Air Products and Chemicals, Inc. v. Illinois Central Gulf R. Co.

• Decision Date: 16 December 1983
• Docket Number: No. 82-3356,82-3356
• Citation: 721 F.2d 483
• Parties: AIR PRODUCTS AND CHEMICALS, INC., Plaintiff-Appellee, v. ILLINOIS CENTRAL GULF RAILROAD COMPANY, Defendant-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 483

721 F.2d 483

AIR PRODUCTS AND CHEMICALS, INC., Plaintiff-Appellee, v. ILLINOIS CENTRAL GULF RAILROAD COMPANY, Defendant-Appellant.

No. 82-3356.

United States Court of Appeals Fifth Circuit.

Dec. 16, 1983.

Breazeale, Sachse & Wilson, Murphy J. Foster, III, Baton Rouge, La., for defendant-appellant.

Durrett, Hardin, Hunter, Dameron & Fritchie, Wallace A. Hunter, Baton Rouge, La., for plaintiff-appellee.

Appeal from the United States District Court for the Middle District of Louisiana.

Before TATE, Circuit Judge, and DAVIS, ^* District Judge. ^**

TATE, Circuit Judge:

The defendant carrier ("Illinois Central") appeals. The district court judgment awarded the plaintiff consignee ("Air Products") damages caused by a misdelivery to its premises of contaminating cargo intended for another consignee. Air Products' complaint is based upon the Carmack Amendment. 49 U.S.C. Sec. 20(11) (1906). The district court awarded Air Products the damages resulting from the breach through such misdelivery of Illinois Central's contract to deliver the intended cargo to Air Products, as specified by the bill(s) of lading issued by Illinois Central to Air Products. Illinois Central appeals, principally contending that the present consignee does not have a cause of action against a carrier for breach of a contractual obligation under the Carmack Amendment, because, as to the misdelivered damage-causing cargo, the consignee Air Products had not been issued a bill of lading and, therefore, as to this cargo, no contract was made between the parties.

We affirm. We agree with the district court that the Carmack Amendment as judicially interpreted, provides an exclusive remedy for a breach of a contract of carriage provided by a bill of lading, and that this remedy includes foreseeable damages resulting from misdelivery of different cargo than that specified by the bill of lading issued to the damaged consignee. This conclusion, moreover, is in accord with the only other reported decision on the issue cited to us. American Synthetic Rubber Corporation v. Louisville & Nashville Railroad Company, 422 F.2d 462 (6th Cir.1970).

This litigation arises out of the following facts:

The plaintiff-consignee, Air Products, had ordered 400,000 gallons of a chemical from the shipper ("Shell") to be delivered over a period of days, during which a series of bills of lading were issued by the defendant railroad, Illinois Central, one for each tank car delivered without incident.

On November 1, Illinois Central delivered four tank cars to Air Products, but one of them (for which a bill of lading had been issued to a different consignee at another location) was delivered at Air Products' premises through the railroad's misrouting error. This fourth tank car contained a chemical similar to and indistinguishable in appearance to the chemical ordered by Air Products that was intended to be delivered. Without fault on the part of Air Products, which had then tested the liquids for impurities, all four tank cars thus received were, in accordance with the normal practice, emptied into a large storage tank of the chemical on its premises--but an ingredient in the misdelivered chemical contaminated the entire contents of the large storage tank. The reprocessing costs caused net damages of $73,393.12. The district court awarded this amount to Air Products.

I.

In its complaint, Air Products had alleged that the "misdelivery" of the tank car entitled it to recover under the Carmack Amendment. ¹ Pertinently to the present cause of action, this statutory enactment provides that a railroad is required to issue a bill of lading upon receiving property for transportation in interstate commerce, and that this railroad "delivering said property so received and transported shall be liable to the lawful holder of [the] bill of lading" for damages with regard to the property transported. 49 U.S.C. Sec. 20(11) (1906). ²

Despite the apparent statutory limitation to recovery of damage caused to the property itself transported, the Supreme Court (as the present carrier does not dispute) from its earliest interpretation has consistently construed the Amendment as likewise imposing liability upon the carrier for all reasonably foreseeable consequential damages resulting from a breach of the contract of carriage, including those resulting from nondelivery of the shipped goods as provided by the bill of lading. See, e.g., Southeastern Express Company v. Pastime Amusement Company, 299 U.S. 28, 57 S.Ct. 73, 81 L.Ed. 20 (1936); New York, Philadelphia & Norfolk Railroad Company v. Peninsula Produce Exchange of Maryland, 240 U.S. 34, 36 S.Ct. 230, 60 L.Ed. 511 (1906); Adams Express Company v. Croninger, 226 U.S. 491, 33 S.Ct. 148, 57 L.Ed. 314 (1913). "The words 'any loss, damage, or injury to such property' ... are comprehensive enough to embrace all damages resulting from any failure to discharge a carrier's duty with respect to any part of the transportation to the agreed destination." Peninsula Produce Exchange, supra, 240 U.S. at 38, 36 S.Ct. at 232. See also Georgia, Florida & Alabama Railway Company v. Blish Milling Co., 241 U.S. 190, 196, 36 S.Ct. 541, 544, 60 L.Ed. 948 (1916).

This broad interpretation of a carrier's liability under its bills of lading was premised upon what the Court conceived to be a paramount object of the legislation--to provide a uniform rule that the carrier issuing the bill of lading would be responsible to the consignee for all loss, damage, or delay arising out of the contract to transport the goods so shipped. Peninsula Produce Exchange, supra, 240 U.S. at 37, 36 S.Ct. at 231; Adams Express Company, supra, 226 U.S. at 503-10, 33 S.Ct. at 151-53; Atlantic Coast Line Railroad Company v. Riverside Mills, 219 U.S. 186, 199-203, 31 S.Ct. 164, 167-70, 55 L.Ed. 167 (1911). Moreover, a purpose was to substitute a paramount and uniform national law as to the rights and liabilities of interstate carriers subject to the Amendment. As stated in Adams Express Company, 226 U.S. at 505-06, 33 S.Ct. at 152:

That the legislation supersedes all the regulations and policies of a particular state upon the same subject results from its general character. It embraces the subject of the liability of the carrier under a bill of lading which he must issue, and limits his power to exempt himself by rule, regulation, or contract.

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* * *

To hold that the liability therein declared may be increased or diminished by local regulation or local views of public policy will either make the provision less than supreme, or indicate that Congress has not shown a purpose to take possession of the subject. The first would be unthinkable, and the latter would be to revert to the uncertainties and diversities of rulings which led to the amendment. The duty to issue a bill of lading, and the liability thereby assumed, are covered in full; and though there is no reference to the effect upon state regulation, it is evident that Congress intended to adopt a uniform rule and relieve such contracts from the diverse regulation to which they had been theretofore subject.

What is the liability imposed upon the carrier? It is a liability to any holder of the bill of lading which the primary carrier is required to issue "for any loss, damage, or injury to such property caused by it," or by any connecting carrier to whom the goods are delivered..... The liability thus imposed is limited to "any loss, injury, or damage caused by it or a succeeding carrier to whom the property may be delivered;" and plainly implies a liability for some default in its common-law duty as a common carrier.

II.

Illinois Central, the defendant carrier, points out that no bill of lading was issued to Air Products with regard to the misdelivered tank car, and that thus the only contract with regard thereto is represented by the bill of lading issued to the different (intended) consignee. Illinois Central forcefully argues that the Carmack Amendment does not provide a cause of action with regard to the misdelivered cargo, since with regard thereto Air Products, the plaintiff consignee, was not "the lawful holder of [a] bill of lading" who, under the statutory language, is entitled to recover the "full actual loss ... caused by" the carrier. 49 U.S.C. Sec. 20(11) (quoted in note 2 supra ).

What Illinois Central's argument overlooks, however, is that no claim is made that the Carmack Amendment relationship of carrier and consignee between Illinois Central and Air Products arose out of the bill of lading for the misdelivered tank car (that had been issued to a third party). Instead, the relationship of carrier and shipper here arose out of the issuance of a series of bills of ladings by Illinois Central to transport the given chemical to Air Products' premises in accordance with their terms.

The breach of the contract here urged is Illinois Central's delivery to Air Products, causing damage, of a tank car concerning an injurious substance, instead of one of the tank cars containing the proper chemicals for which the bills of lading were issued and which Illinois Central contracted to deliver to Air...