WD Lawson & Company v. Penn Central Company

• Citation: 456 F.2d 419
• Decision Date: 29 February 1972
• Docket Number: No. 71-1357.,71-1357.
• Parties: W. D. LAWSON & COMPANY and Washington General Insurance Company, Plaintiffs-Appellees, v. PENN CENTRAL COMPANY and Fort Worth & Denver Railway Company, Defendants-Appellants.
• Court: United States Courts of Appeals. United States Court of Appeals (6th Circuit)

456 F.2d 419 (1972)

W. D. LAWSON & COMPANY and Washington General Insurance Company, Plaintiffs-Appellees, v. PENN CENTRAL COMPANY and Fort Worth & Denver Railway Company, Defendants-Appellants.

No. 71-1357.

United States Court of Appeals, Sixth Circuit.

February 29, 1972.

Caruthers Ewing, and J. Martin Regan, Memphis, Tenn., for appellants; Laughlin, Garthright, Halle & Regan, Memphis, Tenn., of counsel.

Newton P. Allen, Memphis, Tenn. (J. Kirby Riffel, Memphis, Tenn. on the brief), for appellees; Armstrong, Allen, Braden, Goodman, McBride & Prewitt, Memphis, Tenn., of counsel.

Before WEICK and EDWARDS, Circuit Judges, and McALLISTER, Senior Circuit Judge.

EDWARDS, Circuit Judge.

This is an appeal from a judgment after jury trial entered by the United States District Court for the Western District of Tennessee (Western Division). The judgment against the two defendant railroads was in the amount of $13,206. It resulted from the nearly total destruction of 110 bales of cotton shipped by plaintiff from Texas to Massachusetts as a result of a fire in defendant Penn Central's yard in Cleveland, Ohio. Defendant Fort Worth and Denver was the initial carrier and issued its bill of lading, while Penn Central was the delivering carrier. Neither railroad operates a line of railroad in Tennessee, but both have offices and agents in Memphis, as does the plaintiff.

Plaintiff brought this suit in the Circuit Court in Shelby County, Tennessee, alleging liability in two counts—the first a common law count and the second a statutory count under the Carmack Amendment (49 U.S.C. § 20(11) (1970)). Both defendants removed the case to the United States District Court specifically reserving their objections to venue. The District Judge denied defendants' motions to dismiss except as to the Carmack Amendment count against Penn Central. The jury found for plaintiff on a common law count and the Carmack Amendment count against Fort Worth and Denver, and on the common law count against Penn Central.

On these simple and undisputed facts appellants state three issues:

1) The law in Tennessee is that the nonresident defendant corporations were not subject to suit in Tennessee.

2) The federal law has preempted the field of law relating to shipment of goods by interstate carriers.

3) To allow this suit in Tennessee against these appellants constitutes an unreasonable burden on interstate commerce.

As to the first issue posed, the District Judge held:

"This court is of the opinion that the defendants are subject to service of process in the State of Tennessee by virtue of TCA 20-218. Atchison, Topeka & Santa Fe Railroad Co. v. Ortiz, 50 Tenn.App. 317 361 S.W.2d 113 (1962). TCA 20-220, a separate service of process provision pertaining to foreign corporations is inapplicable to this case. That section is to be distinguished from TCA 20-218. Cumberland Tel. & Tel. Co. v. Turner, 88 Tenn. 265, 12 S.W. 544 (1898). The defendants rely upon Delaney Furniture Company v. The Magnavox Company, 222 Tenn. 329, 435 S.W.2d 828 (Sup.Ct.Tenn.1968). In the Delaney opinion the Supreme Court was considering TCA 20-220 and not TCA 20-218. This court is of the opinion that service of process upon both defendants is valid."

This issue is anything but simple and would require considerable discussion but for the fact that we have recently decided a closely parallel case. Beautytuft, Inc. v. Factory Insurance Assoc., 431 F.2d 1122 (6th Cir. 1970). The principal issue in Beautytuft, as in this case, was whether the courts of Tennessee are open to adjudicate disputes arising outside the boundaries of Tennessee between associations and corporations which have offices and agents available for service in personam within the state of Tennessee.

As we recognized in Beautytuft, Tennessee statute T.C.A. § 20-220 (1955) provides for substituted service on corporations doing business in Tennessee on statutorily designated agents who would not normally be held to be corporate agents. This statute also limits suits thus commenced to suits pertaining to causes of action which arise within the boundaries of Tennessee. Tennessee, however, historically has belonged to the group of states which open their courts to suits by their citizens against each other, even though the locus of the cause of action is entirely outside of the forum state. The narrow issue in this case is whether Tennessee law would treat two foreign corporations, which are subject to service because they have offices and do business in Tennessee, like Tennessee citizens who can sue each other in Tennessee courts in relation to a cause of action arising wholly outside of Tennessee's boundaries.

Two Tennessee judges familiar with Tennessee law, Judge Wilson in the Beautytuft case, and Judge McRae in the instant case, both thought the Tennessee courts were open to such suits. They relied upon the fact that the Tennessee legislature in authorizing service on associations in T.C.A. § 20-223 (1955), and in authorizing service on corporations with offices in Tennessee in T.C.A. § 20-218 (1955), did not see fit to include the limitation contained in T.C.A. § 20-220 (1955).

This likewise is the view of the Tennessee Court of Appeals, as expressed in Atchison, Topeka & Santa Fe R. Co. v. Ortiz, 50 Tenn.App. 317, 361 S.W.2d 113 (1962). We recognize, of course, that we here construe Tennessee law and that there is force to appellants' argument that the Supreme Court of Tennessee may hold that the limitation contained in T.C.A. § 20-220 should be read into such service of process statutes as T.C.A. § 20-223 and T.C.A. § 20-218.

Since nothing suggesting that the Tennessee legislature intended this result is presented to us here (or was in Beautytuft) and pending final adjudication on this point in the Supreme Court of Tennessee, we now adhere to our views as fully expressed in Beautytuft, supra.

As to the second issue posed by this appeal concerning whether or not the Carmack Amendment preempted common law suits of the nature of the first count stated in this case against both appellants, we hold that it did. We have read the first count as stated in appellees' original state court declaration and find that it is a suit for damages for violation of appellants' common carriers contract for interstate carriage of goods.¹ We perceive no distinction between the nature of this count, or the relief sought thereunder, and that stated or sought under the federal statute.

In Adams Express Co. v. Croninger, 226 U.S. 491, 33 S.Ct. 148, 57 L.Ed. 314 (1913), the Supreme Court by unanimous decision dealt at length with the Carmack Amendment proviso which is relied upon here to sustain the common law counts. Its holding was:

"Prior to that amendment the rule of carrier\'s liability, for an interstate shipment of property, as enforced in both Federal and state courts, was either that of the general common law as declared by this court and enforced in the Federal courts throughout the United States, Hart v. Pennsylvania Railroad Co., 112 U.S. 331, 5 S.Ct. 151, 28 L.Ed. 717; or that determined by the supposed public policy of a particular State, Pennsylvania Railroad Co. v. Hughes, 191 U.S. 477, 24 S.Ct. 132, 48 L.Ed.2d 268; or that prescribed by statute law of a particular state, Chicago etc Railroad v. Solan, 169 U.S. 133, 18 S.Ct. 289, 42 L.Ed. 688.

"Neither uniformity of obligation nor of liability was possible until Congress should deal with the subject. The situation was well depicted by the Supreme Court of Georgia in Southern Pacific Co. v. Crenshaw Bros., 5 Ga.App. 675, 687, 63 S.E.Rep. 865, where that court said:

`Some States allowed carriers to exempt themselves from all or a part of the common-law liability, by rule, regulation, or contract; others did not; the Federal courts sitting in the various States were following the local rule, a carrier being held liable in one court when under the same state of facts he would be exempt from liability in another; hence this branch of interstate commerce was being subjected to such a diversity of legislative and judicial holding that it was practically impossible for a shipper engaged in a business that extended beyond the confines of his own State, or for a carrier whose lines were extensive, to know without considerable investigation and trouble, and even then oftentimes with but little certainty, what would be the carrier\'s actual responsibility as to goods delivered to it for transportation from one State to another. The congressional action has made an end to this diversity; for the national law is paramount and supersedes all state laws as to the rights and liabilities and exemptions created by such transaction. This was doubt-less the purpose of the

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