American Transfer and Storage Co. v. Brown, No. 19598

• Court: Court of Appeals of Texas. Court of Civil Appeals of Texas
• Writing for the Court: Before GUITTARD; GUITTARD
• Citation: 584 S.W.2d 284,23 Tex.Sup.Ct.J. 426
• Docket Number: No. 19598
• Decision Date: 12 April 1979
• Parties: AMERICAN TRANSFER AND STORAGE COMPANY, Appellant, v. Raymond J. BROWN, Appellee.

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584 S.W.2d 284 AMERICAN TRANSFER AND STORAGE COMPANY, Appellant,
v.
Raymond J. BROWN, Appellee. No. 19598. Court of Civil Appeals of Texas, Dallas. April 12, 1979.
Rehearing Denied May 9, 1979.

Page 287

Duncan E. Boeckman, Golden, Potts, Boeckman & Wilson, Dallas, for appellant.

Carl David Adams, Dallas, for appellee.

Before GUITTARD, C. J., and AKIN and ROBERTSON, JJ.

GUITTARD, Chief Justice.

This suit was brought under the Texas Deceptive Trade Practices Act, Tex.Bus. & Comm.Code §§ 17.42-17.50 (Vernon Supp.1979) for damages to household goods being shipped from Irving, Texas, to Fairbanks, Alaska. The trial court rendered judgment against the packer, who also acted as agent of the carriers, for treble damages and an attorney's fee. The principal question is whether the Texas Act is pre-empted by the Carmack Amendment to the Interstate Commerce Act, 49 U.S.C. § 20(11), (1970), which concerns liability for goods shipped in interstate commerce.

We hold that the Carmack Amendment does not pre-empt the Texas Act with respect to liability for false, misleading, or deceptive acts and practices that occurred before the contract of carriage was made. For like reasons, we hold that a contractual limitation of liability does not apply. However, we conclude that the cause must be reversed and remanded for a new trial because the trial court erred in excluding evidence of the shipper's acceptance of insurance benefits under coverage provided by the contract. We also hold that damages for mental anguish cannot be recovered for this kind of loss, and we give directions concerning special issues to be submitted on another trial.

1. Pre-emption of Deceptive Trade Practices Act by the

Carmack Amendment

Defendant does not challenge the sufficiency of the evidence to support the jury's findings of deceptive trade practices. Consequently, we must assume that plaintiff has established his cause of action for deceptive trade practices unless the Texas Deceptive Practices Act is inapplicable because of the interstate character of the shipment involved. Defendant's principal contention is that the Act does not apply because this suit is an action for damages to freight shipped in interstate commerce within the Carmack Amendment to the Interstate Commerce Act, 49 U.S.C. § 20(11) (1970), which regulates such claims and excludes all recovery based on state statutes or common-law grounds.

Plaintiff asserts that his claim is not based on the contract of carriage or on any rule of carrier liability, under either statute or common law, but that it rests solely on the Texas Deceptive Trade Practices Act. He argues that the interstate character of the shipment does not exempt defendant from the penalties of the Texas law for false, misleading, and deceptive acts and practices.

This question has given us difficulty because the opinions of the Supreme Court of the United States on the question of federal pre-emption of state law, though numerous, provide no clear guidance. Each case turns on the peculiarities and special features of the regulatory scheme in question. City of Burbank v. Lockheed Air Terminal, Inc., 411 U.S. 624, 637, 638, 93 S.Ct. 1854, 36 L.Ed.2d 547 (1973).

Of course, if there is a direct conflict between federal and state law, the federal law controls under the Supremacy Clause in Article VI of the United States Constitution. Perez v. Campbell, 402 U.S. 637, 91 S.Ct. 1704, 29 L.Ed.2d 233 (1971); Swift and Co. v. Wickham, 382 U.S. 111, 86 S.Ct. 258, 15 L.Ed.2d 194 (1965); Gibbons v. Ogden, 9 Wheat. 1, 22 U.S. 1, 6 L.Ed. 23 (1824); See, e. g., Note, The Preemption Doctrine: Shifting Perspectives on Federalism and the Burger Court, 75 Colum.L.Rev. 623 (1975). Likewise, state legislation is invalidated by a federal statute that either expressly or impliedly by its structure and purpose evinces an intention to occupy the field and exclude state regulation. Jones v. Rath Packing Company, 430 U.S. 519, 97 S.Ct. 1305, 1309, 51 L.Ed.2d 604 (1977). The

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test is whether under the circumstances of the particular case the state law stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress. Perez v. Campbell, 402 U.S. 637, 91 S.Ct. 1704, 29 L.Ed.2d 233 (1971); Hines v. Davidowitz, 312 U.S. 52, 67, 61 S.Ct. 399, 85 L.Ed. 581 (1940).

Accordingly, we must examine the Carmack Amendment and the decisions construing it to determine the purposes and objectives of Congress. The subject matter of the amendment is contracts for interstate transportation of property and the liability of carriers for breach of such contracts. The statute contains detailed provisions concerning the liability of initial and connecting carriers for losses in interstate shipments, issuance of bills of lading, contractual limitations of liability, and notice and filing of claims. This statute was construed authoritatively in the leading case of Adams Express Co. v. Croninger, 226 U.S. 491, 33 S.Ct. 148, 57 L.Ed. 314 (1912), which held that the provision of this law permitting a carrier to fix its rates with respect to the agreed or declared value of the property renders inapplicable any local law forbidding limitation of liability to less than the full value. The Supreme Court pointed out that the purpose of the Carmack Amendment was to free interstate shipments from the diversity of legislative and judicial holdings that made it difficult for shippers and carriers to know the extent of the carrier's responsibility for goods delivered to it for transportation from one state to another. The court stated:

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. Almost every detail of the subject is covered so completely that there can be no rational doubt but that Congress intended to take possession of the subject, and supersede all state regulation with reference to it. (226 U.S. at 505-506, 33 S.Ct. at 152).

Following Croninger, the Supreme Court held in Atchison, T. & S. F. Ry. v. Harold, 241 U.S. 371, 36 S.Ct. 665, 60 L.Ed. 1050 (1916), that the Carmack Amendment applies to liability for an error in a bill of lading even though Congress has not legislated specifically on that subject. The court said that the amendment "was an assertion of the power of Congress over the subject of interstate shipments, the duty to issue bills of lading, and the responsibilities thereunder, which, in the nature of same, excluded state action." The court reaffirmed its position that the "prime object" of the amendment "was to bring about a uniform rule of responsibility as to interstate commerce and interstate commerce bills of lading." This principle of uniformity of responsibility for shipments in interstate commerce has been held to exclude recovery of the attorneys' fees provided by state law in an action for damages to an interstate shipment. Strickland Transport Co. v. American Distrib. Co., 198 F.2d 546, 547 (5th Cir. 1952); Southwestern Motor Transport Co. v. Valley Weathermakers, Inc., 427 S.W.2d 597 (Tex.1968).

Comprehensive though the Carmack Amendment may be in its regulation of contracts of carriage in interstate commerce and claims arising out of such contracts, we conclude that deceptive trade practices, except possibly to the limited extent of misrepresentations affecting the applicable rate, ¹ do not fall within the ambit of federal regulation. The uniformity sought by the Carmack Amendment, according to the authorities above mentioned, is uniformity in the requirements of a contract of carriage in interstate commerce and in the carrier's liability for breach of its duties under such a contract. The Deceptive Trade Practices Act does not purport to

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regulate these matters and presents no obstacle to full accomplishment of uniformity in these respects. It applies to false, misleading, and deceptive acts or practices in general and makes no special provision for interstate shipments or other transactions in interstate commerce. We find nothing in the Carmack Amendment or in the decisions construing it suggesting that uniformity was sought with respect to legal liability for false, deceptive, or misleading acts or practices preliminary to the formation of the contract for interstate shipment. We conclude that protection of interstate shippers from such practices is left to the police powers of the several states.

We recognize that in this case damages for violation of the Deceptive Trade Practices Act may be measured by the same loss, at least in part, as damages for breach of the contract of carriage. This coincidence should not obscure the differences in the purposes of the two statutes, in the scope of activities they undertake to regulate, or in their respective grounds of liability. In these important respects, the two neither conflict nor overlap. Measurement of damages by the same loss does not present an obstacle to full accomplishment of the purpose of the federal legislation. For this purpose the treble damage penalty imposed by the Deceptive Trade Practices Act is no different from a fine or civil penalty determined on some other basis. Consequently, we find no basis to hold that the state's regulation of deceptive trade practices relating to interstate shipments has been pre-empted by federal legislation.

Although this exact problem was not considered in any of the cases cited to us, our holding is consistent with the decisions of the Supreme Court of the United States concerning federal pre-emption. The most nearly analogous case we have found is Huron Portland Cement Co. v. City of Detroit, 362 U.S. 440, 80 S.Ct. 813, 4 L.Ed.2d 852 (1960). There an ordinance regulating emission of smoke from boilers...