BNUMBER:  B-270725
DATE:  June 26, 1996
TITLE:  American Van Services, Inc.

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Matter of:American Van Services, Inc.

File:     B-270725

Date:June 26, 1996

DIGEST

Carrier's submission of check in payment of damages to shipment of 
household goods with conditional endorsement releasing carrier of any 
future liability for shipment is without effect as to liability for 
damaged items subsequently reported to carrier, where the subsequent 
report is provided to the carrier within 75 days of delivery in 
accordance with Military-Industrial Memorandum of Understanding.  This 
memorandum specifies the responsibilities and duties of carriers, and 
a carrier may not unilaterally alter the basis for determining its 
liability for loss and damage under the Memorandum.

DECISION

American Van Services, Inc., appeals Claim Settlement No. 
Z-2862118(69), dated December 7, 1995, which denied American's refund 
request for monies set off for damage or loss to the household goods 
shipment of Douglas Clark, an Air Force member.  For the reasons which 
follow, we sustain the settlement.

American picked up the member's household goods on October 27, 1993, 
in Niceville, Florida, and delivered the goods to Henderson, Nevada, 
on February 17, 1994.  The member and the carrier completed DD Form 
1840 (Joint Notice of Loss or Damage at Delivery) on February 17, 
1994, which listed damage to a coffee table and a broken mirror.  
Subsequently, the member completed DD Form 1840R (Notice of Loss or 
Damage) on February 24, 1994, listing later-discovered damage to other 
items in the shipment.

On May 11, 1994, the Air Force paid the member $553.58 in partial 
payment for the claimed losses but denied other items claimed because 
of lack of documentation or estimates.  The Air Force requested that 
American pay $227.95 for the damages, and American, by check dated May 
24, 1994, paid the claim.  The check contained the following notation 
on the reverse:  "Proper endorsement of this check hereby releases 
American Van Services, Inc., of any further liability for Bill of 
Lading Number 20495."  On the front of the check the government bill 
of lading number and the member's name appeared.  The Air Force 
endorsed and deposited the check on June 3, 1994.

Subsequently, the member submitted additional documentation which 
supported his claim for damage to a table and a stereo totaling 
$400.41, for which payment was requested from American.  American did 
not remit the payment.  Subsequently, the amount was set off against 
other funds due the carrier.

American contends it is not liable for the additional damage in view 
of the endorsement, arguing that when the Air Force endorsed and 
deposited the check, American was relieved of further liability for 
damage to the shipment.  American requests a refund of the setoff 
amount.  The Air Force argues that since American received notice of 
the damage within the 75 days period set forth in the 
Military-Industrial Memorandum of Understanding (MOU), it is liable 
for the damages, notwithstanding the endorsement on the May 24 check.

We find that the acceptance and negotiation of the check by the Air 
Force did not bar the later demand for further damages.  American 
cannot unilaterally alter its responsibilities and duties as specified 
in the MOU, including the obligation to pay for damage in transit to 
the household goods it has moved for military members, when damage 
that is otherwise payable is brought to its attention in a timely 
fashion.  See McDonald v. United States, 13 Cl. Ct. 255 (1987), where 
a borrower attempted to avoid payment of outstanding escrow charges 
required by loan agreement by paying only loan amount with conditional 
endorsement marked payment in full was found to be without effect.

For the endorsement to have been effective, it would have to be 
considered an accord and satisfaction which is the payment and 
acceptance, as full settlement, of an amount less than that claimed by 
the creditor of the whole claim or demand, where it is not liquidated, 
or is the subject of a dispute between the parties.  40 Comp. Gen. 
261, 264-65 (1960).

Here, the initial demand covered only those items for which the member 
had submitted sufficient documentation to allow adjudication of the 
claim.  The endorsement by the Air Force served to bar the Air Force 
from asserting further carrier liability with regard to the items of 
loss and damage covered by the check.  However, American received 
timely notice of additional liability reflected in the damage to the 
table and stereo within 75 days of delivery and knew that if the claim 
with the member were later settled, as here,  the service would look 
to it for reparation.  American Van Services, Inc., B-252671, Aug. 19, 
1993.  Therefore, the final amount of the claim had not been 
determined at the time of the check submittal by American.

American has submitted to our Office a copy of a letter from the Navy 
regarding another claim which states that endorsement and negotiation 
of the carrier's instrument constitutes full and final satisfaction of 
a claim.  However that situation in which the Navy accepted the 
carrier's offer prior to making that statement, is materially 
different from the instant situation where there had been no final 
claim amount agreed upon by the Air Force.

Accordingly, we affirm the claim settlement.

/s/Seymour Efros
for Robert P. Murphy
General Counsel