Cleveland, C., C. & St. L. Ry. Co. v. Southern Coal & Coke Co.

• Decision Date: 02 February 1923
• Citation: 248 S.W. 297,147 Tenn. 433
• Parties: CLEVELAND, C., C. & ST. L. RY. CO. v. SOUTHERN COAL & COKE CO.
• Court: Tennessee Supreme Court

248 S.W. 297

147 Tenn. 433

CLEVELAND, C., C. & ST. L. RY. CO. v. SOUTHERN COAL & COKE CO.

Supreme Court of Tennessee.

February 2, 1923

Appeal from Chancery Court, Knox County; Charles Hays Brown Chancellor.

Suit by the Cleveland, Cincinnati, Chicago & St. Louis Railway Company against the Southern Coal & Coke Company. Decree for complainant was reversed by the Court of Civil Appeals, and complainant appeals. Decree of Court of Civil Appeals reversed, and that of chancellor affirmed.

McKINNEY J.

This suit was instituted for the purpose of recovering $331.39 balance of freight charges alleged to be due on 11 cars of coal shipped in the months of January and February, 1916, by the defendant, Southern Coal & Coke Company, from its mine at Gatliff, Ky., to John T. Solon at Toledo, Ohio.

Said coal was sold by the defendant to Solon f. o. b. cars at mine. This fact, however, was unknown to complainant. Gatliff is located on the Louisville & Nashville Railroad, and said coal was routed over said road to Cincinnati, Ohio; thence over the road of complainant to Toledo. The freight was not prepaid by the consignor. There was no express agreement at the time of shipment that Solon was to pay the freight charges, but the defendant had previously shipped him coal and the freight was collected by the complainant from him, or his assignee. Solon, it appears, was a coal broker, and sold the 11 cars of coal in question to the Toledo Ice & Cold Storage Company, located about 11 miles from complainant's road in Toledo on the Toledo, St. Louis & Western Railroad, known as the "Clover Leaf" Road.

It is inferable from the record, and the cause proceeds upon that theory, that said coal was delivered to the Toledo Ice & Cold Storage Company without any demand being made for the freight charges.

Mr Wench, freight agent for the complainant, testified, in a general way, that he subsequently undertook to collect said freight from both the Toledo Ice & Cold Storage Company and Solon.

Subsequent to the delivery of said coal, the Toledo Ice & Cold Storage Company was adjudged a bankrupt.

The freight on said 11 cars of coal from Gatliff to Toledo was $665.48. The complainant filed its claim for said amount in said bankruptcy proceeding, alleging that the Toledo Ice & Cold Storage Company was indebted to it in said sum, and received on said claim, in said proceeding, $339.09. It then demanded the balance of $331.39 of Solon, which he declined to pay, and, without any previous notice that said freight had not been paid, or without any demand therefor, and nearly three years after the shipments were made, it filed the present bill.

Solon died July 1, 1920, and his estate was insolvent.

The answer filed by the defendant is as follows:

"I. That it does not owe the complainant the amount sued for or any part thereof.

II. That said coal, referred to in said original bill, was sold by respondent to one John T. Solon, f. o. b. cars at mines, where shipments originated, that the carriers handling said shipments, including complainant, well knew said fact at the time, and had previously handled similar shipments, and looked to and collected the transportation charges from the said consignee thereof, or his assigns, by reason and account of which the complainant has estopped itself and is now estopped from asserting otherwise, that pursuant to an agreement or understanding between complainant and said consignee, or his assigns, the complainant upon the arrival of said shipments, at the point of destination, delivered the same to said consignee, or his assigns, and extended to said consignee, or his assigns, the sole credit for the transportation charges thereon, thus and thereby releasing and discharging the respondent from any and all liabilities touching said matters, in any event, and thereby estopping the complainant from asserting otherwise.

III. On information and belief, the respondent further shows to the court that complainant, without having previously made any demand on respondent, or given respondent any notice touching said matters, said complainant filed its petition, or proof of claim, predicated on said alleged transportation charges, in a bankruptcy or general creditor's proceedings against the Toledo Ice & Cold Storage Company, was indebted to it for said transportation charges, and that complainant, upon said theory, participated in the distribution of the assets of said Toledo Ice & Cold Storage Company, to the extent of approximately $334.07; that without the knowledge and consent of respondent, said coal was diverted by said Solon with the acquiescence and consent of complainant to the said Toledo Ice & Cold Storage Company, about January or February, 1916, and that complainant by so participating and thus electing and so proceeding has thereby precluded and estopped itself, in any event."

Solon paid for the coal in February and March of 1916, and the defendant did not know that the freight had not been paid until the bill was filed in this cause.

The chancellor entered a decree in favor of the complainant for the balance of said freight, with interest.

Upon appeal, the Court of Civil Appeals reversed the chancellor and dismissed the bill. The basis of its decision is thus stated in its opinion, to wit:

"We do not rest this opinion upon the doctrine of estoppel, but upon the distinct proposition, or rather propositions, that complainant in this case turned over the coal after it arrived at destination under the bill of lading to another carrier, as its agent, to deliver the coal to the assignee of the original consignee, and, presumably, authorized its carrier agent to deliver the goods without demanding payment of the freight charges, after which it proceeded against the assignee of the original consignee as its debtor to collect the freight charges.

We have been able to discover no case, or authority in any text-writer, treating of the subject of the rights of common carriers with respect to the collection of freight charges, that forbids them to waive the collection of freight charges by the original consignee, and having delivered the shipment of goods to the assignee of the original consignee, to treat said assignee as its debtor, and proceed against said assignee to collect its freight charges.

To hold that a common carrier doing that could, after proceeding against its debtor to collect the freight charges, and having failed to collect all of the freight charges, it could delay about three years and then proceed against the shipper and collect the balance of the freight charges it failed to collect from its debtor, would, it seems to us, establish a most unequitable rule, under the operation of which might, could, and would arise serious inconveniences and obstructions to the normal course of an immense mass of business transactions necessitating the shipment of merchandise in interstate commerce over connecting lines of carriers."

The bills of lading issued to the defendant for said coal at the time of shipment are the standard form approved by the Interstate Commerce Commission, and contain the following provision, to wit:

"The owner or consignee shall pay the freight, and average if any, and all other lawful charges accruing on said property, and if required, shall pay the same before delivery. If upon inspection it is ascertained that the articles shipped are not those described in this bill of lading, the freight charges must be paid upon the articles actually shipped."

The Interstate Commerce Act of 1887, as amended (U. S. Comp. St. § 8569[7]) is as follows:

"Nor shall any carrier charge or demand or collect or receive a greater or less or different compensation for such transportation of passengers or property, or for any service in connection therewith, between the points named in such tariffs than the rates, fares, and charges which are specified in the tariff filed and in effect at the time; nor shall any carrier refund or remit in any manner or by any device any portion of the rates, fares, and charges so specified, nor extend to any shipper or person any privileges or facilities in the transportation of passengers or property, except such as are specified in such tariffs."

The policy of the courts has been to require a strict compliance with the above act with a view of prohibiting any discriminations or variations from same in favor of any shipper.

It is now well settled that where an erroneous rate is quoted and collected, the carrier has to collect the correct freightage even though it result in injury or great hardship to the shipper or consumer, and the carrier cannot, by its conduct in this respect, estop itself to sue for and recover the lawful amount. New York Central & Hudson River Railroad Co. v. York & Whitney Co., 256 U.S. 406, 41 S.Ct. 509, 65 L.Ed. 1016; Railroad v. Fink, 250 U.S. 577, 40 S.Ct. 27, 63 L.Ed. 1151; Louisville & Nashville Railroad v. Maxwell, 237 U.S. 94, 35 S.Ct. 494, 59 L.Ed. 853, L. R. A. 1915E, 665; Chicago & Alton Railroad v. Kirby, 225 U.S. 155, 32 S.Ct. 648, 56 L.Ed. 1033, Ann. Cas. 1914A, 501; Texas & Pacific Railway v. Mugg, 202 U.S. 242, 26 S.Ct. 628, 50 L.Ed. 1011.

Upon the same principle the more recent decisions are to the effect that the shipper cannot be relieved of his liability for freightage by express contract with the carrier releasing him and agreeing to look to the consignee for the reason that the law makes him primarily liable for the freight charge.

In New York Central & Hudson Railroad Co. v. York & Whitney, supra, the court used this expression:

"The consignee could not escape the liability imposed by law through any contract with the carrier."

In Wells Fargo & Co. v. Cuneo (D. C.) 241 F. 727, the court said:

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