Chicago, Milwaukee St Paul Pac Co v. Acme Fast Freight

• Decision Date: 04 April 1949
• Docket Number: No. 65,65
• Citation: 93 L.Ed. 817,336 U.S. 465,69 S.Ct. 692
• Parties: CHICAGO, MILWAUKEE, ST. PAUL & PAC. R. CO. et al. v. ACME FAST FREIGHT, Inc
• Court: U.S. Supreme Court

336 U.S. 465

69 S.Ct. 692

93 L.Ed. 817

CHICAGO, MILWAUKEE, ST. PAUL & PAC. R. CO. et al.

v ACME FAST FREIGHT, Inc.

No. 65.

Argued Dec. 8, 1948.

Decided April 4, 1949.

Messrs. Joseph Walker and Rowland L. Davis, Jr., both of New York City (Messrs. Willam Zearfaus, of Philadelphia, Pa., Bleakley, Platt, Gilchrist & Walker, Arthur C. Patterson, Dennis P. Donovan, Thomas L. Ennis, and Joseph Rosch, all of New York City, John H. English, of Albany, N.Y., and Pierce & Greer and H. Brua Campbell, both of New York City, of counsel), for petitioners.

Mr. Paul A. Crouch, of New York City, for respondent.

Mr. Chief Justice VINSON delivered the opinion of the Court.

In 1942, Congress enacted what is popularly known as the Freight Forwarder Act. This legislation, which appears as Part IV¹ of the Interstate Commerce Act, was designed to define freight forwarders, to prescribe certain regulations governing forwarder operations, and to bring this essential transportation business within the control of the Interstate Commerce Commission. The legislative and judicial history culminating in the Act need not now be detailed. See United States v. Chicago Heights Trucking Co., 1940, 310 U.S. 344, 60 S.Ct. 931, 84 L.Ed. 1243; Acme Fast Freight, Inc., v. United States, D.C., 30 F.Supp. 968, affirmed 1939, 309 U.S. 638, 60 S.Ct. 810, 84 L.Ed. 993.

Freight forwarders consolidate less than carload freight into carloads for shipment by rail, truck, or water. Their charges approximate rail less than carload rates; their expenses and profits are derived from the spread between the carload and 1. c. 1. rates. Forwarders are utilized by 1. c. 1. shippers because of the speed and efficiency with which they handle shipments, the unity of responsibility obtained, and certain services which forwarders make available.²

Forwarders are required by § 1013 of the Act to issue bills of lading to their customers, covering the individual package shipment from time of receipt until delivery to the ultimate consignee. When the freight is consolidated into carloads, the railroad gives the forwarder its bill of lading in which the forwarder is designated as both consignor and consignee. The contents are noted as 'one carload of mixed merchandise' and usually move under an 'all-commodity' carload rate. The destination set out in the railroad bill of lading is the forwarder's break-bulk point. At that point the carload is broken up; some shipments may be distributed locally, some sent by truck to off-line destinations, and some consolidated into carloads for reshipment to further break-bulk points. The railroad has no knowledge of the contents of the car, the identity of the individual shippers, or the ultimate destinations of the consignments. The forwarder has an unqualified right to select the carrier and route for the transportation of the freight.

The forwarder thus has some of the characteristics of both carrier and shipper. In its relations with its customers, a forwarder is subjected by the Act to many of the requirements and regulations applicable to common carriers under Parts I, II, and III of the Act, 49 U.S.C.A. § 1 et seq., 301 et seq., 901 et seq. In its relations with these carriers, however, the status of the forwarder is still that of shipper. It is this duality of character that raises the question in this case.

Section 1013 of the Act³ provides that the Carmack Amendment, 34 Stat. 593, as amended, 49 U.S.C. § 20 (11)⁴ and (12),⁵ 49 U.S.C.A. § 20(11, 12), shall apply to freight forwarders 'in the case of service subject to this chapter' (Part IV), and that the freight forwarder shall be deemed both the receiving and delivering transportation company for the purposes of such § 20(11) and (12). Incorporation of the Carmack Amendment requires, as has been noted, that the forwarder issue bills of lading to its shippers, covering transportation of the individual shipments to their ultimate destinations. There can be no question but that under § 20(11), the forwarder is liable to its shipper for loss or damage to the freight exactly as if it were an initial carrier subject to Parts I, II, and III. We are now asked to decide whether the right-over given by § 20(12) to an initial carrier against its connecting carriers applies in the case of forwarders who have paid loss and damage claims to their shippers and seek recompense from the carrier responsible for the loss.

In this action, respondent freight forwarder sought a declaratory judgment that it is not bound by the nine-month limitation period provided in the railroad bill of lading for the filing of loss or damage claims. If § 1013 of the Act, by its incorporation of § 20(11) and (12), makes the forwarder an initial carrier with a right-over against the carrier responsible for the loss or damage, the nine-month period is not applicable. If, however, the forwarder is still a shipper vis-a-vis the railroads, it must file its claims within the period specified in the railroad bill of lading.⁶ The District Court held, on an agreed statement of facts, that the forwarder must file its claims within the nine-month period. The Court of Appeals for the Second Circuit reversed, holding that for the purposes of § 1013 alone, forwarders are to be considered carriers and as such are entitled to the right-over given by § 20(12). We granted the petition for a writ of certiorari, 335 U.S. 807, 69 S.Ct. 30, to resolve this important question under Part IV of the Interstate Commerce Act.

First. The railroads contend that Part IV of the Act was not intended to change the shipper-carrier relationship that had for many years existed between forwarder and railroad. Their position is that while the previously prevailing duties and responsibilities owed by the forwarder to the public were changed by the Act, the language of the Act and its legislative history negative the forwarder's claim to carrier status. They read the language of § 1013, that 'The provisions of section 20(11) and (12) of this title * * * shall apply with respect to freight forwarders, in the case of service subject to this chapter * * *' to mean that, while the forwarder is liable to its shippers under § 20(11) for loss or damage no matter whose the ultimate responsibility, its right-over under § 20(12) is limited to losses or damage occurring in 'service subject to this chapter'—i.e., in the business of forwarding freight. Thus limited, the right-over would apply as against other freight forwarders with whom joint loading agreements authorized by § 1004(d) were in effect, and against motor carriers who are permitted by § 1013 to issue bills of lading on behalf of the forwarders. The right-over would not, however, apply against railroads, water carriers, and line-haul motor carriers.

'Service subject to this chapter' is defined in § 1002 as 'any or all of the service in connection with the transportation in interstate commerce which any person undertakes to perform or provide as a freight forwarder * * *.' While use of the word, 'provide,' lends some support to respondent's thesis that the definition should be read broadly to include the service performed by common carriers for the forwarders, the House Committee report indicates the contrary. It defines 'service subject to this chapter' as: 'the term used throughout Part IV when referring to the business or operations of freight forwarders which it is proposed to regulate. The definition is intended to be broad enough to cover everything the freight forwarder does, in connection with the forwarding by surface facilities, in the course of carrying out his undertaking to the shipper whom he serves. On the other hand it is not broad enough, of course, to bring under regulation, under Part IV, the services performed by the carriers whose services the freight forwarder utilizes in performing his undertaking.'⁷ (Italics added.)

The emphasis supplied by the phrase is emphasis on the freight forwarder's activities, not upon the service performed by underlying carriers. Since the forwarder contracts with its shipper to deliver the shipment safely to its ultimate destination, its undertaking is obviously part of the 'service subject to this chapter'. But inclusion of that phrase in § 1013 indicates a limitation of applicability of the right-over under § 20(12) to the forwarder's business, which, we are told by the House Report, does not include 'the services performed by the carriers whose services the freight forwarder utilizes in performing his undertaking.'

The importance of the phrase, 'service subject to this chapter,' in the Forwarder Act is accentuated by a contemporaneous amendment to Part II of the Interstate Commerce Act, which pertains to motor carriers. The MotorCarrier Act had made, § 20(11) applicable to motor carriers but had omitted § 20(12). As a part of the Freight Forwarder legislation, Congress amended § 219 of the Interstate Commerce Act to make § 20(12) applicable to motor carriers. It did so without including the qualifying phrase. The amendment reads simply:

'Sec. 219. The provisions of section 20(11) and (12) of this Act, together with such other provisions of such part (including penalties) as may be necessary for the enforcement of such provisions, shall apply with respect to common carriers by motor vehicle with like force and effect as in the case of those persons to which such provisions are specifically applicable.'

Unless we are to assume that Congress, in enacting § 1013, included the phrase, 'in the case of service subject to this chapter,' for no purpose whatsoever, while at the same time approving a similar section which did not include the qualifying phrase, we must give it the effect contended for by petitioners. Respondent suggests no other.

That meaning is supported by the explanation of § 1013 given by Representative Wolverton, a member of the committee which drafted the section. However, doubt is cast upon the correctness of this...