E. B. Ackerman Importing Co. v. City of Los Angeles

• Decision Date: 11 August 1964
• Court: California Supreme Court
• Parties: , 394 P.2d 566 E. B. ACKERMAN IMPORTING COMPANY et al., Plaintiffs and Appellants, v. CITY OF LOS ANGELES, Defendant and Respondent. L. A. 27588.

Page 726

39 Cal.Rptr. 726

61 Cal.2d 595, 394 P.2d 566

E. B. ACKERMAN IMPORTING COMPANY et al., Plaintiffs and Appellants, v. CITY OF LOS ANGELES, Defendant and Respondent.

L. A. 27588.

Supreme Court of California, In Bank.

Aug. 11, 1964.

Rehearing Denied Sept. 10, 1964.

McCutchen, Black, Harnagel & Shea, Philip K. Verleger and Howard J. Privett, Los Angeles, for plaintiffs and appellants.

Roger Arnebergh, City Atty., Arthur W. Nordstrom, Asst. City Atty., Walter C. Foster, Deputy City Atty., Trippet, Yoakum & Ballantyne and F. B. Yoakum, Jr., Los Angeles, for defendant and respondent.

PEEK, Justice.

Plaintiffs appeal from a summary judgment in favor of defendant City of Los Angeles in an action brought to recover for damage to plaintiffs' goods. The merchandise was stored in a transit shed located on a pier in Los Angeles Harbor, owned by the defendant city, and maintained by its Harbor Department.

Some of the plaintiffs' goods which had been placed in the shed were, on March 12, 1956, awaiting transfer for expert to a vessel of the Grace Line, Inc., while the remainder of such goods had been umoaded from other ships of that carrier and were awaiting delivery to their consignees. On the above date a water pipe located beneath the floor of the shed broke. Water from the pipe flooded the floor of the shed and damaged the merchandise so stored.

Since 1946, and at the time of the accident, an agreement was in effect between the Grace Lines and defendant city whereby that carrier was given a 'preferential berth assignment' for the use of the pier and shed in question.

Also in effect at the time of the accident was an agreement establishing the California Association of Port Authorities, ¹ of which the Port of Los Angeles was a member. This agreement provided in article four that 'A copy of each tariff effective hereunder containing all rates, charges, rules, classifications, regulations and/or practices, including additions thereto and changes therein, shall be furnished promptly to each member of the Association, and to the United States Maritime Commission, Washington, D. C., by the Association.' This agreement was filed with and approved by the commission (now known as the Federal Maritime Commission) pursuant to the Shipping Act, ² and is designated as F.M.C. Agreement No. 7345.

Since 1951, and at the time of the accident, the pier facilities were operated by the Harbor Department in accordance with the provisions of the Port of Los Angeles Tariff No. 3, which was adopted pursuant to city ordinance and was thereafter filed with the Federal Maritime Commission. Under the terms of the tariff, fees for wharfage and wharf demurrage were charged against cargo which was in transit or storage and paid by the owners thereof to the carrier, who in turn remitted such charges to defendant city. Tariff No. 3 reads in part as follows: 'Neither the Board (of Harbor Commissioners) nor the City shall be responsible or liable in any manner or degree for any loss or damage to any merchandise or other property of any description stored, handled, used, kept or placed upon, over, in, through or under any wharf or structure or property owned, controlled or operated by the Board or the City occasioned by or on account of pilferage, rodents, insects, natural shrinkage, wastage, decay, seepage, leaky containers, heating, evaporation, fire, leakage or discharge from sprinkler system, rain, floods, or the elements, collapse of a wharf or other structure, war, riots, strikes, or from any cause whatsoever, except to the extent that responsibility and liability shall be, regardless of the above limitations, absolutely imposed by operation of law.'

Plaintiffs instituted the present action to recover for damages claimed to have been sustained because of the alleged negligence of defendant city. The trial court granted defendant's motion for summary judgment on the grounds that the exculpatory clause contained in Tariff No. 3 exonerated the city from liability, and that the city 'has not breached any duty owed by it to the plaintiffs or any of them.'

Plaintiffs here claim that the exculpatory clause contained in the tariff is invalid under the reasoning of this court in Tunkl v. Regents of the University of California, 60 Cal.2d 92, 32 Cal.Rptr. 33, 383 P.2d 441, and that the summary judgment should be reversed for that reason. However, because we have concluded that primary jurisdiction relative to the issue is vested in the commission and that the parties should therefore be afforded a reasonable opportunity to obtain a determination from that body, we do not reach that issue.

In Southwestern Sugar & Molasses Co. v. River Terminals, 360 U.S. 411, 79 S.Ct. 1210, 3 L.Ed.2d 1334, a libel was filed against a water carrier seeking damages for loss of a cargo and for expenses incurred in raising and repairing a barge chartered by Southwestern Sugar and towed by the carrier from Louisiana to Texas, where it sank at dockside. The District Court found the carrier liable for all damages sought, but the Court of Appeals reversed the judgment and remanded with instructions to give effect to an exculpatory clause in a filed by the carrier with the Interstate Commerce Commission ³ unless Southwestern should obtain from the commission within a reasonable time a ruling that the exculpatory clause was invalid. ⁴

The Supreme Court agreed with the ruling of the Court of Appeals that the exculpatory clause should not be struck down as a matter of law and that the parties should be afforded a reasonable opportunity to obtain the views of the commission if, after consideration of the carrier's certain other claims of error, it were found that a determination as to the validity of the clause was necessary to the disposition of the case.

The court distinguished Bisso v. Inland Waterways Corp., 349 U.S. 85, 75 S.Ct. 629, 99 L.Ed. 911, wherein it was held that a clause in a private contract of towage purporting to exculpate the tug from liability for its own negligence was void as against public policy, on the ground that considerations of public policy which might lead courts to strike down private contractual arrangements are not 'necessarily applicable to provisions of a tariff filed with, and subject to the pervasive regulatory authority of, an expert administrative body.' (Southwestern Sugar & Molasses Co. v. River Terminals, supra, 360 U.S. at 417, 79 S.Ct. at 1214) The court went on to show that its distinction was supported by a considerable difference: 'For all we know, it may be that the rate specified in the relevant tariff is computed on the understanding that the exculpatory clause shall apply to relieve the towboat owner of the expense of insuring itself against liability for damage caused tows by the negligence of its servants, and is a reasonable rate so computed. If that were so, it might be hard to say that public policy demands that the tow should at once have the benefit of a rate so computed and be able to repudiate the correlative obligation of procuring its own insurance with the knowledge that the towboat may be required to respond in damages for any injury caused by its negligence despite agreement to the contrary. For so long as the towboat's rates are at all times subject to regulatory control, prospectively and by way of reparation, the possibility of an overreaching whereby the towboat is at once able to exact high rates and deny the liabilities which transportation at such rates might be found fairly to impose upon it can be aborted by the action of the I.C.C. The rule of Bisso, however applicable where the towboat owner has 'the power to drive hard bargains,' may well call for modification when that power is effectively controlled by a pervasive regulatory scheme.' (Southwestern Sugar & Molasses Co. v. River Terminals, supra, 360 U.S. 417-418, 79 S.Ct. 1215.)

Finally, the court emphasized that the doctrine of primary jurisdiction is grounded in principles of comity and expedition, and is not in any strict sense a 'jurisdictional' doctrine: 'We may assume that the question whether a clause of this kind offends against public policy is one appropriate ultimately for judicial rather than administrative resolution. But that does not mean that the courts...