KNOWN AND LONG-ESTABLISHED CUSTOM IN THE GRAIN TRADE WHEREBY THE TRANSIT OPERATOR WHO SURRENDERS THE INBOUND BILLING, AND COMPLIES WITH THE OTHER TARIFF REQUIREMENTS, IS RECOGNIZED AS THE PARTY ENTITLED TO SUCH REFUND. SECTION 6 OF THE INTERSTATE COMMERCE ACT PROHIBITS THE CHARGING OF "A GREATER OR LESS OR DIFFERENT COMPENSATION * * * THAN THE RATES * * * WHICH ARE SPECIFIED IN THE TARIFFS.' THE FACT THAT COMPLAINANT PAID THE ILLEGAL CHARGES ASSAILED IS NOT DISPUTED, AND IT WAS THE PLAIN DUTY OF DEFENDANT TO REFUND THE EXCESS OVER THE TARIFF BASIS TO THE ONE WHO PAID SUCH EXCESS. THE RIGHT TO REFUND AROSE IN CONTEMPLATION OF LAW THE MOMENT THE OVERCHARGES WERE PAID, AND THE PARTY WHO PAID THEM WAS ENTITLED TO REPARATION FROM THAT MOMENT. AMERICAN SMELTING AND REFINING CO. V. DIRECTOR GENERAL, 144 I.C.C. 570. THE FACT THAT THE CUSTOM RELIED UPON, WHICH OBVIOUSLY CONFLICTS WITH THE CLEARLY DEFINED DUTY OF THE CARRIER UNDER THE ACT, MAY HAVE BEEN INDULGED IN IN THE PAST DOES NOT GIVE TO THAT CUSTOM LEGAL FORCE OR EFFECT, NOR DOES IT AFFORD ANY REASON FOR ITS CONTINUANCE. NEITHER DOES THE FACT THAT DEFENDANT, RELYING UPON SUCH CUSTOM, HAS PAID OVERCHARGES ADMITTEDLY COLLECTED FROM COMPLAINANT TO THE TRANSIT OPERATOR-CONSIGNOR, WHO DID NOT PAY OR BEAR ANY PART OF THEM, OPERATE TO DISCHARGE OR IN ANY WAY AFFECT ITS LIABILITY TO COMPLAINANT.

THUS IT APPEARS SUFFICIENTLY ESTABLISHED THAT WHILE A TARIFF MAY PROVIDE THAT TRANSIT PRIVILEGES WILL BE ACCORDED ONLY TO SHIPPERS, TRANSIT HOUSE OWNERS OR OPERATORS WHO COMPLY WITH THE RULES, ETC., THE BENEFIT OF CHARGES AT THE RATE AVAILABLE UNDER THE TRANSIT ARRANGEMENTS WHEN THE CONDITIONS ENTITLING THE SHIPMENT TO TRANSIT PRIVILEGES HAVE BEEN MET, IS NOT LIMITED TO SUCH SHIPPERS, TRANSIT HOUSE OWNERS OR OPERATORS BUT IS FOR APPLICATION IN FAVOR OF THE PARTY PAYING THE CHARGES WHETHER HE BE THE CONSIGNEE OF THE TRANSITED SHIPMENTS, OR ANOTHER. CLEARLY SUCH IS THE SITUATION WHERE THE PARTIES TO THE TRANSACTION OF SHIPMENT ARE MEMBERS OF THE GENERAL PUBLIC, OR IN OTHER WORDS REGULAR COMMERCIAL SHIPPERS OR CONSIGNEES, AND NO CITATION OF AUTHORITIES WOULD APPEAR TO BE REQUIRED FOR THE PROPOSITION THAT CHARGES HIGHER THAN THOSE AVAILABLE TO THE GENERAL PUBLIC CAN NOT LAWFULLY BE IMPOSED UPON THE GOVERNMENT. SEE, HOWEVER, IN THIS CONNECTION, MISSOURI PACIFIC RAILROAD COMPANY V. THE UNITED STATES, 71 CT.CLS. 650, 661, WHERE IT WAS SAID: ,GOVERNMENT OFFICERS ARE WITHOUT AUTHORITY TO CONTRACT FOR RATES HIGHER THAN THOSE TENDERED TO THE PUBLIC IN DULY PUBLISHED AND AUTHORIZED TARIFFS.'

AS TO THE REQUIREMENTS OF RULE THREE WITH RESPECT TO THE MATTER OF SHIPPERS' CERTIFICATES, IT IS TO BE NOTED THAT SAID RULE REQUIRES THAT WHEN COMMODITIES ARE RESHIPPED FROM A TRANSIT HOUSE, THE SHIPPERS MUST PRESENT TO AN INSPECTION AND WEIGHING BUREAU REPRESENTATIVE FREIGHT BILLS OF INBOUND CARRIERS AND SHIPPING DIRECTIONS IN DUPLICATE WITH A CERTIFICATE TO THE EFFECT THAT THE TENDER TO THE OUTBOUND CARRIER OF THE LISTED FREIGHT BILLS OF THE INBOUND CARRIER IS MADE FOR THE PURPOSE OF SECURING RESHIPPING PRIVILEGE AND TRANSIT RATE, THE CERTIFICATE FURTHER RECITING THAT THE TENDER IS MADE WITH A GUARANTEE THAT SUCH PRIVILEGE MAY BE GRANTED IN CONFORMITY WITH THE CARRIER'S PUBLISHED RULES WITH WHICH THE SHIPPER IS FAMILIAR. WHERE SUCH CERTIFICATE IS PROPERLY MADE BY THE SHIPPER FROM THE TRANSIT POINT, YOUR OBJECTION THAT THE GOVERNMENT MIGHT NOT BE ABLE TO QUALIFY AS A SHIPPER UNDER THE TRANSIT TARIFF AND HENCE COULD NOT ISSUE SUCH A CERTIFICATE, WOULD APPEAR TO HAVE NO MORE EFFECT UPON THE AMOUNT OF CHARGES COLLECTIBLE THAN DOES THE PROVISION IN RULE ONE THAT TRANSIT PRIVILEGES WILL BE ACCORDED ONLY TO SHIPPERS, TRANSIT HOUSE OWNERS, OR OPERATORS WHO COMPLY WITH THE RULES. WHILE IT WOULD APPEAR NECESSARY THAT THE SHIPPER FROM THE TRANSIT POINT TENDER THE INBOUND FREIGHT BILLS AND EXECUTE THE REQUIRED CERTIFICATE, THERE APPEARS NO REQUIREMENT THAT THE GOVERNMENT MUST BE SUCH SHIPPER, BEFORE IT, AS THE PARTY RESPONSIBLE FOR THE TRANSPORTATION CHARGES FROM THE TRANSIT POINT, MAY BE ENTITLED TO THE BENEFIT OF THE RATE AVAILABLE UNDER TRANSIT ARRANGEMENTS. IN OTHER WORDS, IF THE SHIPPER FROM THE TRANSIT POINT MAKES THE NECESSARY TENDER OF THE INBOUND FREIGHT BILLS AND EXECUTES THE REQUIRED CERTIFICATE, THE FACT THAT SUCH SHIPPER MAY BE THE TRANSIT HOUSE OWNER OR OPERATOR RATHER THAN THE GOVERNMENT DOES NOT PREVENT THE APPLICABILITY OF THE RATE AVAILABLE UNDER THE TRANSIT ARRANGEMENTS, IF THE TRANSIT REQUIREMENTS ARE OTHERWISE MET, AND THE GOVERNMENT AS THE PARTY RESPONSIBLE TO THE CARRIER FOR THE TRANSPORTATION CHARGES IS ENTITLED TO THE BENEFIT OF SAID APPLICABLE RATE. NOR IS THERE ANYTHING IN RULE THREE WHICH WOULD APPEAR TO RENDER NECESSARILY IMPOSSIBLE THE QUALIFICATION BY THE GOVERNMENT AS A SHIPPER FROM THE TRANSIT POINT WITH POSSESSION OF THE INFORMATION NECESSARY TO ENABLE IT TO EXECUTE THE REQUIRED CERTIFICATE AS SHIPPER.

AS TO THE PROPOSITION THAT UNDER RULE FOUR YOU UNDERSTAND THAT THE PURCHASER AT THE TRANSIT POINT CANNOT BE SHOWN AS THE SHIPPER BUT THE SHIPMENT MUST BE BILLED OUT IN THE NAME OF THE TRANSIT OPERATOR AND THAT "THEREFORE THERE CAN NOT PROPERLY BE USED A GOVERNMENT BILL OF LADING FROM THE TRANSIT STATION AND THE QUESTION OF LAND GRANT DOES NOT BECOME INVOLVED," IT IS PERTINENT TO OBSERVE THAT THE RULE AS SET OUT IN YOUR SUBMISSION RELATES TO THE MATTER OF ENDORSING FREIGHT BILLS UPON CHANGE OF OWNERSHIP OR TRANSFER OF COMMODITIES FROM ONE HOUSE TO ANOTHER, AND THERE HAS BEEN NOTED NOTHING THEREIN WHICH WOULD OR COULD PRECLUDE THE PURCHASER AT THE TRANSIT POINT FROM BEING SHOWN AS THE SHIPPER FROM THE TRANSIT POINT UNDER THE TRANSIT ARRANGEMENTS. HOWEVER, EVEN IT IT BE CONSIDERED THAT THE RULE HAS THE EFFECT, WHICH YOU STATE IS GIVEN IT IN PRACTICE, OF REQUIRING THE TRANSIT OPERATOR, RATHER THAN THE PURCHASER, AT THE TRANSIT POINT TO BE SHOWN AS THE SHIPPER FROM THE TRANSIT POINT, IT STILL DOES NOT FOLLOW THAT SUCH CIRCUMSTANCE PRECLUDES THE USE OF A GOVERNMENT BILL OF LADING FOR THE OUTBOUND MOVEMENT. GOVERNMENT BILLS OF LADING ARE USED CUSTOMARILY WHEREVER IT IS KNOWN THAT THE CHARGES FOR THE TRANSPORTATION SERVICE INVOLVED ARE TO BE PAID AND BORNE BY THE UNITED STATES. WHERE THEREFORE THE GOVERNMENT PURCHASES PROPERTY AND ASSUMES THE RESPONSIBILITY OF PAYMENT TO THE CARRIER OF THE CHARGES FOR THE TRANSPORTATION SERVICE INVOLVED, THE ISSUANCE OF A GOVERNMENT BILL OF LADING IS PROPER EVEN THOUGH IT MAY BE NECESSARY ON SAID BILL OF LADING TO SHOW AS THE CONSIGNOR OF THE SHIPMENT THE PARTY FROM WHOM THE PROPERTY WAS PURCHASED OR SOME OTHER PARTY. THE FACT, THEREFORE, IF IT BE A FACT, THAT THE TRANSIT OPERATOR MUST BE SHOWN AS THE SHIPPER FROM THE TRANSIT POINT DOES NOT PRECLUDE THE USE OF A GOVERNMENT BILL OF LADING WHERE THE GOVERNMENT HAS PURCHASED THE PROPERTY AT THE TRANSIT POINT AND UNDERTAKES RESPONSIBILITY FOR THE PAYMENT OF THE CARRIER'S CHARGES FOR TRANSPORTATION THENCE TO DESTINATION. MOREOVER, EVEN IF SHIPMENT WERE TO BE MADE FROM THE TRANSIT POINT ON A COMMERCIAL BILL OF LADING RATHER THAN ON A GOVERNMENT BILL OF LADING AND THE SHIPPER SHOWN THEREON BE A TRANSIT OPERATOR RATHER THAN THE GOVERNMENT, SAID FACT WOULD NOT REQUIRE, AS YOU SEEM TO ASSUME, PAYMENT OF FULL COMMERCIAL CHARGES WITHOUT DEDUCTION FOR LAND GRANT IN THE ROUTE TRAVERSED FROM THE TRANSIT POINT, WHERE IT IS ESTABLISHED THAT TITLE TO THE PROPERTY IN THE SHIPMENT WAS ACQUIRED BY THE GOVERNMENT AT THE TRANSIT POINT. IN PAYMENT OF THE CARRIER'S BILL UNDER SUCH CIRCUMSTANCES THE GOVERNMENT WOULD BE REQUIRED TO MAKE DEDUCTION FOR LAND GRANT NOTWITHSTANDING THE USE OF A COMMERCIAL BILL OF LADING, AS THE RIGHT DEPENDS UPON STATUTES OF THE UNITED STATES AND NOT UPON TERMS OF BILLS OF LADING. THAT THE USE OF A GOVERNMENT BILL OF LADING IS NOT REQUIRED AS A CONDITION PRECEDENT TO THE DEDUCTION OF LAND GRANT FROM COMMERCIAL OR TARIFF CHARGES FOR SHIPMENTS OF GOVERNMENT PROPERTY OVER LAND-GRANT ROADS, SEE NORTHERN PACIFIC RAILWAY COMPANY V. THE UNITED STATES, 72 CT.CLS. 563, WHERE IT WAS HELD THAT, WITH RESPECT TO SHIPMENTS CONSIDERED IN FINDING IX, WHICH WERE TRANSPORTED UNDER COMMERCIAL BILLS OF LADING, DEDUCTION FOR LAND-GRANT IN THE AGGREGATE AMOUNT OF $533.68 WAS PROPER. SEE ALSO, IN THIS CONNECTION, LOUISVILLE AND NASHVILLE RAILROAD COMPANY V. UNITED STATES, 267 U.S. 395. THERE APPEARS NO BASIS FOR THE CONCLUSION, THEREFORE, THAT LAND-GRANT DEDUCTION CANNOT BE MADE FROM COMMERCIAL CHARGES APPLICABLE FOR THE TRANSPORTATION OF PROPERTY OF THE UNITED STATES OVER LAND-GRANT ROADS MERELY BECAUSE THE SHIPMENT MAY NOT HAVE BEEN MADE ON A GOVERNMENT BILL OF LADING.

RELATIVE TO YOUR CONCLUSION THAT THE GOVERNMENT HAS TWO OPTIONS AVAILABLE WHERE IT PURCHASES A COMMODITY AT THE TRANSIT STATION, I.E.--

(1) PROCEEDED UNDER THE CONTRACT RATE WHICH MEANS NO LAND GRANT DEDUCTIONS;

(2) USE THE LOCAL RATE AND APPLY THERETO WHATEVER LAND GRANT IS LAWFULLY APPLICABLE.

IT WOULD APPEAR THAT THERE IS INVOLVED A MISCONCEPTION OF THE BASIS UPON WHICH DEDUCTION FOR LAND GRANT IS REQUIRED BY STATUTE TO BE BASED. THE AMOUNT THAT MAY BE PAID FOR THE TRANSPORTATION OF PROPERTY OF THE UNITED STATES, OVER ROADS AIDED UPON CONDITIONS AFFORDING THE GOVERNMENT REDUCED RATES, MAY NOT EXCEED FIFTY PERCENT OF THE FULL AMOUNT OF COMPENSATION, COMPUTED ON THE BASIS OF THE TARIFF OR LOWER SPECIAL RATES FOR LIKE TRANSPORTATION PERFORMED FOR THE PUBLIC AT LARGE. IN OTHER WORDS WHERE DEDUCTION FOR LAND GRANT IS REQUIRED THE CHARGES FROM WHICH SUCH DEDUCTION MUST BE MADE ARE THE CHARGES THAT WOULD APPLY TO THE PUBLIC AT LARGE FOR LIKE SERVICE. IF, THEREFORE--- AS APPEARS TO BE ADMITTED IN THE "OPTIONS" STATED BY YOU AS OPEN TO THE GOVERNMENT--- THE PUBLIC AT LARGE WOULD BE REQUIRED TO PAY COMMERCIAL CHARGES AT RATES AVAILABLE UNDER THE TRANSIT ARRANGEMENTS, SUCH CHARGES ARE THE ONLY CHARGES THAT MAY BE USED IN MAKING DEDUCTION FOR LAND GRANT. AS ESTABLISHED IN THE CASE OF SCHREIBER MILLING AND GRAIN COMPANY V. CHICAGO GREAT WESTERN RAILROAD COMPANY, SUPRA, THE GENERAL PUBLIC IN SITUATIONS SUCH AS HERE CONCERNED WOULD BE ENTITLED TO THE BENEFIT OF THE RATES AVAILABLE UNDER THE TRANSIT ARRANGEMENTS AND COULD NOT BE REQUIRED TO PAY GREATER CHARGES ON THE BASIS OF THE LOCAL RATES FROM THE TRANSIT POINT. IT IS EVIDENT, THEREFORE, THAT IT IS FROM COMPENSATION COMPUTED ON THE BASIS OF RATES AVAILABLE UNDER THE TRANSIT ARRANGEMENTS THAT LAND GRANT MUST BE DEDUCTED, WHERE UNDER THE TRANSIT TARIFFS THE SHIPMENT IS ENTITLED TO THE BENEFIT OF TRANSIT PRIVILEGES.

CONCERNING YOUR OBJECTION TO THE METHOD OF ARRIVING AT THE AMOUNT OF LAND GRANT WHERE THE ENTIRE SERVICE TO AND FROM THE TRANSIT POINT INVOLVES A SINGLE ROAD, IT WILL BE NOTED THAT THIS QUESTION WAS FULLY CONSIDERED IN 16 COMP. GEN. 1027. THE PRINCIPLES THERE CONSIDERED AS CONTROLLING NEED NOT BE RESTATED HERE. AS TO YOUR SUGGESTION, HOWEVER, THAT IN SUCH INSTANCE THE CHARGES SUBJECT TO LAND GRANT IN ANY EVENT SHOULD NOT BE MORE THAN THE TRANSIT BALANCE AND NOT THE PROPORTION OF THE THROUGH CHARGE ACCRUING BEYOND THE TRANSIT POINT ON THE BASIS OF APPORTIONING THE THROUGH CHARGE ON A MILEAGE PRORATE, ATTENTION IS INVITED TO THE FACT THAT IN EX- RIVER GRAIN FROM ST. LOUIS TO THE SOUTH, 203 I.C.C. 385, 388, IT WAS SAID: "TRANSIT BALANCES ARE REMAINING PORTIONS OF THROUGH RATES VIA TRANSIT POINTS THAT ARE PAID WHEN THE TRAFFIC MOVES FROM THOSE POINTS. THEY ARE NOT THE CHARGES FOR SUCH MOVEMENTS.'

AS NOTED ABOVE, DEDUCTION FOR LAND GRANT IS REQUIRED TO BE MADE FROM THE CHARGES, OR COMPENSATION, ACCRUING TO THE LAND-AIDED LINE AND THE APPORTIONMENT OF THE THROUGH CHARGE ON THE BASIS OF A MILEAGE PRORATE, WHERE THE ENTIRE SERVICE TO OR FROM THE TRANSIT STATION INVOLVES A SINGLE LINE, APPEARS, IN THE ABSENCE OF ANY AUTHORITATIVE BASIS OTHERWISE, THE PROPER METHOD OF ARRIVING AT THE EARNINGS OF THE LAND GRANT LINE FROM THE TRANSIT POINT. SEE ALSO IN THIS CONNECTION, SOUTHERN PACIFIC COMPANY V. UNITED STATES, 237 U.S. 202.

ACCORDINGLY, UPON CONSIDERATION OF THE MATTERS SUGGESTED BY YOU I AM UNABLE TO HOLD THAT THE GOVERNMENT IS NOT ENTITLED TO THE BENEFIT OF RATES AVAILABLE UNDER TRANSIT ARRANGEMENTS OR THAT, WHERE IT IS SO ENTITLED, THE CHARGES ACCRUING UNDER SUCH RATES ARE NOT PROPERLY SUBJECT TO DEDUCTION FOR LAND GRANT WHEN THE ROUTE INVOLVED EMBRACES LAND-AIDED MILEAGE CONDITIONED UPON REDUCED RATES FOR THE TRANSPORTATION OF PROPERTY OF THE UNITED STATES.

IT IS BELIEVED THE MATTERS HEREIN DEVELOPED SHOULD REMOVE ANY NECESSITY FOR A CONFERENCE ON THE QUESTION SUCH AS YOU SUGGEST. HOWEVER, IF NOTWITHSTANDING THE FOREGOING YOU FEEL THAT THE MATTER SHOULD BE FURTHER DISCUSSED, YOU MAY MAKE ARRANGEMENTS WITH THIS OFFICE THEREFOR ON ANY WORKING DAY DURING THE USUAL OFFICE HOURS.