Marks Manufacturing Co. v. New York Central R. Co.

• Decision Date: 31 August 1971
• Docket Number: No. 20995.,20995.
• Citation: 448 F.2d 68
• Parties: MARKS MANUFACTURING COMPANY, Plaintiff-Appellant, v. NEW YORK CENTRAL RAILROAD CO., a Delaware Corporation, et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Sixth Circuit

448 F.2d 68 (1971)

MARKS MANUFACTURING COMPANY, Plaintiff-Appellant, v. NEW YORK CENTRAL RAILROAD CO., a Delaware Corporation, et al., Defendants-Appellees.

No. 20995.

United States Court of Appeals, Sixth Circuit.

August 31, 1971.

Harold M. Shapero, Detroit, Mich., (Harold M. Shapero, for Shapero, Shapero & Cohn, Detroit, Mich., on the brief), for appellant.

Frederic L. Wyckoff, Detroit, Mich., for appellees.

Before CELEBREZZE, PECK and McCREE, Circuit Judges.

CELEBREZZE, Circuit Judge.

This is an appeal from a judgment of the United States District Court, Eastern District of Michigan, in a case involving a claim for damaged cargo lodged by the Marks Manufacturing Company (hereinafter, the Appellant) against the New York Central Railroad Company and its successors, (hereinafter sometimes referred to as the Appellees).

The following facts were either found by the trial court and supported by the underlying record or are substantially undisputed between the parties. In November, 1967, the Appellant agreed to purchase from Stainless Steel, Inc., a quantity of coiled stainless steel for a total price of $40,999.78 (including freight, F.O.B. seller's plant). On December 15, 1967, the seller executed two bills of lading. The first was directed to the Appellees and instructed them to pick up a railroad freight car provided to Appellant by The Chesapeake and Ohio Railway Company (hereinafter, C & O) containing steel cargo at the seller's sidetrack and to deliver said car some six or seven miles across town at the yards of the C & O Railroad. The second bill of lading directed the C & O Railroad to haul the steel cargo in interstate transportation via a connecting carrier, the Illinois Central Railroad, to Marks, Mississippi, where the Appellant's factory was located.

In railroad parlance, the first bill of lading covered an intrastate "switching operation" by the Appellees which was usually completed within two days; and the second bill of lading covered the entire interstate haul which normally required approximately two weeks to complete. The C & O Railroad, being the primary carrier of the proposed interstate haul, was to have paid the Appellees.

Pursuant to the first bill of lading, the Appellees picked up a fully loaded freight car at the seller's plant in Detroit, Michigan. There was credible evidence by several employees of the seller that the freight car was properly loaded with approximately 85,000 pounds of coiled stainless steel in good condition, and that such loading was done in precisely the same manner as the seller had done on numerous prior occasions where the same type of steel goods and freight car had travelled to the same ultimate destination without suffering any damage. The Appellees' factual contention that the seller failed to properly load the steel cargo in good condition was rejected by the trial court.

On December 16, 1967, Appellees transported the freight car to their yards where it was "humped" to a hold track. Four days later, the freight car was humped to another track in Appellees' yard indicating it was to be switched to the C & O's yards. Humping is a method of moving cars about a freight yard by the use of gravity; a car or line of cars is brought to a high point in the railroad yard and then humped over the high point where the force of gravity races the cars to their parking tracks. Depending upon the number of cars in a cut, either track retarders or the car's own braking system may be used to slow down the humped cars. There is no evidence in the record as to whether the Appellees used track retarders or the freight car's air brakes in slowing the freight car's run during the Appellees' humping procedures. (See transcript at 206-08).

On December 20, 1967, the Appellees "evidently discovered the freight car was * * * in bad order due to a broken train line which controls the freight car's air brakes and was sent to the Repair Track." On January 1, 1968, the freight car was cleared from the repair track. The car was shuttled around the Appellees' yard and finally delivered to the C & O's yards at 2:00 p. m. on January 6, 1968.

On January 10, 1968 at 2:30 a. m., the C & O Railroad returned the freight car to the Appellees' yard with an order to return it to the shipper. The C & O did not pay the Appellees for "switching" the freight car to its tracks and did not pay or intend to pay the Appellees for returning the freight car to the shipper.

On January 11th, the Appellees contacted the seller-shipper, Stainless Steel, Inc., who inspected the contents of the car and found them to be scattered about the freight car, broken away from their originally harnessed position, and significantly damaged. Stainless Steel refused to accept the returned damaged steel cargo.

The Appellees, without notice to the Appellant, who was the consignee of the shipment, "reconditioned" the damaged steel cargo, the cost of which they bore themselves, and tendered the "reconditioned" cargo to a representative of the Appellant in Detroit, Michigan. The Appellant refused to accept the goods on the grounds that it believed the goods to be damaged. The Appellant offered to take the goods subject to a claim for damages, if any; offered to purchase them from the Appellees "as is" at a reduced price ($26,281.49 in February, 1968, and $20,346.96 in June, 1968); and, in the alternative, urged the Appellees to sell the goods at public auction, time being of the essence. There is evidence in the record that the goods' prime use was on certain automobile models whose production would be halted within a period of months. The Appellees repeatedly made conditional and perhaps at least one unconditional tender of the reconditioned steel goods to both the shipper and the Appellant. At no time did the Appellees request that either party pay the cost of reconditioning the steel goods. The tenders were rejected.

The Appellees placed the steel goods in a warehouse in its own account, and despite repeated urging to sell the goods promptly, sold the goods in September, 1969, for $13,450.00. The Appellees retained the proceeds of the sale of the abandoned cargo.

At trial, the Appellant relied on several alternative theories of liability, each of which the District Court rejected. The District Court held that Appellees' delay in switching the freight car to the C & O's yard was reasonable under the circumstances of a broken train line and did not constitute a deviation from the contractual agreement of the bill of lading issued by Appellees. Further, the District Court found that one of the state statutes relied upon by Appellant had been repealed by implication, M.C. L.A. 462.7(e) (adopted in 1909) repealed by M.C.L.A. 440.7302 (adopted in 1964), and that the two other statutes relied upon by Appellant, "the Carmack Amendment," 49 U.S.C. § 20(1) (1964) and "Article 7, Section 302 of the Uniform Commercial Code," M.C.L.A. 440.7302, were inapplicable because the Appellees were not an "initial carrier" issuing a "through bill of lading," but merely a carrier involved in an intrastate switching operation. See United States v. Mississippi Valley Barge Line Co., 285 F.2d 381, 393-394 (8th Cir. 1960).

Finally, the District Court held that the applicable theory of liability was that of the common law; and that under the facts of this case, the Appellant had failed to prove that the damage to its goods occurred while Appellees were carrying the goods over their own line, rather than during the three and one-half day period during which the C & O Railroad was in possession of the Appellant's cargo of steel. Accordingly, the District Court ordered that the Appellant's claims be dismissed and that the Appellees "turn over to the * * * Appellant the proceeds of the sale of the abandoned cargo less the cost of reconditioning."

On appeal, Appellant raises three issues. The first issue concerns the applicability of certain Michigan statutory provisions to the liability of the Appellees. For the reasons stated in the opinion of the District Court, we hold — as did the District Court — that the appropriate law under which to determine the liability of the Appellees is the common law.

The second issue raised by the Appellant is that the District Court failed to apply the appropriate common law principles of carrier liability to the evidence in the record. We agree.

The generally accepted common law rule governing carrier liability is that:

"* * * A carrier, though not an absolute insurer, is liable for damages to goods transported by it unless it can show that the damage was caused by `(a) the act of God; (b) the public enemy; (c) the act of the shipper himself; (d) public authority; (e) or the inherent vice or nature of the goods.\'" Missouri P. R. Co. v. Elmore & Stahl, 377 U.S. 134, 137, 84 S.Ct. 1142, 12 L.Ed.2d 194 (1964).

See Secretary of Agriculture v. United States, 350 U.S. 162, 165-166, 76 S.Ct. 244, 100 L.Ed. 173 (footnote 9) (1956); Chesapeake & Ohio Ry. Co. v. Thompson Mfg. Co., 270 U.S. 416, 421, 46 S.Ct. 318, 70 L.Ed. 659 (1926); Adams Express v. Croninger, 226 U.S. 491, 509, 33 S.Ct. 148, 57 L.Ed. 314 (1913). The common law establishes a prima facie case of carrier liability when the complaining party can show "delivery to the carrier in good condition, arrival in damaged condition, and the amount of damages. Thereupon, the burden of proof is upon the carrier to show both that it was free from negligence and that the damage to the cargo was due to one of the excepted causes relieving the carrier of liability." Missouri P. R. Co. v. Elmore & Stahl, supra 377 U.S. at 138, 84 S.Ct. at 1145. See Schnell v. The Vallescura, 293 U.S. 296, 303-304, 55 S.Ct. 194, 79 L.Ed. 373 (1934); The Folmina, 212 U.S. 354, 361, 363, 29 S.Ct. 363, 53 L.Ed. 546 (1909); Hall & Long v. Nashville & C. Railroad Companies, 13 Wall 367, 372, 20 L.Ed. 594 (1871).

The above common law rules place a heavy burden of persuasion on a...