Consolidated Freightways Corp. of Delaware v. Eddy

• Decision Date: 10 September 1973
• Citation: 513 P.2d 1161,266 Or. 385
• Parties: CONSOLIDATED FREIGHTWAYS CORPORATION OF DELAWARE, Respondent, v. Rodger EDDY, Appellant.
• Court: Oregon Supreme Court

Page 1161

513 P.2d 1161

266 Or. 385

CONSOLIDATED FREIGHTWAYS CORPORATION OF DELAWARE, Respondent, v. Rodger EDDY, Appellant.

Supreme Court of Oregon, In Banc.

Argued and Submitted June 4, 1973.

Decided Sept. 10, 1973.

Robert G. Chidester, Portland, argued the cause and filed briefs for appellant.

Richard H. Williams, Portland, argued the cause for respondent. With him on the brief were James H. Clarke, and James C. Dezendorf, of Dezendorf, Spears, Lubersky & Campbell, Portland.

McALLISTER, Justice.

Consolidated Freightways, a motor carrier, brought this action to recover from defendant, as consignee, unpaid freight charges for the interstate shipment of a printing press. Defendant appeals from a judgment for plaintiff. We affirm.

Plaintiff's complaint alleged that on September 29, 1970, it delivered to defendant a printing press which had been shipped to defendant 'collect' by Graphic Machinery Co. from Oklahoma City, Oklahoma, and that the unpaid freight charges thereon were $1,960.19, which defendant had failed to pay.

Defendant's answer admitted plaintiff's corporate status and qualifications to do business in Oregon, but denied all the other allegations of the complaint. Defendant then alleged two affirmative defenses of estoppel. First, defendant alleged that he had no knowledge that the shipment was 'collect,' that plaintiff with full knowledge unconditionally relinquished possession of the shipment without making demand upon defendant for payment of freight charges and thereafter sought to collect the charges from the shipper, and that plaintiff's transaction with the shipper involved extension of credit beyond the seven-day limit imposed by the Interstate Commerce Commission.

For his second affirmative defense, defendant again alleged his lack of knowledge that the shipment was 'collect,' and that plaintiff unconditionally relinquished possession without demand for payment of freight charges. He further alleged that plaintiff unreasonably delayed for two years to notify defendant of plaintiff's claim that defendant was liable for the freight charges, that defendant's contract with the shipper provided that the shipper was responsible for the freight charges, that defendant has paid the shipper the contract price in full, and that during plaintiff's two-year delay the shipper became insolvent.

We first take note of the unorthodox procedure in the trial court which apparently was based on an informal stipulation of the parties. Plaintiff demurred to both affirmative defenses on the following grounds:

'(1) no act or omission of a motor carrier will estop it from collecting the proper published rate for the service performed and (2) the Interstate Commerce Act imposes upon a consignee who accepts a shipment the liability for the payment of freight and other charges without regard to any contract and even though the consignee may have relied upon a promise made by a third party to pay for all such charges.'

The only ground for demurrer to new matter in an answer recognized by ORS 16.250 is that 'such new matter does not constitute a defense or counterclaim.' Since the parties both in the trial court and in this court assumed that plaintiff's demurrer raised that basic issue, we will indulge in the same assumption.

The trial court file contains a copy of a letter from counsel for the plaintiff to counsel for the defendant confirming an oral agreement 'that the outcome of the case would follow the ruling on the demurrer,' that if the court sustained the demurrer to defendant's defenses plaintiff would be entitled to a judgment and if the court held that the 'estoppel defenses are good defenses' then the complaint would be dismissed.

The trial court sustained plaintiff's demurrer to the defenses and allowed defendant time to further plead. When defendant failed to plead further the court entered a judgment for plaintiff for the amount demanded in plaintiff's complaint. This procedure overlooked the general denial by defendant of the allegations of plaintiff's complaint. However, since defendant's notice of appeal recites that the judgment was rendered 'pursuant to stipulation of the parties prior to hearing on (the) demurrer' we will proceed to decide the issue of whether the new matter in the answer constitutes a defense to plaintiff's complaint.

Since this case involves an interstate shipment by motor carrier, part II of the Interstate Commerce Act, formerly known as the Motor Carrier Act, 1935, is applicable. The following portions thereof are pertinent:

'No common carrier by motor vehicle shall charge or demand or collect or receive a greater or less or different compensation for transportation or for any service in connection therewith between the points enumerated in such tariff than the rates, fares, and charges specified in the tariffs in effect at the time; and no such carrier shall refund or remit in any manner or by any device, directly or indirectly, or through any agent or broker or otherwise, any portion of the rates, fares or charges so specified, or extend to any person any privileges or facilities for transportation in interstate or foreign commerce except such as are specified in its tariffs: * * *.' 49 U.S.C.A. § 317(b).

'No common carrier by motor vehicle shall deliver or relinquish possession at destination of any freight transported by it in interstate or foreign commerce until all tariff rates and charges thereon have been paid, except under such rules and regulations as the Commission may from time to time prescribe to govern the settlement of all such rates and charges, including rules and regulations for weekly or monthly settlement, and to prevent unjust discrimination or undue preference or prejudice: * * *.' 49 U.S.C.A. § 323.

The Commission has promulgated the following regulation:

'Upon taking precautions deemed by them to be sufficient to assure payment of the tariff charges within the credit period herein specified, common carriers by motor vehicle may relinquish possession of freight in advance of the payment of the tariff charges thereon and may extend credit in the amount of such charges to those who undertake to pay them, such persons herein being called shippers, for a period of 7 days excluding Saturdays, Sundays, and legal holidays. When the freight bill covering a shipment is presented to the shipper on or before the date of delivery, the credit period shall run from the first 12 o'clock midnight following delivery of the freight. When the freight bill is not presented to the shipper on or before the date of delivery, the credit period shall run from the first 12 o'clock midnight following the presentation of the freight bill. * * *' 49 C.F.R. § 1322.1 (1972).

The above provisions have nearly identical counterparts in the statutes and regulations governing rail carriers. 49 U.S.C.A. § 6(7), 49 U.S.C.A. § 3(2), 49 C.F.S. 1320.1 (48-hour credit period). The parties have cited and relied on cases involving rail carriers and such cases are apposite.

The purpose of the above provisions of the Interstate Commerce Act is the elimination of rate and credit discrimination. Pittsburgh, C.C. & St. L.R. Co. v. Fink, 250 U.S. 577, 40 S.Ct. 27, 63 L.Ed. 1151, 1153 (1919); Louisville & N.R. Co. v. Central Iron & C. Co., 265 U.S. 59, 44 S.Ct. 441, 68 L.Ed. 900, 902 (1924); Consolidated Freightways Corp. of Del. v. Admiral Corp., 442 F.2d 56, 61 (7th Cir. 1971). In accord with this purpose, the Supreme Court held, in the Fink case, that an innocent consignee who has been undercharged by the carrier is liable for the full freight according to the tariff rates, even though the undercharge was the carrier's fault. The consignee, the court said, must be presumed to know the law and to have understood that only the rate fixed by the tariff could be charged:

'* * * The transaction, in the light of the act, amounted to an assumption on the part of Fink to pay the only legal rate the carrier had the right to charge or the consignee the right to pay.

'* * * Nor can the defendant in error successfully invoke the principle of estoppel against the right to collect the legal rate. Estoppel could not become the means of successfully avoiding the requirement of the act as to equal rates, in violation of the provisions of the statute.' 250 U.S. at 582, 40 S.Ct. at 28, 63 L.Ed. at 1153.

In Louisville & N.R. Co. v. Central Iron & C. Co., supra, the consignee had paid the freight demanded by the carrier upon delivery, but the carrier discovered three years later that it had not charged enough. It then brought an action against the shipper, who refused to pay. The Supreme Court again stated that the amount of freight was fixed by law and could not be varied:

'* * * Nor could any act or omission of the carrier (except the running of the Statute of Limitations) estop or preclude (the carrier) from enforcing payment of the full amount by a person liable therefor. * * *' 265 U.S. at 65, 44 S.Ct. at 442, 68 L.Ed. at 902.

The court reaffirmed the liability of the consignee in the following language:

'* * * under the rule of the Fink Case, if a shipment is accepted, the consignee becomes liable, as a matter of law, for the full amount of the freight charges, whether they are demanded at the time of delivery, or not until later. * * *' 265 U.S. at 70, 44 S.Ct. at 444, 68 L.Ed. at 904.

The lower federal courts, in Undercharge cases, have uniformly followed the Fink case and held that the carrier cannot be estopped, by having billed and collected a lesser amount, to collect the full amount properly due under the applicable tariff. See Southern Pacific Company v. Miller Abattoir Company, 454 F.2d 357, 359 (3d Cir. 1972); Miller v. Ideal Cement Company, 214 F.Supp. 717 (D.Wy.1963); Bernstein Bros. Pipe & Mach. Co. v. Denver & R.G.W.R. Co., 193 F.2d 441 (10th Cir. 1951); Porto Transport v. Consolidated Diesel Elec. Corp., 19 F.R.D. 256, 258--259 (S.D.N.Y.1956).

The defendant relies,...