Illinois Steel Co v. Baltimore Co

• Citation: 320 U.S. 508,64 S.Ct. 322,88 L.Ed. 259
• Decision Date: 03 January 1944
• Docket Number: No. 99,99
• Parties: ILLINOIS STEEL CO. v. BALTIMORE & O.R. CO
• Court: U.S. Supreme Court

320 U.S. 508

64 S.Ct. 322

88 L.Ed. 259

ILLINOIS STEEL CO.

v BALTIMORE & O.R. CO.

No. 99.

Argued Dec. 16, 1943.

Decided Jan. 3, 1944.

Mr. Paul R. Conaghan, of Chicago, Ill., for petitioner.

Mr. Francis R. Cross, of Baltimore, Md., for respondent.

Mr. Chief Justice STONE delivered the opinion of the Court.

Decision in this case turns on the proper interpretation to be given to several clauses of the uniform bill of lading approved by the Interstate Commerce Commission as authorized by §§ 1(6), 12 and 15(1) of the Interstate Commerce Act, as amended, 49 U.S.C. §§ 1(6), 12, 15(1), 49 U.S.C.A. §§ 1(6), 12, 15(1), which make it the duty of interstate rail carriers to adopt and observe the form and substance of bills of lading approved by the Commission. Matter of Bills of Lading, 52 I.C.C. 671, 685, 686; 64 I.C.C. 347, 351, 352; 64 I.C.C. 357; 66 I.C.C. 63; 167 I.C.C. 214; 172 I.C.C. 362; 245 I.C.C. 527.

Petitioner was the consignor upon through bills of lading of a number of rail shipments of sulphate of ammonia for export. The shipments were from Gary, Indiana, to Baltimore, Maryland, over the lines of connecting railroads, of which respondent was the terminal carrier. Each bill of lading¹ contained a clause, inserted by petitioner, the consignor, in conformity to instructions appearing on the bill, and providing that freight was 'to be prepaid'; and also the so-called non-recourse clause which petitioner signed and which read: 'If this shipment is to be delivered to the consignee without recourse on the consignor, the consignor shall sign the following statement: The carrier shall not make delivery of this shipment without payment of freight and all other lawful charges. (See Section 7 of conditions.)'² Petitioner at shipment paid the freight charges specified in the bills of lading, which were computed at the export freight rate. The bills of lading included a receipt for specified sums paid to the carrier 'to apply in prepayment of the charges'. The record does not disclose who was the owner of the sulphate, or what further relations existed between consignor and consignee.

The parties concede that upon delivery of the shipments at Baltimore, the consignee did not handle the sulphate as required by the provisions of the export tariff, and that the delivery or the method of handling subjected the shipments to the higher domestic freight rate. The parties have also stipulated that respondent is entitled to recover from petitioner, additional freight charges to the extent of the difference between the export rate and the higher domestic rate, unless recovery is barred by the clauses of the bills of lading to which we have referred.

Respondent brought the present suit in the Illinois Superior Court to recover the additional freight due upon the shipments. The Superior Court gave judgment for petitioner, which the Illinois Appellate Court reversed, 316 Ill.App. 516, 46 N.E.2d 144, and the Illinois Supreme Court denied leave to appeal. We granted certiorari, 320 U.S. 721, 64 S.Ct. 38, the interpretation of the uniform bill of lading in the circumstances of this case being a question of public importance.

Pursuant to Congressional authority, the Interstate Commerce Commission has prescribed uniform forms of bills of lading, including that involved in this case. Matter of Bills of Lading, supra. In promulgating them, the Commission has stated that it was doing so in the interest of uniformity and to prevent discriminations. 52 I.C.C. 671, 676, 677, 678; 64 I.C.C. 357, 363, 364. It has found that the prescribed forms are just and reasonable, 52 I.C.C. 671, 740, and that any other would be unreasonable, 64 I.C.C. 357, 360, 361, 364.

The construction of the clauses of a bill of lading, adopted by the Commission and prescribed by Congress for interstate rail shipments, presents a federal question. Georgia, Florida & Alabama Ry. Co. v. Blish Milling Co., 241 U.S. 190, 194, 195, 36 S.Ct. 541, 543, 60 L.Ed. 948; Chesapeake & Ohio Ry. Co. v. Martin, 283 U.S. 209, 212, 213, 51 S.Ct. 453, 455, 75 L.Ed. 983. Such has been the consistent ruling of this Court where the question presented concerned the conditions in bills of lading affecting the liability of the carrier such as are required by the Carmack Amendment, as amended, 49 U.S.C. § 20(11), 49 U.S.C.A. § 20(11). Georgia, Florida & Alabama Ry. Co. v. Blish Milling Co., supra; Atchison, Topeka & S.F. Ry. Co. v. Harold, 241 U.S. 371, 36 S.Ct. 665, 60 L.Ed. 1050; St. Louis, Iron Mt. & S. Ry. Co. v. Starbird, 243 U.S. 592, 37 S.Ct. 462, 61 L.Ed. 917; Gulf, Colo. & S.F. Ry. Co. v. Texas Packing Co., 244 U.S. 31, 34, 37 S.Ct. 487, 488, 61 L.Ed. 970; American Ry. Exp. Co. v. Lindenburg, 260 U.S. 584, 43 S.Ct. 206, 67 L.Ed. 414; Chesapeake & Ohio Ry. Co. v. Martin, supra; cf. Peyton v. Railway Express Agency, 316 U.S. 350, 62 S.Ct. 1171, 86 L.Ed. 1525.

Since the clauses of the uniform bill of lading govern the rights of the parties to an interstate shipment and are prescribed by Congress and the Commission in the exercise of the commerce power, they have the force of federal law and questions as to their meaning arise under the laws and Constitution of the United States. Hence we have jurisdiction to review their determination by the state courts, in a suit by the carrier to recover freight charges. Judicial Code § 237(b), 28 U.S.C. § 344(b), 28 U.S.C.A. § 344(b); Pittsburgh, Cinc., C. & St. L. Ry. Co. v. Fink, 250 U.S. 577, 581—583, 40 S.Ct. 27, 28, 63 L.Ed. 1151; New York Central & H.R.R. Co. v. York & Whitney Co., 256 U.S. 406, 408, 41 S.Ct. 509, 510, 65 L.Ed. 1016; cf. Sola Electric Co. v. Jefferson Co., 317 U.S. 173, 176, 177, 63 S.Ct. 172, 173, 174; Peyton v. Railway Express Agency, supra; Southern Ry. Co. v. Prescott, 240 U.S. 632, 639, 640, 36 S.Ct. 469, 472, 60 L.Ed. 836.

The shipments by petitioner being in interstate commerce, the rail freight rates are those stated in the tariffs filed with the Interstate Commerce Commission. They cannot be lawfully released by the carrier or altered by others who have assumed the duty to pay them. See Midstate Horticultural Co., Inc. v. Pennsylvania R.R. Co., 320 U.S. 356, 64 S.Ct. 128, decided November 22, 1943; Pittsburgh, Cinc., c. & St. L. Ry. Co. v. Fink, supra, 250 U.S 581—583, 40 S.Ct. 27, 28, 63 L.Ed. 1151. The tariffs do not prescribe who is to pay the freight charges, but subject to the prohibition against unlawful discrimination. and the limitations imposed by the uniform bill of lading, the parties to the shipment, as between themselves, are free to stipulate who shall pay them. See Louisville & N.R.R. Co. v. Central Iron Co., 265 U.S. 59, 65—67, 44 S.Ct. 441, 442, 68 L.Ed. 900.

Section 7 of the conditions of the uniform bill of lading provides that the owner or consignee shall pay the freight and all other lawful charges upon the transported property, and except in those instances where it may be lawfully authorized to do so, that no railroad carrier shall deliver or relinquish, at destination, possession of the property covered by the bill of lading until all tariff rates and charges have been paid. Cf. § 3(2) of the Interstate Commerce Act, as amended, 49 U.S.C. § 3(2), 49 U.S.C.A. § 3(2). But it further provides that 'The consignor shall be liable for the freight and all other lawful charges, except that if the consignor stipulates, by signature, in the space provided for that purpose on the face of this bill of lading that the carrier shall not make delivery without requiring payment of such charges and the carrier, contrary to such stipulation, shall make delivery without requiring such payment, the consignor (except as hereinafter provided³) shall not be liable for such charges. * * * Nothing herein shall limit the right of the carrier to require at time of shipment the prepayment or guarantee of the charges. * * *' Under these provisions, if the non-recourse clause is not signed by the consignor, he remains liable to the carrier for all lawful charges. The carrier is free to demand payment in advance by the consignor, or it may decline to make delivery to the consignee until the freight charges are paid or guaranteed, or if delivery is amde to the consignee without payment, the consignee is also liable for all freight charges. But if the non-recourse clause is signed by the consignor and no provision is made for prepayment of freight, delivery of the shipment to the consignee relieves the consignor of liability, see Louisville & N.R.R. Co. v. Central Iron Co., supra, 265 U.S. 66, note 3, 44 S.Ct. 442, 68 L.Ed. 900, and acceptance of the delivery establishes the liability of the consignee to pay all freight charges. Pittsburgh, Cinc., C. & St. L. Ry. Co. v. Fink, supra; New York Central & H.R.R. Co. v. York & Whitney Co., supra.

In the light of these long-established rules of liability the facts of the present case raise only a single question, whether the stipulation in the bills of lading for the prepayment of freight restricts the operation of the non-recourse clause so that, despite its presence in the bills of lading, recourse may be had to petitioner for charges in addition to those which it prepaid at shipment, the additional charges arising only by reason of events which occurred on or after the delivery of the shipments to the...