Illinois Cent. Gulf R. Co. v. Southern Rock, Inc.
| Decision Date | 14 May 1981 |
| Docket Number | No. 79-2162,79-2162 |
| Parties | ILLINOIS CENTRAL GULF RAILROAD COMPANY, Plaintiff-Appellee, v. SOUTHERN ROCK, INC., Defendant-Appellant. |
| Court | U.S. Court of Appeals — Fifth Circuit |
Reynolds & Mockbee, David W. Mockbee and David L. Reynolds, Jackson, Miss., for defendant-appellant.
Wise, Carter, Child, Steen & Caraway, Charles T. Ozier and Joseph P. Wise, Jackson, Miss., for plaintiff-appellee.
Appeal from the United States District Court for the Southern District of Mississippi.
Before VANCE and GARZA, Circuit Judges, and ALLGOOD *, District Judge.
Appellee Illinois Central Gulf Railroad Company brought this suit under the Interstate Commerce Act, 49 U.S.C. §§ 1 et seq. 1 to recover demurrage charges allegedly owed by appellant Southern Rock, Inc. Southern Rock counterclaimed, alleging that Illinois Central had failed to deliver railroad cars to Southern Rock on schedule and that it had suffered damages from resulting delays in construction projects. The case was tried before a jury. At the close of evidence, the district court granted Illinois Central's motion for directed verdict on both the claim and the counterclaim. We affirm as to the counterclaim but reverse and remand for a new trial on the issue of the demurrage charges.
During July and August 1976, Illinois Central shipped 394 carloads of rip rap stone consigned to Southern Rock at Oakland, Mississippi. Southern Rock unloaded the stone at Oakland and transported it from there to a construction site. Of the 394 cars, 269 came from Kentucky and were carried exclusively by Illinois Central. The other 125 cars came from Alabama and were picked up by Illinois Central at Winona, Mississippi.
Under the applicable tariff (Supplement 73 to Freight Tariff 4-J) Southern Rock had 48 hours of free time following actual or constructive placement of each car in which to unload it. The Tariff provided that after the 48 hour period, daily demurrage charges would be assessed until the cars were released. On November 19, 1976, Illinois Central sent Southern Rock a bill for demurrage of $29,390. On December 6, 1976, Southern Rock responded that it considered the demurrage charges improper, stating that the delays in unloading had resulted from improper supply, moving, and placing of cars by the railroad.
At trial, Southern Rock attempted to introduce evidence tending to show that delays in unloading the cars resulted from the railroad's negligence in supplying cars for unloading. As a result of this alleged negligence fewer cars were delivered to Southern Rock on some days than it was capable of unloading. According to Southern Rock, at least part of the demurrage stemmed from the failure to provide a steady flow of cars in the quantity ordered. It contended that such demurrage charges were improper under Rule 8-E of the Tariff. 2 Rule 8-E provides that a carrier may not collect demurrage charges resulting from the "(e)rror of any railroad named in the bill of lading contract or participating in the transportation transaction, which prevents acceptance, proper tender or delivery." The trial court, however, ruled that "error" under Rule 8-E did not encompass negligence and refused to admit evidence bearing upon possible negligence by Illinois Central.
We are cited to no cases that support this broad proposition and our research has discovered none. On the contrary, the general rule has been stated to be that a consignee is not responsible for demurrage "where the delay is the fault of the carrier or those for whom he is responsible....." Pennsylvania Railroad v. Moore-McCormack Lines, Inc., 370 F.2d 430, 432 (2d Cir. 1966). "Demurrage is part compensation and part penalty to secure the release of equipment and tracks." Illinois Central Railroad v. Texas Eastern Transmission Corp., 533 F.2d 272, 275 (5th Cir. 1976), vacated in part, 551 F.2d 943 (5th Cir. 1977). We are given no reason why Rule 8-E should be construed so as to permit carriers to exact penalty and compensation for delays in unloading that result from their own negligence. We believe instead that the term "error" as used in Rule 8-E is not a word of art and is to be read according to its plain and ordinary meaning as encompassing mistakes made negligently.
Illinois Central relies heavily on Union Pacific Railroad v. Bartlett & Co., 393 F.Supp. 1347 (W.D.Mo.1975), one of the few cases specifically interpreting Rule 8-E. Bartlett in no way suggests, however, that a railroad should be able to charge for delays resulting from its negligence. That case holds only that a shipper may not avoid demurrage charges when it fails "to prove that it had actual ability to have unloaded additional cars even if they had been placed." Id. at 1355. Bartlett thus deals with the issue of causation as do a number of decisions of the Interstate Commerce Commission cited by Illinois Central. While these cases do not speak to the question of whether "error" in Rule 8-E encompasses negligence, they strongly indicate that a carrier may not be permitted to recover demurrage incurred from its own failure to act in a reasonable manner. We find persuasive the statement of the Commission in National Trucking & Storage Co. v. Pennsylvania Railroad, 270 I.C.C. 539, 544 (1948) modified 277 I.C.C. 109 (1950), modified 283 I.C.C. 395 (1951), aff'd in part and rev'd in part, 228 F.2d 23 (D.C.Cir.1955) that
(i)n a situation such as is here present, it is the primary duty of the carrier to place cars, on which demurrage time is running, upon the consignee's siding whenever, during the ordinary and usual switching time of that area, space for such placement is available .... Obviously, defendant should not be permitted to profit through its own error.
Illinois Central argues that Southern Rock was unable to unload the cars actually delivered to it so that no demurrage resulted from any failure to supply cars on schedule. It is impossible to determine from the record to what extent pile-ups at the unloading site resulted from the alleged negligence of the railroad itself. Evidence on this point, along with any other evidence concerning Illinois Central's alleged negligence, was excluded by the trial court because of its erroneous interpretation of Rule 8-E. Similarly, because it is unclear to what extent the railroad's error produced delays in unloading, the record cannot support Southern Rock's claim that it was entitled to a directed verdict. 3
The only damages sought in Southern Rock's counterclaim were consequential damages. We think that the issue was largely resolved by our discussion of consequential damages under the Carmack Amendment 4 in Hector Martinez & Co. v. Southern Pacific Transportation Co., 606 F.2d...
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