Center Video Indus. Co., Inc. v. Roadway Package System, Inc., 95-2345

Decision Date12 July 1996
Docket NumberNo. 95-2345,95-2345
PartiesFed. Carr. Cas. P 84,017, 29 UCC Rep.Serv.2d 1239 CENTER VIDEO INDUSTRIAL COMPANY, INCORPORATED, an Illinois corporation, Plaintiff-Appellee, v. ROADWAY PACKAGE SYSTEM, INCORPORATED, a Delaware corporation, Defendant-Appellant.
CourtU.S. Court of Appeals — Seventh Circuit

Harvey M. Silets, Dawn M. Canty (argued), Katten, Muchin & Zavis, Chicago, IL, for Plaintiff-Appellee.

Joel H. Steiner, Paul A. Gajewski (argued), Axelrod, Goodman, Steiner & Bazelon, Chicago, IL, for Defendant-Appellant.

Before BAUER, RIPPLE, and MANION, Circuit Judges.

MANION, Circuit Judge.

Center Video Industrial, Inc. ("Center Video") contracted with Roadway Package Systems, Inc. ("Roadway") to ship products to mail order customers. Roadway's filed tariff required that a shipper's instruction to collect "cash only" for COD shipments meant that Roadway could accept cash or cash equivalent instruments. When Roadway accepted as payment an instrument that was marked "certified funds" but that turned out to be worthless, Center Video sued for breach of contract. The district court concluded that the instrument was not authorized by the tariff and granted summary judgment for Center Video. We affirm.

I.

Center Video sells video equipment to customers by mail order, shipping the equipment via common carrier. Roadway is a common carrier that Center Video frequently used to ship its product. As required by the Interstate Commerce Act, 49 U.S.C. § 10762(a)(1), Roadway filed a tariff setting forth the rates, rules and regulations governing its shipment of goods. Pursuant to 49 C.F.R. § 1052.2, 1 which requires that cash on delivery ("COD") terms be set forth in a carrier's tariff, item 460 of Roadway's tariff provides Unless the shipper writes instructions to collect "Cash Only" on the COD label, carrier will accept the consignee's check naming the shipper as payee in payment for the COD package. When instructions to collect "Cash Only" are written on the COD label, carrier reserves the right to accept cash, cashier's check, certified check, money order or other similar instrument issued by or on behalf of the consignee. All checks (including cashier's checks and certified checks) and money orders tendered in payment of COD packages will be accepted by the carrier at shipper's risk including, but not limited to, the risk of nonpayment and forgery, and carrier shall not be liable upon any such instrument.

Center Video contracted with Roadway to ship COD, "cash only," equipment valued at $13,530 to an address identified as the United States Peace Corps in Denver, Colorado. 2 Roadway released the goods to the recipient "Peace Corps," accepting as payment an instrument that resembled a check from the "United States Peace Corps" but which also had "certified funds" printed above a scribbled signature. Center Video was unable to collect on the instrument and demanded that Roadway pay $13,530 for the goods based on its failure to comply with the tariff. 3 Roadway refused and Center Video sued for breach of contract.

The district court granted Center Video summary judgment, finding that Roadway had violated its tariff and thus its contract, and awarded Center Video damages of $13,530. 4 Roadway appeals. We affirm.

II.

The district court concluded that Roadway had violated its tariff by accepting a nonnegotiable instrument as payment from the "Peace Corps." Summary judgment is appropriate if there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. GCIU Employer Retirement Fund v. Chicago Tribune Co., 66 F.3d 862, 864 (7th Cir.1995). We review summary judgment de novo. Id.

The undisputed facts demonstrate that Roadway failed to comply with the terms of its tariff. The tariff required that "when instructions to collect 'Cash Only' are written on the COD label," Roadway may accept only "cash, cashier's check, certified check, money order or other similar instrument issued by or on behalf of the consignee." Roadway admits the document it accepted was neither cash, cashier's check, certified check, nor a money order. It contends instead that the document was a "similar instrument," or at least that its driver reasonably believed it was. 5

Taken out of context, the term "similar instrument" could mean many things. However, the term does not exist in isolation. It immediately follows four specific terms: cash, cashier's check, certified check, and money order. "[W]here a general term follows a series of specific terms, the former should not be given its broadest possible meaning, but rather extends only to matters of the same general class or nature as the terms specifically enumerated." (rule of ejusdem generis). Pipefitters Welfare Educ. Fund v. Westchester Fire Ins. Co., 976 F.2d 1037, 1041 (7th Cir.1992). Applying this rule of construction to Roadway's tariff requires that we examine the specifically enumerated terms contained within the tariff (e.g., cash cashier's checks, etc.) to determine their common characteristics.

Roadway essentially argues that the "Peace Corps" instrument shares visual characteristics with the acceptable instruments enumerated in its tariff. Roadway contends the common characteristics contained within the "Peace Corps" instrument include

the boldly printed legends "UNITED STATES PEACE CORPS" and "CERTIFIED FUNDS" stamped on the front. The draft identifies itself as being "Made Payable" to Center Video. It also contains bank code at the bottom and a signature. The back of the check contains instructions to financial institutions on payment. Nothing on the face of the check indicates that it is not a valid authorized draft from an agency of the Federal Government. Nothing about the transaction put Roadway's driver on notice as to the validity of the draft.

But such a "looks something like it" test provides little insight into the tariff. Roadway cannot seriously contend that its clients entrust to Roadway their merchandise and permit Roadway to collect as payment anything that looks like cash, a cashier's check, a certified check, or a money order. 6 A carrier cannot define instruments in commerce by what its drivers believe a document looks like. The documents listed in Roadway's tariff have legal definitions and operations in banking and law. We must look to the legal import of the enumerated instruments in order to determine what distinguishes a "similar" from a dissimilar instrument. A review of their characteristics reveals certain essential similarities that convince us that the instrument Roadway accepted cannot be considered a "similar instrument" under its tariff.

Cash

Title 12 U.S.C. § 4001(4) defines "cash" as "United States coins and currency, including Federal Reserve Notes." This is no surprise, nor is it terribly useful. Roadway did not mistake the disputed instrument for cash. The pertinent question presented by Roadway's tariff is what similar instruments are acceptable substitutes for cash.

Cashier's Check

Title 12 U.S.C. § 4001(5) defines "cashier's check" as "any check which--(A) is drawn on a depository institution; (B) is signed by an officer or employee of such depository institution; and (C) is a direct obligation of such depository institution." Black's Law Dictionary defines "cashier's check" as "a check drawn by the bank upon itself and issued by an authorized officer of a bank, directed to another person evidencing [the] fact that [the] payee is authorized to demand and receive from the bank, upon presentation, the amount of money represented by the check." Black's Law Dictionary 217 (6th ed.1990). A cashier's check has been defined as "a bill of exchange drawn by a bank upon itself and accepted in advance by the act of its issuance and not subject to countermand by either its purchaser or the issuing bank." Able & Associates, Inc. v. Orchard Hill Farms of Illinois, Inc., 77 Ill.App.3d 375, 32 Ill.Dec. 757, 760, 395 N.E.2d 1138, 1141 (1979) (quoting Wertz v. Richardson Heights Bank & Trust, 495 S.W.2d 572, 574 (Tex.1973)); Munson v. American Nat'l Bank & Trust Co. of Chicago, 484 F.2d 620, 623-24 (7th Cir.1973). It is issued by the drawee (the bank) after the remitter (the customer) has provided to the bank payment in the amount of the cashier's check. See, generally, Henry J. Bailey & Richard B. Hagedorn, Brady on Bank Checks, para. 1.17 (7th Ed.1992). By drawing the check upon itself, the bank guarantees it will honor the check when presented. "The cashier's check is substantially equivalent to a certified check in that neither generally can be countermanded and both circulate in the commercial world as primary obligations of the issuing bank as substitutes for the money represented." Gillespie v. Riley Management Corp., 59 Ill.2d 211, 319 N.E.2d 753, 756 (1974). By issuing a cashier's check a bank "creates a primary obligation on behalf of the bank to the payee named on the check." Computer Works, Inc. v. CNA Ins. Cos., 757 P.2d 167, 168 (Colo.Ct.App.1988). In short, the cashier's check is a direct obligation of the bank itself for the face amount payable to the designated payee.

Certified Check

Title 12 U.S.C. § 4001(6) defines "certified check" as "any check with respect to which a depository institution certifies that--(A) the signature on the check is genuine; and (B) such depository institution has set aside funds which (i) are equal to the amount of the check; and (ii) will be used only to pay such check." "Certification of a check is acceptance." Skipper Marine Elec., Inc. v. United Parcel Service, Inc., 210 Ill.App.3d 231, 155 Ill.Dec. 55, 60, 569 N.E.2d 55, 60 (1991) (citing Illinois Uniform Commercial Code, Ill.Rev.Stat. ch. 26, par. 3-411 (1987), revised effective January 1, 1992 to now state, similarly, " 'certified check' means a check accepted by the bank on which it is drawn." 810 ILCS 5/3-409(d)). "The term 'certified check' has a...

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