Charley Hayashida Farms, Inc. v. Baker
| Decision Date | 11 December 1973 |
| Docket Number | Nos. 58800,58801,s. 58800 |
| Citation | 306 N.E.2d 673,16 Ill.App.3d 514 |
| Parties | CHARLEY HAYASHIDA FARMS, INC., Plaintiff-Appellant, v. George P. BAKER et a., Defendants-Appellees. DEMASE & MANNA COMPANY, INC., Plaintiff-Appellant. v. George P. BAKER et al., Defendants-Appellees. |
| Court | United States Appellate Court of Illinois |
Mel S. Cahan, Chicago, for plaintiffs-appellants; Lurie Orth & Cahan, Chicago, of counsel.
Anna M. Kelly, Chicago, for defendant-appellee Denver & Rio Grande Western RR.; John K. Kallman, Chicago, for defendant-appellee Union Pacific RR. Co.
Plaintiffs appeal an order dismissing the Denver & Rio Grande Western Railroad Company (DRGW) as an additional defendant named in amended complaints. The causes were consolidated and, because they present a typical and recurring set of facts arising in the wake of Penn Central's reorganization, the Union Pacific Railroad was granted leave to file an Amicus curiae brief.
The pertinent facts in both Hayashida and Demase are closely parallel. Each plaintiff delivered perishable produce together with a through Bill of Lading to the DRGW for shipment by rail. The Bills of Lading specified routing, naming the DRGW as the initial line-haul carrier and the Penn Central as the delivering line-haul carrier. Following delivery to the consignee, each plaintiff claimed damage to its shipment. Within nine months of the delivery written notice of the claim was filed with the receiving carrier, DRGW. Thereafter, DRGW by letter disallowed each claim in whole or in substantial part, and within two years and one day of the disallowance letters, suits were filed against the delivering carrier, Penn Central. Each complaint stated sufficient facts so that, if the allegations were all true, the DRGW and the Penn Central, had both been made defendants, would have been jointly and severally liable to the plaintiff for damages. 1
Subsequently, Penn Central filed a Petition for Reorganization under Section 77 of the Federal Bankruptcy Act and, consequently, all claims for freight loss or damage arising prior to the filing of the reorganization petition, became claims in bankruptcy. Then, more than two years and one day after DRGW's disallowance letters, each plaintiff filed an amended complaint naming the receiving carrier, DRGW, as an additional defendant in the pending suits. DRGW moved for dismissal, grounding its motion upon the contention that it had not been named a defendant within two years and a day of its letter of disallowance in contravention of the following condition set forth in the Bill of Lading:
Sec. 2(b) As a condition precedent to recovery, claims must be filed in writing with the receiving or delivering carrier, of carrier issing the bill of lading, or carrier on whose line the loss, damage, injury or delay occurred, within nine months after delivery * * *; and suits shall be instituted against any carrier within two years and one day from the day when notice in writing is given by the carrier to the claimant that the carrier has disallowed the claim or any part or parts thereof specified in the notice. Where claims are not filed or suits are not instituted thereon in accordance with the foregoing provisions, no carrier hereunder shall be liable, and such claims will not be paid.
The trial court granted the motion. On appeal the issue is whether Section 2(b) of the contract of carriage between the parties prohibits the plaintiffs, who sued one carrier within the time period provided by Section 2(b), from joining another defendant carrier after the expiration of the time period.
Section 2(b) of the Bill of Lading is drafted in compliance with the Interstate Commerce Act, 49 U.S.C.A. Sec. 20(11), which provides, Inter alia:
* * * Provided further, That it shall be unlawful for any such receiving or delivering common carrier to provide by rule, contract, regulation, or otherwise a shorter period for the filing of claims than nine months, and for the institution of suits than two years, such period for institution of suits to be computed from the day when notice in writing is given by the carrier to the claimant that the carrier has disallowed the claim or any part or parts thereof specified in the notice.
In enacting Section 20(11), Congress has regulated the power of common carriers and shippers to contract, rather than promulgate a statute of limitations. (Louisiana & Western R.R. Co. v. Gardiner, 273 U.S. 280, 47 S.Ct. 386, 71 L.Ed. 644.) In Denney & Co. v. Southern Pacific Co., 263 Ill.App. 106, this court, recognizing the absence of any federal statute of limitations, held that the enactment of the Interstate Commerce Act preempted the field from state regulation, including state statutes of limitations. The court stated:
We are of the opinion that Congress has assumed exclusive control of the subject of shipments under interstate commerce and that the conditions named in the bill of lading are binding and exclusive of any State regulation. The very purpose of the federal legislation is to make the provisions regarding interstate commerce uniform without regard to local legislation upon the subject. To permit a shipper to bring suit under section 2 of the Illinois Limitations Act, Cahill's St. ch. 83, § 26, after the period in the bill of lading had expired, would violate this rule of uniformity. The federal law makes no provision for the commencing of a new suit after the period of limitations contained in the bill of lading has expired. 263 Ill.App. at 109.
Since there is neither federal nor state periods of limitations involved, plaintiffs correctly conclude that resolution of the instant appeal rests upon the construction of Section 2(b) of the contract of carriage. In furtherance of a construction which would allow joinder of an additional carrier after expiration of the two-year period, plaintiffs argue two points.
First, plaintiffs note that Section 2(b) contains a twofold prescription regarding time limitations: 'claims' must be filed within nine months after delivery; and 'suits' must be instituted within two years and one day from the date notice of disallowance is given. As to the matter of filing the claims, it has been held that the filing of a claim with any one of the carriers specified in Section 2(b) constitutes notice to and a claim upon all of the line-haul carriers who may be liable under the Interstate Commerce Act. (Northern Pacific Ry. Co. v. Wall, 241 U.S. 87, 36 S.Ct. 493, 60 L.Ed. 905.) Therefore, plaintiffs contend, the bringing of suit against one carrier within the required period satisfies that condition as to all carriers.
Secondly, plaintiffs urge that the limitation period contained in Section 2(b), unlike a statute of limitations which operates as a personal defense, conditions the substantive right. The theory is grounded on that part of Section 2(b) which provides: 'Where claims are not filed or suits are not instituted thereon in accordance with the foregoing provisions, No carrier hereunder shall be liable, and such claims will not be paid.' (emphasis supplied). This sentence, plaintiffs argue, manifests the parties' intention that a failure to fulfill either condition in respect to any of the contracting parties results in non-liability for all carriers. On this theory, unless timely suit against one carrier is held to constitute timely suit against all carriers (just as a claim filed with one is held to constitute a claim filed with all), the result will be to nullify the timely suit filed against the one. For example, if DRGW is entitled to have plaintiffs' suit against it dismissed, it will then become necessary to dismiss plaintiffs' suit against Penn Central, because the dismissal of plaintiffs' suit against DRGW will demonstrate that 'suits (have not been) instituted...
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Fruitco Corp. v. Consolidated Rail Corp.
...v. Ward, supra; Northern Pacific Railway Co. v. Wall, 241 U.S. 87, 36 S.Ct. 493, 60 L.Ed. 905 (1916); Charley Hayashida Farms, Inc. v. Baker, 16 Ill.App.3d 514, 306 N.E.2d 673 (1973). In 1976, Congress passed the Railroad Revitalization and Regulatory Reform Act. Pub.L. No. 94-210, 90 Stat.......