Carmana Designs Ltd. v. North American Van Lines Inc.

• Decision Date: 08 July 1991
• Docket Number: No. 91-1127,91-1127
• Citation: 943 F.2d 316
• Parties: CARMANA DESIGNS LTD., Appellant, v. NORTH AMERICAN VAN LINES INC., American Priority Express, Inc. NORTH AMERICAN VAN LINES, INC., Cross-Claimant, v. AMERICAN PRIORITY EXPRESS, INC., Cross-Claimant. . Submitted Under Third Circuit Rule 12(6)
• Court: U.S. Court of Appeals — Third Circuit

Page 316

943 F.2d 316

CARMANA DESIGNS LTD., Appellant, v. NORTH AMERICAN VAN LINES INC., American Priority Express, Inc.

NORTH AMERICAN VAN LINES, INC., Cross-Claimant, v. AMERICAN PRIORITY EXPRESS, INC., Cross-Claimant.

No. 91-1127.

United States Court of Appeals,

Third Circuit.

Submitted Under Third Circuit Rule 12(6)

July 8, 1991.

Decided Sept. 3, 1991.

John J. Del Casale, M. Mark Mendel, Ltd., Philadelphia, Pa., for appellant.

Jeffrey S. Adler, Oberymayer, Rebmann, Maxwell & Hippel, Philadelphia, Pa., for appellee.

Before STAPLETON, HUTCHINSON and ROSENN, Circuit Judges.

OPINION OF THE COURT

ROSENN, Circuit Judge.

This appeal from a grant of summary judgment requires us to determine whether a common carrier of goods in interstate commerce properly limited its liability to a shipper whose goods were destroyed by fire when the carrier's vehicle exploded on the highway. Prior to shipment, the customer, Carmana Designs, Ltd., signed two bills of lading with the carrier, North American Van Lines, Inc., (North American) comprising the agreement for the transport and delivery of Carmana Designs' goods, which were to be purchased for over $25,000. The United States Court for the District of Eastern Pennsylvania found that the bills limited North American's liability for the destruction of Carmana Designs' goods to $1.25 per pound of the actual weight of the shipment, stipulated by the parties after the accident as not more than 9,725 pounds. The district court, thus, entered judgment against North American for $12,156.25.

In this appeal, Carmana Designs contends that the court should have calculated Carmana's coverage based on either of the two net weight figures recorded on the two bills of lading by North American, 24,000 pounds or 34,000 pounds. Because the bills of lading and other undisputed evidence in this record shows that Carmana Designs reasonably believed it was fully covered, we conclude that, under federal law governing the interpretation of bills of lading, North American failed to limit effectively its liability for Carmana's shipment. We thus reverse. ¹

I.

Carmen Vona and his wife own and operate Carmana Designs, a small company which designs, manufactures, and sells custom furniture and exhibits out of its sole place of business in Philadelphia, Pennsylvania. Carmana Designs has two employees who help to construct the furniture and make deliveries of small shipments by van.

On July 14, 1989, Carmana Designs entered into a contract with Macy's for the design, manufacture and delivery of custom display exhibits for two of Macy's Northern California stores. The displays consisted of fourteen lacquered, hollow, wooden pyramids, ranging in height from six to fourteen feet plus five other pieces for which Carmana Designs was to receive payment of $25,166. A tax of $1637.79 on these items and a delivery cost of $4,000 brought Macy's total bill to over $30,000. It appears that Carmana Designs' delivery charge of $4,000 was determined by the company which brokered the delivery arrangement, American Priority Express.

American Priority Express, a freight forwarder which obtains the services of carriers for its clients, brokered the contract between Carmana Designs and the defendant North American. The contract provided that North American, through its High Value Products Division, would timely deliver the exhibits to Macy's San Francisco and Santa Clara stores. According to his deposition, Vona believed he was to pay American Priority the $4,000 shipping charge, and American Priority in turn would pay the carrier North American $3,000. Vona never paid for this delivery, however, because on August 23, 1989, the truck carrying Carmana Designs' exhibits was involved in a one vehicle accident resulting in the total destruction of the exhibits. Because of the failure of the plaintiffs to timely deliver the exhibits, Macy's in California severely limited its future business with Carmana Designs.

Because the shipment had two different destinations, the transport and delivery contract between Carmana Designs and North American's High Value Products Division consisted of two bills of lading with sequential contract numbers. The bills of lading, bearing North American's name and logo, are standardized documents which allow the customer to declare a value for the shipment and thus fix the carrier's liability in case of loss. The customer could value it at $.60 a pound, $1.25 a pound, or state a lump sum value. Carmana Designs' officer Vona signed both bills of lading declaring North American's liability to be $1.25 a pound.

On the face of the bill of lading is a column for determining the weight and covered value of the shipped goods. That column is divided vertically into four sections. The bottom section, in bold red print, is reproduced in part below:

THE SHIPMENT WILL MOVE SUBJECT TO THE RULES AND CONDITIONS OF THE CARRIER'S TARIFF. SHIPPER HEREBY RELEASES THE ENTIRE SHIPMENT TO A VALUE NOT EXCEEDING:

$__________

(TO BE COMPLETED BY PERSON SIGNING BELOW)

NOTICE:

THE SHIPPER SIGNING THIS CONTRACT MUST INSERT IN THE SPACE ABOVE IN HIS OWN HANDWRITING, EITHER HIS DECLARATION OF THE ACTUAL VALUE OF THE SHIPMENT, OR THE WORDS "60 per pound per article." OTHERWISE, THE SHIPMENT WILL BE DEEMED RELEASED TO A MAXIMUM VALUE OF $1.25 TIMES THE WEIGHT OF THE SHIPMENT IN POUNDS AND CHARGED PER TARIFF. IF THE SHIPPER DECLARES THE VALUE OF THE SHIPMENT AT ANY VALUE OTHER THAN $.60 PER POUND PER ARTICLE, THERE WILL BE A CHARGE ASSESSED FOR THE DECLARED VALUE. SEE ADVANCED CHARGE NOTE BELOW.

(Shipper)_______DATE___

Carmana Designs signed on the appropriate line and did not declare the shipment's actual value or limit North American's liability to $.60 a pound. Carmana Designs' agreement with North American, thus, shows that it chose to value the shipment of display exhibits at $1.25 per pound as the parties stipulated.

At the top of the valuation column in the first section are spaces in which to enter the gross, tare, and net weights of the truck and thus allow the computation of the weight of the shipment. Contrary to the bills' express requirement, however, these spaces were left blank. Directly underneath is the statement, "shipper certifies the total weight of this shipment to be: ___ pounds." On the first bill of lading, North American had typed the figure of 24,000 in the blank. On the other, the handwritten figure of 34,000 appears. Below the certified weight line is a signature line on which Vona signed both bills of lading. Underneath this column in the lower right corner of the bill, North American again recorded the net weight of 24,000 pounds on the first bill of lading.

According to Richard Panning, the manager of cargo claims for North American's High Value Products Division, the shipment was originally registered by American Priority with North American at 24,000 pounds. He also stated in his affidavit that the computer printed 24,000 pound figure is a standard designation used to indicate that the customer has reserved the entire truck for its shipment. According to Panning, no one from North American or American Priority discussed the purported meaning of the 24,000 pound figure with Vona or anyone else at Carmana Designs.

Vona testified that he read this part of the bill of lading when he signed both documents. He stated that he noticed that they had recorded the weight as 24,000 pounds, did a quick multiplication to arrive at the figure of $30,000, and felt that this covered the full value of his goods.

Panning did not know why the second bill of lading listed the certified weight as 34,000 pounds or who wrote it. Vona, however, testified that the 34,000 pound figure was filled in by the driver of the truck in Vona's presence. He did not know how the driver came up with 34,000 pounds and did not discuss it with him. After Carmana Designs' goods were destroyed in the fire caused by the motor vehicle accident, the shipper and North American stipulated that the actual weight of the shipment was no greater than 9,725 pounds.

On the reverse side of the bill of lading is another paragraph purporting to circumscribe the carrier's maximum liability. Printed in lower case black letters, in the middle of the page, this provision states that the carrier's maximum liability shall be the greater of two values: the lump sum value declared by the shipper or "1.25 times the actual weight (in pounds) of the shipment." This is the only mention of "actual" weight of the shipment in the bill of lading; the language on the front of the bill refers only to "weight" and "net weight." There is no place for a signature on the back of the bill. Although the face of the bill contains a highlighted section stating that it is subject to the terms printed on its reverse side, Vona testified that he did not read the back of the bill prior to releasing the shipment to North American and there is no evidence that it was ever brought to his attention.

On February 23, 1990, Carmana Designs filed this action in the Court of Common Pleas of Philadelphia County against North American and American Priority Express. Pursuant to a Motion for Removal filed by North American, the case was removed to the United States District Court for the Eastern District of Pennsylvania. American Priority never responded to any pleadings or participated in this case in any way. The district court denied Carmana Designs' motion for default judgment against American Priority based on a pro se letter sent to the court by American Priority.

On September 25, 1990, the case was tried before a panel of arbitrators. The panel awarded Carmana Designs $72,500. North American filed a timely appeal from that award. The district court, reviewing de novo the arbitrators' decision, reduced the shipper's award to $12,156.25. The parties have agreed that North American's liability to Carmana Designs is governed by federal law.

II.

The Carmack Amendment to...