General Elec. Co. v. Priority Transport Services Inc.

• Decision Date: 04 May 1995
• Citation: 215 A.D.2d 827,625 N.Y.S.2d 755
• Parties: GENERAL ELECTRIC COMPANY et al., Appellants-Respondents, v. PRIORITY TRANSPORT SERVICES INC., Respondent-Appellant, et al., Defendant.
• Court: New York Supreme Court — Appellate Division

Page 755

625 N.Y.S.2d 755

215 A.D.2d 827

GENERAL ELECTRIC COMPANY et al Appellants-Respondents, v. PRIORITY TRANSPORT SERVICES INC., Respondent-Appellant, et al., Defendant.

Supreme Court, Appellate Division Third Department.

May 4, 1995.

Charles F. McMorrow, Dix Hills, for appellants-respondents.

Graham, Miller, Neandross, Mullin & Roonan (William Mullin, of counsel), New York City, for respondent-appellant.

Before MERCURE, J.P., and CREW, YESAWICH, PETERS and SPAIN, JJ.

PETERS, Justice.

Cross appeals from an order of the Supreme Court (Lynch, J.), entered November 28, 1994 in Schenectady County, which, upon reargument, inter alia, adhered to its prior decision denying plaintiffs' motion to strike the second affirmative defense in the amended answer of defendant Priority Transport Services Inc.

In January 1988, plaintiff General Electric Company agreed to perform repair work on a turbine rotor valued at $3 million owned by plaintiff Great Southern Paper Company. General Electric contacted defendant Priority Transport Services Inc., a general commodities carrier, to transport the rotor from Great Southern's plant in Georgia to General Electric's plant in the City of Schenectady, Schenectady County.

Paul Montarello, president of Priority, testified that he initially quoted Jack McGillin, General Electric's traffic supervisor, a price of $1,400 or $1,500 to transport the rotor. In response to McGillin's inquiry regarding the purchase of insurance for the rotor's transport, Montarello contends that he quoted an additional price of $2,600. Priority further alleges that, despite several inquiries to verify whether General Electric sought to have Priority purchase the insurance, McGillin never confirmed that he wanted such insurance either prior to the pick up or at the time thereof. Conversely, McGillin testified that he was quoted $2,850 for the cost of shipment and insurance and was assured by Montarello that insurance would be obtained. On the day that the rotor was picked up from Southern Paper, McGillin testified that he was reassured by Montarello that insurance was procured.

On January 18, 1988, the truck transporting the rotor was involved in an accident, causing damage to the rotor. Plaintiffs thereafter commenced this action against Priority and the driver of the truck alleging, inter alia, breach of contract, breach of contract of bailment and negligence. Priority acknowledged liability for the damage to the rotor, yet alleges, inter alia, as an affirmative defense that its liability is limited pursuant to its tariff on file with the Interstate Commerce Commission (hereinafter ICC).

Plaintiffs moved to strike the various affirmative defenses interposed by Priority, which included the limitation of liability defense. Priority cross-moved for summary judgment on the issue of the limitation of liability or, in the alternative, for an order denying plaintiffs' motion to dismiss that affirmative defense. Supreme Court denied the motion and cross motion finding issues of fact. Thereafter, Supreme Court granted plaintiffs' motion to reargue but adhered to its prior decision. Plaintiffs and Priority cross-appeal.

It is well settled that shipment of property is subject to the provisions of the Carmack Amendment to the Interstate Commerce Act (see, 49 U.S.C. §§ 10703, 10730, 11707), which imposes absolute liability upon carriers for the actual value of goods lost or damaged during transport (see, Missouri Pac. R.R. Co. v. Elmore & Stahl, 377 U.S. 134, 137, 84 S.Ct. 1142, 1144, 12 L.Ed.2d 194; Howe v. Allied Van Lines, 622 F.2d 1147, 1157, cert. denied 449 U.S. 992, 101 S.Ct. 528, 66 L.Ed.2d 289). However, 49 U.S.C. § 11707(c)(4) and 49 U.S.C. § 10730(b)(1) and (2) allow a carrier to limit its liability for loss or damage if it "maintains and charges I.C.C. approved [choice of] lower [freight] rates, obtains the shipper's agreement to the released value in writing, and provides the shipper with a reasonable opportunity to pay a higher rate and thereby increase the carrier's liability" (W.C. Smith, Inc. v. Yellow Freight Sys., 596 F.Supp. 515, 517; see, Anton v. Greyhound Van Lines, 591 F.2d 103; Flying Tiger Line v. Pinto Trucking Serv., 517 F.Supp. 1108).

Here, it is undisputed that Priority had on file with the ICC a tariff which sets forth, in pertinent part, as follows:

Shippers should state specifically in writing, when freight tendered is valued at more than $250,000.00 per shipment per vehicle. * * * In the event shipper fails to notify carrier that freight tendered is valued at more than $250,000.00 per shipment per vehicle, carrier's liability will not exceed $250,000.00 per shipment per vehicle.

The tariff also contains a "released value" provision which provides for higher rates to be paid by the shipper in exchange for greater liability to be imposed upon the carrier. It is undisputed that plaintiffs had actual notice of the tariff and the released value provision (see, Mavirazon Compania Naviera, S.A. v. H.J. Baker & Bro., 494 F.Supp. 1023; Atlantic Mut. Ins. Co. v. Companhia de Navegacao Maritima Netumar, 113 Misc.2d 516, 522, 449 N.Y.S.2d 588 affd. 120 Misc.2d 667, 467 N.Y.S.2d 497).

A limitation of liability provision in a bill of lading is specifically permitted by the Carmack Amendment (see, 49 U.S.C. § 10730[b][1], [2]; § 11707[c][4]; see also, Flying Tiger Line v. Pinto Trucking Serv., supra ). The bill of lading here was a standard form prepared by Southern Paper which included the following notation:

NOTE--Where the rate is...