Bio-Lab, Inc. v. Pony Exp. Courier Corp.

• Decision Date: 20 September 1990
• Docket Number: INC,No. 89-7744,BIO-LA,89-7744
• Citation: 911 F.2d 1580
• Parties: , Plaintiff-Appellee, v. PONY EXPRESS COURIER CORPORATION, Defendant-Appellant.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1580

911 F.2d 1580

BIO-LAB, INC., Plaintiff-Appellee, v. PONY EXPRESS COURIER CORPORATION, Defendant-Appellant.

No. 89-7744.

United States Court of Appeals, Eleventh Circuit.

Sept. 20, 1990.

Roy W. Scholl, III, Scholl & Scholl, Birmingham, Ala., for defendant-appellant.

Daniel J. Burnick, Sirote & Permutt, PC, Birmingham, Ala., for plaintiff-appellee.

Appeal from the United States District Court for the Northern District of Alabama.

Before HATCHETT, Circuit Judge, RONEY ^* and FAIRCHILD ^**, Senior Circuit Judges.

FAIRCHILD, Senior Circuit Judge.

Bio-Lab, Inc. contracted with Pony Express Courier Corporation to deliver a shipment of human blood from Birmingham, Alabama, to Norcross, Georgia. The shipment was apparently lost, for it was never delivered. Bio-Lab filed this diversity suit to recover the shipment's declared value, $10,789.77. Pony Express conceded liability for losing the shipment, but claimed that its contract with Bio-Lab limited its liability to $250. After conducting discovery, both parties moved for summary judgment. The district court ruled that Pony Express had failed effectively to limit its liability, and granted judgment in favor of Bio-Lab for the stipulated value of the shipment. Pony Express appeals.

I.

The Interstate Commerce Act imposes liability on carriers like Pony Express for "the actual loss or injury to the property" received for transportation, unless the carrier limits its liability under 49 U.S.C. Sec. 10730. 49 U.S.C. Sec. 11707(a)(1) & (c)(4). Section 10730 allows motor carriers to

establish rates for the transportation of property (other than household goods) under which the liability of the carrier ... is limited to a value established by written declaration of the shipper or by written agreement between the carrier ... and shipper if that value would be reasonable under the circumstances surrounding the transportation.

These sections are recodifications of the Carmack Amendment and are commonly referred to by that name. Hughes v. United Van Lines, Inc., 829 F.2d 1407, 1412 n. 6 (7th Cir.1987), cert. denied, 485 U.S. 913, 108 S.Ct. 1068, 99 L.Ed.2d 248 (1988).

The critical issue, as we see it, is whether the waybill issued at the time of shipment fulfills the statutory requirement of a written agreement establishing a value of $250, notwithstanding Bio-Lab's declaration on the face of the waybill of a value of $10,789.77.

II.

When Pony Express picked up the shipment in question from Bio-Lab on November 2, 1988, a waybill was filled out. ¹ The waybill states in bold print on its front side:

UNLESS A GREATER VALUE IS DECLARED HEREIN THE SHIPPER AGREES AND DECLARES THAT THE VALUE OF THE PROPERTY IS RELEASED TO AN AMOUNT NOT EXCEEDING $50 FOR ANY SHIPMENT.

There is a box printed on the front of the waybill near this statement so the shipper can declare the value of its shipment. Bio-Lab declared the shipment to be worth $10,789.77 by writing this value in the box. The front of the waybill also states in bold print "Non negotiable waybill subject to conditions set forth on reverse side hereof." In undifferentiated print on the back of the waybill appears paragraph number 10:

Transportation rates have been established based on an agreement by shipper that the release value of the property transported does not exceed $50.00 per shipment, or such amount as provided in an applicable tariff or special written agreement. Shipper recognizes that it may declare a higher value pursuant to a separate written agreement with carrier and that such declared higher value will result in higher transportation rates. Absent a tariff provision or an executed contract to the contrary, carrier's maximum liability for such increased value shipments, specifically including food stamps, shall be $250.00.

The waybill referred to the tariff which Pony Express had on file with the Interstate Commerce Commission.

Item 416 of the tariff, entitled "Carrier's Liability" provided in Paragraph B that a base transportation rate would apply to a shipment with a value "declared in writing by the shipper or agreed upon in writing as the released value" not exceeding $50. The base transportation rate plus an ad valorem charge would apply to shipments with a released value exceeding $50, but not exceeding $250. Paragraph C required the bold face legend and space for declared value on the face of the bill of lading, already referred to.

Paragraph D provided:

If the shipper designates a value exceeding $250.00 per shipment, the shipment will not be accepted for transportation, but if such shipment is inadvertently accepted, charges will initially be assessed on the basis of the rate for the highest value provided.... In no case will the carrier's liability exceed the highest value for which rates are provided.

Paragraph E provided:

If shipper declares liability in excess of $250.00, shipper must notify carrier in writing seventy-two (72) hours in advance of tendering of shipment. Such notification must indicate nature of commodity to be shipped, origin, and destination of shipments and value to be declared. If shipper fails to comply with provisions of this paragraph, shipment will be considered to have a released value of no more than $50.00 per shipment.

Evidently Pony Express construes paragraph D of the tariff consistently with paragraph 10 of the waybill, limiting liability in this case to $250. The construction is reasonable, because $250 is "the highest value for which rates are provided." Paragraph E, however, would limit liability in this case to $50. The district court noted this discrepancy and that Paragraph E of the tariff requires 72 hours advance notice of a "declared liability" in excess of $250, while Paragraph 10 of the waybill says nothing about notice, but requires "a separate written agreement" or "executed contract." The court held that the waybill was not in substantial compliance with the tariff and therefore void. See Robinson v. Ralph G. Smith, Inc., 735 F.2d 186, 190 (6th Cir.1984). We need not reach this issue.

III.

The Carmack Amendment allows carriers such as Pony Express to limit their liability "to a value established by written declaration of the shipper or by written agreement." Section 10730(b)(1). Our case differs from any decided case of which we are aware. The shipper has declared the full value on the waybill. The same waybill contains the provision on which Pony Express must rely to override the value established by the shipper's declaration. That provision, Paragraph 10, is inconspicuous, appears on the back of the waybill, and there is no evidence that it was ever called to the attention of anyone at Bio-Lab, the shipper. It is a part of a contract Bio-Lab signed, but there is nothing to show that Bio-Lab's people were actually aware of it.

Although the cases dealing with the Carmack Amendment do not involve situations where an obscure printed provision in a bill of lading is relied on to render nugatory a shipper's own declaration of value, they do emphasize the substantial burden which the carrier must bear in limiting liability to less than full value.

There are four steps a carrier must take to limit its liability under the Carmack Amendment: (1) maintain a tariff within the prescribed guidelines of the Interstate Commerce Commission; (2) obtain the shipper's agreement as to his choice of liability; (3) give the shipper a reasonable opportunity to choose between two or more levels of liability; and (4) issue a receipt...