Faribault Woolen Mill Co. v. CHICAGO, ETC., 49105.

• Decision Date: 05 February 1980
• Docket Number: No. 49105.,49105.
• Citation: 289 NW 2d 126
• Parties: FARIBAULT WOOLEN MILL CO., Appellant, v. CHICAGO, ROCK ISLAND AND PACIFIC RAILROAD COMPANY et al., Respondents.
• Court: Minnesota Supreme Court

289 N.W.2d 126 (1979)

FARIBAULT WOOLEN MILL CO., Appellant, v. CHICAGO, ROCK ISLAND AND PACIFIC RAILROAD COMPANY et al., Respondents.

No. 49105.

Supreme Court of Minnesota.

November 9, 1979.

Rehearing Denied February 5, 1980.

Jesse & Cosgrove and Jon A. Hanson, Minneapolis, for appellant.

Stringer, Donnelly, Courtney, Cowie & Rohleder and A. James Dickinson, St. Paul, for respondents.

Heard before SHERAN, C. J., TODD and MAXWELL, JJ., and considered and decided by the court en banc.

STEPHEN L. MAXWELL, Justice.^*

Plaintiff, Faribault Woolen Mill Co., brought suit under the Carmack Amendment to the Interstate Commerce Act, 49 U.S.C.A. § 20(11) (1978),¹ against the defendant rail carriers to recover for a water-damaged shipment of "greasy wool" which defendants transported. The case was tried to the court without a jury. The trial court ruled alternatively (1) that plaintiff failed to establish a prima facie case of liability under the Carmack Amendment, and (2) that, assuming arguendo, that plaintiff did establish a prima facie case, defendants had rebutted the case. Accordingly, it granted defendants' motion for summary judgment and dismissed the action. We reverse, holding that plaintiff did establish a prima facie case of liability under the Carmack Amendment, which defendants' evidence failed to rebut.²

Plaintiff shipped 120 bales of New Zealand "greasy wool" (uncleaned, freshly shorn wool) from New Zealand to its factory in Faribault, Minnesota, in a large metal ocean cargo container roughly the size of a semitrailer. The container was designed so that wheels could be attached for hauling it over the road.

The container left Auckland, New Zealand, aboard an ocean vessel on May 29, 1974, and arrived in Norfolk, Virginia, on July 22, 1974. Apparently the steamship company retained possession and control of the container until August 9, 1974, when it was converted into a trailer, hauled by a Norfolk cartage firm to defendant Norfolk and Western Railway's terminal, and loaded on a flat-car for rail transport to Faribault. The container left Norfolk on August 11, 1974, and connected in Chicago with defendant Chicago, Rock Island and Pacific Railroad, which delivered the container to Faribault on August 20, 1974. That same day, Yule Transport of Medford, Minnesota, hauled the container, again converted to a trailer, about a mile from the terminal to plaintiff's plant in Faribault.³

At plaintiff's dock, plaintiff's employees broke the container's seal and opened its doors. The unpleasant odor and rotted condition of the visible bales announced that the cargo was water-damaged.⁴ After unloading the several damaged bales stacked within three to four feet of the doors of the container, plaintiff's employees discovered a hole, four to five inches in diameter, in the container's metal top. It had jagged edges as if it had been punched in, and was covered from the outside top of the container with tape. One side of the tape was loose, allowing a sliver of light to enter through the hole. The most severely damaged bales were located directly below the hole. The hole was observed only from inside the container; no one observed the top surface of the tape or the container.

At trial, to prove that defendants received the container in good condition at origin, plaintiff introduced bills of lading and inspection reports which defendants' employees issued in Norfolk on August 9, and in Faribault on August 20. The reports indicated that on those dates defendants inspected the outside of the cargo container, finding no "exceptions" to the warranted receipt of the container in "apparent good order (contents and condition of contents of packages unknown)." Each report contained a pictorial representation of the top of the container on which visible defects were to be marked; the reports noted "no damage or deficiency" to the top, nor did they indicate that the top was not inspected. The trial court considered this evidence insufficient to prove that the damage occurred when the shipment was in the custody of the defendant-railroads, that the defendants were negligent in handling the shipment, or that the wool in the trailer was in good condition when delivered to either or both defendants.

Plaintiff's appeal from the trial court's judgment of dismissal presents two issues: (1) Was plaintiff's evidence sufficient to establish, as an essential element of the prima facie case for defendants' liability under the Carmack Amendment, that the defendant railroads received the property in good condition in Norfolk? (2) If plaintiff did make out a prima facie case for recovery, was defendants' rebuttal evidence sufficient to permit judgment for defendants?

1. Under the Carmack Amendment, a shipper makes out a prima facie case of the carrier's liability for damaged goods by proving delivery of the goods to the carrier in good condition, arrival of the goods in damaged condition, and the amount of damages. Missouri P. R. Co. v. Elmore & Stahl, 377 U.S. 134, 138, 84 S.Ct. 1142, 12 L.Ed.2d 194 (1964); Blue Bird Food Products, Inc. v. Baltimore & Ohio Railroad Co., 492 F.2d 1329, 1332 (3d Cir. 1974). Here only the first element, delivery to the carrier in good condition, is disputed. Plaintiff contends that its evidence, consisting of the clean bills of lading and inspection reports, was sufficient to sustain its burden of proving that the container was not in a defective or damaged condition when delivered to defendants at Norfolk. We agree, rejecting defendants' contention that plaintiff failed to sustain its burden of proof on this element because plaintiff presented no direct evidence of the shipment's condition at origin, and because ordinary inspection at origin would not have disclosed the damage to the container.

The parties cite cases on both sides of the question of whether clean bills of lading, without more, suffice to establish prima facie that a shipment of goods was delivered to the carrier in good condition. None of these cases are controlling, however. They involve circumstances in which defects to smaller packages or loss of goods were so obvious that any reasonable inspection by the carrier at origin would have revealed the damage or loss,⁵ or where defects to the goods or container were so concealed that no reasonable inspection of the outside of the shipping container would reveal them.⁶ The instant case does not fit neatly into either category.

We take guidance from Reider v. Thompson, 197 F.2d 158 (5th Cir. 1952). Reider involved an action under the Carmack Amendment against a railroad to recover for water-damaged sheepskins. The sheepskins were shipped in cases, the shipment originating in a foreign country and arriving in New Orleans by ocean carrier. The defendant rail carrier transported the shipment from New Orleans to Boston, where 12 cases were found to be waterstained. To prove that the rail carrier received the shipment in good condition, the plaintiff introduced the bill of lading issued by the carrier at point of origin in New Orleans. As in the instant case, it represented that the shipment was received in "apparent good order, but that the contents and condition of contents of packages were unknown," of which the Fifth Circuit Court said, on remand from the Supreme Court:

These provisions are considered to relate to the external condition of the packages and do not establish the condition of the contents. However, when packages are received by the carrier in acknowledged good external condition but are delivered by the carrier in a damaged or stained condition which could reasonably and logically be found to indicate that the discovered damage or deterioration of the contents resulted from the cause indicated by the condition of the external package, theretofore received in good condition, the trier of facts may infer from these circumstances that damage to the contents was occasioned by the negligence of the carrier in the respect indicated by the changed external condition of the package. "The outturn itself" may be considered as evidence.

197 F.2d 161.

On remand from the Fifth Circuit, the United States District Court in Reider v. Thompson, 116 F.Supp. 279, 280 (E.D.La. 1953), found that the sheepskins were damaged by water "from an undisclosed outside source during transit," and that defendant's clean bill of lading, issued after inspection of the unopened cases, established that the shipment was in "external good order and condition when received" in New Orleans. Ordering judgment for plaintiff, the court concluded:

When a consignment is received by a common carrier in external good order and condition and delivered by it in damaged condition, with the external covering of the goods so damaged as to account for the damage to the contents, the consignee need not prove the internal good order of the goods at the time of receipt by the carrier, and the presumptive liability of the carrier is established. Reider v. Thompson, 197 F.2d 158, 161 (5 Cir. 1952); Flota Mercante Del Estado v. Orient Ins. Co., 198 F.2d 740 (5 Cir. 1952), affirming D.C.E.D.La.1951, 102 F.Supp. 729.

116 F.Supp. 280.

In the instant case defendants' employees inspected the cargo container at origin in Norfolk and issued a clean bill of lading and an inspection report form. The form specifically instructed the inspecting employee to note any damage to the container itself, including damage to the top surface where the hole was found on a pictorial representation of the container's outside surface. Defendants' employees made no such notations and indicated no "exceptions" to the warranted receipt of the container. The forms had no such notations and warranted receipt of the container indicated no "exceptions" to the warranted receipt of the container in "apparent good order * *." But on arrival at plaintiff's factory in Faribault, the metal top of the container was "so damaged as to account for the damage to the...