Hull and Smith Horse Vans, Inc. v. Carras

• Decision Date: 12 November 1985
• Docket Number: Docket No. 78211
• Citation: 376 N.W.2d 392,144 Mich.App. 712
• Parties: HULL AND SMITH HORSE VANS, INC., a foreign corporation, Plaintiff-Appellee, v. James J. CARRAS, Defendant-Appellant. 144 Mich.App. 712, 376 N.W.2d 392
• Court: Court of Appeal of Michigan — District of US

Page 392

376 N.W.2d 392

HULL AND SMITH HORSE VANS, INC., a foreign corporation Plaintiff-Appellee, v. James J. CARRAS, Defendant-Appellant.

Docket No. 78211.

144 Mich.App. 712, 376 N.W.2d 392

Court of Appeals of Michigan.

Submitted April 9, 1985.

Decided Aug. 6, 1985.

Released for publication Nov. 12, 1985.

[144 MICHAPP 714] David F. Oeming, Jr., Saginaw, for plaintiff-appellee.

James J. Carras, pro se, Bay City, for defendant-appellant.

Before R.B. BURNS, P.J., and SHEPHERD and JASPER ^*, JJ.

PER CURIAM.

Plaintiff brought this action to recover the costs of transporting defendant's racehorses on four separate occasions between 1978 and 1980. Plaintiff also sought recovery for the boarding of two of the horses in California for over two years following defendant's refusal to pay the transportation charges. The jury found for plaintiff. The trial court entered judgment for plaintiff of $20,797.85 with interest on February 28, 1984. On April 16, 1984, the court ordered defendant to pay plaintiff's "actual costs", including attorney fees, which were necessitated by defendant's refusal of the mediation award. GCR 1963, 316.7. Defendant appeals as of right. We affirm.

Each of the four transactions entailed transportation of the horses in interstate commerce. Plaintiff admitted that it lacked a "certificate of public convenience and necessity" to cover the routes for these four shipments. Defendant attempted to affirmatively defend on this ground. Since the Interstate Commerce Commission (ICC) had not issued certificates to plaintiff, plaintiff had violated federal law. 49 U.S.C. Sec. 10921. According to defendant, this violation rendered the shipping contracts void for illegality and barred plaintiff's recovery. The trial court granted plaintiff's motion for summary judgment on this affirmative defense, concluding that enforcement of the Interstate Commerce Act, 49 U.S.C. Sec. 10101 et seq., was a federal matter, and that plaintiff's violation of the act did not bar recovery.

[144 MICHAPP 715] The jury's calculation of plaintiff's damages mirrors that urged by plaintiff in its complaint and at trial. In turn, plaintiff's figures for the transportation costs match those found in the standard rate schedule of the National Horse Carriage Association in force at the time of these four transactions. Plaintiff entered these figures on the bills of lading for the four shipments of defendant's horses. The rate schedule was approved by the ICC. ¹ Therefore, plaintiff's recovery for the transportation costs equals what it would have received if defendant had paid in the first place. Moreover, the rates approved by the commission are the only rates allowed under federal law. United Gas Pipe Line Co. v. Mobil Gas Service Corp., 350 U.S. 332, 338, 76 S.Ct. 373, 378, 100 L.Ed. 373, 383 (1956). Thus, plaintiff recovered the same amount to which it would have been entitled if it had possessed the applicable interstate certificates or tariffs. "A carrier's claim is, of necessity, predicated on the tariff--not an understanding with the shipper." Thurston Motor Lines, Inc. v. Jordan K. Rand, Ltd., 460 U.S. 533, 535, 103 S.Ct. 1343, 1344, 75 L.Ed.2d 260, 262-263 (1983).

Nevertheless, at trial plaintiff wasted much effort by advancing a quantum meruit theory of recovery. Plaintiff claimed it was entitled to be paid a reasonable amount for the transportation of the horses and submitted extensive proof of the reasonableness of the standard rates, in light of the costs of fuel, insurance, salaries and a reasonable profit. Defendant argued that the services rendered were valueless, for various reasons we need not mention here. Plaintiff's effort was unnecessary because, as noted above, the rates approved[144 MICHAPP 716] by the ICC are the sole rates permitted. This Court has stated on numerous occasions that "quantum meruit as a theory of recovery is inapplicable where an express contract exists". The Hayman Co. v. Brady Mechanical, Inc., 139 Mich.App. 185, 191, 362 Mich.App. 243 (1984); LeZontier v. Shock, 78 Mich.App. 324, 331, 260 N.W.2d 85 (1977). We believe it is also inappropriate where the price in the agreement is imposed by law, in this case by the ICC.

The trial court rejected defendant's contention that the contracts were unenforceable. Plaintiff's recovery was limited by the amounts set forth in the rate schedule. Otherwise, a carrier might be able to reap an enhanced profit from the illegality of its own conduct. At oral argument, plaintiff's attorney opined that the carrier might recover an amount greater than that allowed by the rate schedule, by employing a quantum meruit theory in cases in which the carrier lacked an applicable interstate tariff. We reject this view.

In this case, however, plaintiff recovered the same amounts as were dictated by the ICC through its approval of the rate schedules. The jury was convinced that these amounts represented the reasonable value of the transportation services, despite defendant's assertions that plaintiff's services lacked value. This measure of damages yielded the same result as direct application of the schedule itself.

Defendant raises five issues to support his position, none of which has merit.

First, defendant renews his argument that the contracts were invalid and unenforceable because plaintiff had no applicable interstate tariff or certificate for the four routes on which the animals were carried. In Ets-Hokin & Galvan, Inc. v. Maas Transport, Inc., 380 F.2d 258 (CA 8, 1967), the [144 MICHAPP 717] plaintiff sued to recover the costs of transporting cable manufactured in Texas for installation at a missile complex in North Dakota. A federal district court had previously ruled that transportation of such cable was interstate commerce. ² The defendant argued that, since the plaintiff had no applicable interstate tariff, its contract with the plaintiff was illegal and unenforceable. The United States Court of Appeals disagreed:

"A contract in violation of a statutory provision generally is void or illegal only if the legislative body enacting the statute evidences an intention that such contracts be considered void or illegal. See, e.g., McCullough Transfer Co. v. Virginia Sur. Co., 213 F.2d 440 (C.A. 6, 1954); Macco Const. Co. v. Farr, 137 F.2d 52 (C.A. 9, 1943); Guffey-Gillespie Oil Co. v. Wright, 281 F. 787 (C.A.8, 1922); Talco Capital Corp. v. Canaveral Int'l Corp., 225 F.Supp. 1007 (S.D.Fla., 1964); 17 CJS Sec. 202 at p. 1007 (1963). Otherwise even though the parties to a contract may be subject to a statutory penalty as the result of performing a contract, the contract itself remains in full force and effect. In the instant case, Maas was in violation of the Motor Carrier provisions of the Interstate Commerce Act when it transported cable under its contract with Ets-Hokin and was subject to penalties for such violations. The cable transportation contract itself, however, would be void, illegal or unenforceable only if Congress, in passing the Motor Carrier provisions of the Interstate Commerce Act, intended that contracts resulting in violations of that portion of the Act be illegal and void. A review of the statutory provisions involved herein reveals no congressional intention to make contracts in violation thereof void or illegal. The contract between Ets-Hokin and Maas was valid and enforceable." (Footnote omitted.) 380 F.2d 260-261.

In this case, plaintiff may have been subject to civil and criminal penalties for its repeated violations[144 MICHAPP 718] of the certificate requirement, 49 U.S.C. Secs. 10921, 11901 et seq., but the contracts remained valid and enforceable. Defendant refers to Arkansas Louisiana Gas Co. v. Hall, 453 U.S. 571, 101 S.Ct. 2925, 69 L.Ed.2d 856 (1981), as an instance in which the Court held unapproved charges illegal and unenforceable. In Hall, the plaintiff sued to recover under a contract for sale of natural gas. The contract provided that the price would increase if the seller had to pay a higher price for the gas. 453 U.S. 573, 101 S.Ct. 2928. The United States Supreme Court held that the seller could not recover the difference between the original price and the subsequently increased price. This holding was an application of the "filed rate doctrine", which "prohibits a federally regulated seller of natural gas from charging rates higher than those filed with the Federal Energy Regulatory Commission pursuant to the Natural Gas Act", 15 U.S.C. Sec. 717 et seq. 453 U.S. 573, 101 S.Ct. 2928.

Under the Interstate Commerce Act, there is no "filed rate", but only the rate approved by the commission. United Gas Pipe Line, supra. There was no deviation from the mandated rate in this case. The price terms of the contracts contained nothing inconsistent with federal requirements. Compare, Farley Terminal Co., Inc. v. Atchison, T. & S.F.R. Co., 522 F.2d 1095 (C.A.9, 1975). Also inapposite are cases in which the United States Supreme Court held recovery barred because the contract provided for performance of a service in addition to or different than the service which is the basis for the approved rate. Davis v. Cornwell, 264 U.S. 560, 44 S.Ct. 410, 68 L.Ed. 848 (1924); Chicago & A.R. Co. v. Kirby, 225 U.S. 155, 32 S.Ct. 648, 56 L.Ed. 1033 (1912).

Defendant's next claim involves the disqualification of the original trial judge. The original judge [144 MICHAPP 719] denied defendant's motion for disqualification. The issue of disqualification was referred to the State Court Administrator for assignment to another judge. GCR 1963, 912.3(c)(2). The assigned judge granted defendant's motion for disqualification of the trial judge, concluding that, due to the trial judge's past dealings with defendant (an attorney), "there might be some appearance of impropriety" if the judge were allowed to continue. However, the circuit judge who granted the motion found "no reason to doubt" the trial judge's statement "that he could sit on...