Great Atlantic & Pacific Tea Co. v. Atchison, T. & SF Ry. Co.

• Decision Date: 25 June 1964
• Docket Number: No. 14539.,14539.
• Citation: 333 F.2d 705
• Parties: The GREAT ATLANTIC & PACIFIC TEA COMPANY, Inc., Plaintiff-Appellant, v. The ATCHISON, TOPEKA AND SANTA FE RAILWAY COMPANY, Defendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

333 F.2d 705 (1964)

The GREAT ATLANTIC & PACIFIC TEA COMPANY, Inc., Plaintiff-Appellant, v. The ATCHISON, TOPEKA AND SANTA FE RAILWAY COMPANY, Defendant-Appellee.

No. 14539.

United States Court of Appeals Seventh Circuit.

June 25, 1964.

Thomas R. Mulroy, Daniel Walker, Chicago, Ill., Hopkins, Sutter, Owen, Mulroy & Wentz, Chicago, Ill., of counsel, for appellant.

Kenneth F. Burgess, D. Robert Thomas, James W. Kissel, Chicago, Ill., D. Robert Thomas, Wilbur C. Delp, Jr., Sidley, Austin, Burgess & Smith, Chicago, Ill., for appellee.

Before HASTINGS, Chief Judge, and KNOCH and KILEY, Circuit Judges.

HASTINGS, Chief Judge.

The Great Atlantic & Pacific Tea Company, Inc. (A & P) brought this action against The Atchison, Topeka and Santa Fe Railway Company (Santa Fe). It sought to recover damages alleged to have resulted from an unreasonable and unexcused delay of two days in a shipment of plums from California to New York.

The case was submitted to the district court for decision solely upon a stipulation of facts, briefs and oral argument of the parties. The evidence consisted of the stipulation of facts and the bill of lading for the shipment.

The trial court found that A & P suffered no compensable damage resulting from Santa Fe's unreasonable and unexcused delay of two days in delivering the shipment of plums and dismissed the action. The memorandum, findings of fact and conclusions of law filed by Chief Judge William J. Campbell of the Northern District of Illinois were reported at 224 F.Supp. 903 (January 6, 1964). From this judgment of dismissal, A & P has appealed.

A & P represents that it now has pending in the Municipal Court of Chicago alone 5,769 separate claims against various carriers for delayed delivery of shipments and that there are a multitude of similar claims filed or to be filed in other courts. Although all such claims are not based on identical factual situations, it is said many of them are in a category similar to the case at bar. Both sides state this case is a test case for such claims. For this reason, we deem it advisable to set out the entire stipulation of facts as an Appendix to this opinion. Reference is now made thereto.

On June 2, 1956, A & P shipped a carload of plums from Red Bank, California consigned to itself at Harlem River, New York, one of its receiving stations for produce in the New York area. Santa Fe was the carrier and the shipment was made under a straight uniform bill of lading issued by Santa Fe and signed by both parties.

Under the usual and customary time for transportation and delivery of such a shipment, the plums should have been delivered to A & P prior to 9:00 A.M. on Sunday, June 10, 1956, ready for sale at retail in A & P stores in the New York City area on Monday, June 11, 1956. The plums were delivered to A & P by Santa Fe at 5:30 A.M. on June 12, 1956, two days late.

The two-day period of delay was unreasonable and unexcused but was not intentional.

The plums were sold at retail by A & P in its New York City outlets beginning on Wednesday, June 13, 1956. They were not sold at wholesale.

If the plums had been sold on the wholesale market in New York City on June 12, 1956, the average price per crate would have been 74 cents less than if such sale had been made on the wholesale market on June 11, 1956 (June 10, 1956 being Sunday). A & P neither bought nor sold any plums on the New York City wholesale market on any day during this critical period.

A & P purchased the plums with the intent of sale at retail on June 11, 1956. It issued to all of its retail stores in that metropolitan area a daily price list which set out a retail selling price for each item of produce for that day. The price shown for plums on such daily price list did not change during the period from June 10, 1956 to June 15, 1956. Each retail store manager had independent authority to lower the retail price of plums but not to increase the retail prices shown in the daily price list.

The daily price lists (and any advertisements) are the only records A & P keeps with reference to the actual retail price at which its produce is sold. The retail price of plums during June, 1956 did not change as frequently as the wholesale market prices and did not fluctuate in relation to changes in the wholesale market price, although the latter is one of several factors used in determining retail prices.

A & P does not keep records which would disclose with respect to shipments of produce sold at retail (a) whether all of such produce has been sold, (b) the date or time of day when such produce was sold, (c) the store at which such produce was sold, (d) whether such produce was commingled with other produce of the same kind or quality, or (e) any facts about the sale of such produce, including the price at which it was sold other than the daily price lists and advertisements, neither of which constitutes a record of actual sales.

There was no physical damage to or deterioration of the plums by reason of the delayed shipment.

A & P bases its claim for damages solely on delay in the transportation and delivery of the produce and the decline in wholesale market price during the period of such delay.

Under this measure of damages, A & P figures the difference between the cost of replacement on the wholesale market (as of June 11, 1956), reduced by the wholesale price at which the delayed goods could have been sold when delivered (June 12, 1956), this being the stipulated sum of 74 cents per crate. There were approximately 1,000 crates of plums in the carload shipment. A & P claims damage in the amount of $740.

Santa Fe is a "carrier" within the meaning of that word as used in the Interstate Commerce Act, as amended, and was the initial carrier as described in Section 20(11) of the Act, Title 49 U.S. C.A. § 20(11) for the shipment of the plums in question.

The plums were not transported and delivered to A & P with "reasonable dispatch" within the meaning of that term in Section (2) of the "Contract Terms and Conditions" of the uniform straight bill of lading.

A & P's theory of recovery based upon decline in wholesale market prices appears to be as follows: once A & P sustains its burden of proving that it has been injured by an unreasonable and unexcused delay in shipment by Santa Fe, then the wholesale market decline rule is appropriate as a method of determining the amount of actual damage, even though the item delayed was sold at retail; the burden of proving that the wholesale market decline rule will result in unjust enrichment to A & P is on Santa Fe; and, Santa Fe failed to sustain this burden.

Applicable in resolving the issues of recovery and measure of damage is Interstate Commerce Act, 49 U.S.C.A. § 20 (11) (sometimes referred to as the Carmack Amendment or the Cummins Amendment):

"Liability of initial and delivering carrier for loss; limitation of liability; notice and filing of claim

"(11) * * * Any such common carrier, railroad, or transportation company so receiving property for transportation * * * or any common carrier, railroad, or transportation company delivering said property * * * shall be liable to the lawful holder of * * * the bill of lading * * * for the full actual loss, damage, or injury to such property caused by it * * notwithstanding any limitation of liability or limitation of the amount of recovery or representation or agreement as to value in any such receipt or bill of lading, or in any contract, rule, regulation, or in any tariff filed with the Interstate Commerce Commission; * * *" (Emphasis added.)

The general common law rule of damages in cases of unreasonable delay and damage to goods in shipment is the difference in the market value of the goods at the date and in the condition they were contracted to arrive at their destination and the date on and the condition in which they actually arrived. New York, Lake Erie & Western Railroad Co. v. Estill, 147 U.S. 591, 616-617, 13 S.Ct. 444, 37 L.Ed. 292 (1893); Mitsubishi Shoji Kaisha v. Davis, S.D.N.Y., 291 F. 882, 884 (1922); aff'd (2d Cir.) 291 F. 57, cert. denied, 263 U.S. 706, 44 S.Ct. 34, 68 L.Ed. 516; Sangamon and Morgan Railroad Co. v. Henry, 14 Ill. 156, 157 (1852).

The theory which underlies the award of damages based upon market value rather than the shipper's resale contract price to third persons is that the shipper has an opportunity to purchase at the market price on the contracted arrival date to fulfill contracts and can sell the delayed or damaged goods at the market price on the date of their arrival in order to mitigate its damages. Mitsubishi Shoji Kaisha v. Davis, 291 F. at 884; Czarnikow-Rionda Co. v. Federal Sugar Refining Co., 255 N.Y. 33, 173 N.E. 913, 915, 88 A.L.R. 1426 (1930).

The market value rule has been applied in the absence of a purchase by the shipper at the market price on the contracted for arrival date to fulfill existing contracts. Ibid.

The measure of damages in delay and damaged goods cases is actual damages, and the market value rule has been adopted as a method to ascertain actual damages. Its adoption is due to its simplicity in application, the probability that it comes close to actual damages in most cases and the policy that "as against the wrongdoer, the law is willing to disregard the possibility that an award of market value at the time of the wrong may be too much." McCormick, Damages § 48, at 184 (1935). "The wrongdoer shall bear the risk of the uncertainty which his own wrong has created." Bigelow v. RKO Radio Pictures, 327 U.S. 251, 265, 66 S.Ct. 574, 580, 90 L.Ed. 652 (1946).

Since the market value rule is merely a method, it is not applied in cases where it is demonstrated that another rule will better compute actual damages. It has been held that the burden of proving that the market value rule will not result in a just measure of actual damage is on the carrier. Reider v. Thompson, 5 Cir., 197 F.2d 158, 160 (1952).

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