Mills v. Norfolk Southern R. Co

• Decision Date: 08 October 1919
• Docket Number: (No. 29.)
• Citation: 100 S.E. 341
• Court: North Carolina Supreme Court
• Parties: EDENTON COTTON MILLS. v. NORFOLK SOUTHERN R. CO.

100 S.E. 341

EDENTON COTTON MILLS.

v.NORFOLK SOUTHERN R. CO.

(No. 29.)

Supreme Court of North Carolina.

Oct. 8, 1919.

Appeal from Superior Court, Chowan County; Devin, Judge.

Action by the Edenton Cotton Mills against the Norfolk Southern Railroad Company. Judgment for plaintiff, and defendant appeals. Reversed, with directions.

The action, as it appears from the pleadings, was brought to recover certain alleged freight overcharges for goods shipped by the plaintiff over the lines of defendant and connecting carriers. It turns out that certain freight rates had been established with the sanction of the Interstate Commerce Commission, which afterwards were duly changed and increased in amount, but the parties to this action were not aware of the change at the time that the charges were made against the plaintiff. When the change of rates was discovered, the defendant demanded the difference between the rates charged and the amount received under the old tariff and those due under the tariff of rates as amended and increased by the commission. This amount, or difference, was paid by the plaintiff, and it now alleges that the defendant entered into a special agreement with it as follows:

"(1) The defendant undertook, promised, and agreed, for and on behalf of plaintiff, that it would take charge of, present, and submit the same [that is, its claim for reparation] to the said Corporation Commission in proper form and manner and in due time for adjustment and allowance, and time and again, when this plaintiff would call upon it for settlement, stated to this plaintiff that it was then attending to the matter and would have the same presented in reasonable time, which undertaking, agreement, and promise this plaintiff reasonably relied upon.

"(2) Notwithstanding the defendant's undertaking, promise, and agreement aforesaid, and notwithstanding it had assumed the duty aforesaid to this plaintiff, the defendant neglected and wrongfully failed and refused to do its duty as it had agreed to do, and in justice and right was required to do, until more than two years after the plaintiff had paid the overcharges as demanded by the defendant and had suffered the damage aforesaid, and after all right and power to consider and allow the same were by lapse of time denied the Interstate Commerce Commission under the law.

"(3) The claims and demands of the plaintiff aforesaid were, after a lapse of two years from the time the right of demand accrued, presented to the said Interstate Commerce Commission, and that commission disallowed the same solely upon the ground that, because of the delay aforesaid, it was not permitted by law to consider the same.

"(4) That but for the promise, undertaking, and assurance of the defendant, as hereinbefore set out, and but for the reliance of the plaintiff on the same, and its belief that the defendant was performing its duty as it had undertaken to do, this plaintiff would have presented and prosecuted before the Corporation Commission the claim aforesaid, to which there was no defense, and about which there was no dispute, and would have recovered the money justly due it.

"(5) That by reason of the wrongful and unlawful conduct of the defendant aforesaid, and its failure to perform its duty as hereinbefore set forth, the plaintiff has been damaged in a large sum."

There is a prayer for judgment; the amount claimed being $1,000.

The defendant answered, and denied the material allegations as to the contract. It denied that it had overcharged the plaintiff, and averred that the plaintiff had been charged at the established and promulgated rates, and further that the defendant could not, under the Interstate Commerce Act, have charged any less; that the defendant could not refund any of the sums paid, without the same being authorized under the said law.

The jury found against the defendant as to the contract and its breach, and allowed the amount of the excess over the rates promulgated July 20, 1911 (the old rates), as damages. Judgment was entered upon the verdict, and defendant appealed.

Small, MacLean, Bragaw & Rodman, of Washington, N. C, for appellant.

J. N. Pruden, of Edenton, and Ehringhaus & Small, of Elizabeth City, for appellee.

WALKER, J. [1, 2] If we concede that the evidence tends to show a contract as alleged, and not a mere gratuitous offer to lend its aid and assistance in obtaining a refund of the difference between the two rates, as paid by the plaintiff, and also that the contract, if made as alleged by the plaintiff, was founded upon a sufficient consideration, our opinion is that the plaintiff cannot recover, as the contract is illegal; it being contrary to the provisions of the law against rebating or giving undue preferences, privileges, or concessions, which is made a misdemeanor by the Interstate Commerce Act, both as to persons and corporations participating in the unlawful act. U. S. Compiled Statutes (1916) Annotated, vol. 8, title "Interstate and Foreign Commerce, " §§ 8569 and 8574, and notes, where many authorities are collected. The language of the act of Congress Is very stringent in regard to the duty of the shipper to pay and of the carrier to collect the schedule rates on all shipments of freight. The cases cited in notes to the sections of the Compiled Statutes show conclusively that the agreement for a shipment at a rate less than that prescribed cannot be recognized by the courts, and it makes no difference whether the rate has been misquoted to the shipper and received by the agent of the carrier by the mere mistake or the negligence of the latter. The only rate is the true rate, as authorized by the commission. It was held in T. & R. Ry. Co. v. Mugg, 202 U. S. 242, 26 Sup. Ct 628, 50 L. Ed. p. 1011, that where a carrier has negligently made and quoted to a shipper rates on interstate shipments of coal, upon which he has relied in contracting for the coal, selling at prices based on such rates, which were lower than the rates which had been duly published, printed, and posted as required by the Interstate Commerce Act, and the carrier, as required by the act, collects the prescribed rates, the shipper cannot recover against the carrier for damages occasioned by its misrepresentation of the rates. To the same effect are Alabama Lumber & Exp. Co. v. Philadelphia, B. & W. R. Co., 19 Interst. Com. R. 295, and Texas & P. R. Co. v. Leslie, 62 Tex. Civ. App. 380, 131 S. W. 824, motion for rehearing overruled 62 Tex. Civ. App. 380, 131 S. W. 827. See, also, 111., etc., R. Co. v. Henderson Elevator Co., 226 U. S. 441, 33 Sup. Ct. 176, 57 L. Ed. 290; Va. Caro. Peanut Co. v. Railroad Co., 166 N. C. 62, 82 S. E. 1. The following cases are to the same effect, as will appear by statement of the substance of each decision:

"Acceptance by railroad of charge less than rate filed by mistake, not discovered till after consignee's settlement with his principal, held not to create waiver or estoppel, precluding recovery of balance from consignee." Penn. R. Co. v. Titus, 216 N. Y. 17, 109 N. E. S57, L. R. A. 1916E, 1127, Ann. Cas. 1917C, 862.

"A person dealing with a carrier is as effectually bound by the law and the orders of the Commerce Commission, as to both freight and passenger tariffs, as is carrier itself, and neither is estopped to assert the illegality of contract made in violation of the act and orders of the commission." Melody v. Great Northern Ry. Co., 25 S. D. 606, 127 N. W. 543, 30 L. R. A. (N. S.) 568, Ann. Cas. 1912C, 727.

The same was held In B. & O., etc., Rwy. Co. v. N. A. Box & Basket Co., 48 Ind. App. 647, 94 N. E. 906, 96 N. E. 28; La. Rwy. & Nav. Co. v. Holly, 127 La. 615, 53 South. 882; N. Y., etc., R. Co. v. York & W. Co., 215 Mass. 36, 102 N. E. 366.

An agreement of a carrier to refund a part of the rates lawfully charged and collected is in violation of the Act and unenforceable. L. & R. Co. v. Coquillard Wagon Works, 147 Ky. 530, 144 S. W. 1080. Carrier cannot, directly or indirectly, contract for a rate different from that specified in its schedules. St. Louis, etc., R. Co. v. S. R. Stone Co., 169 Mo. App. 109, 154 S. W. 465. A suit by a shipper for a loss of goods on a policy of insurance issued to the carrier, after receipt of the limited value fixed on such goods by the carrier's schedules and bills of lading, was held to be in violation of the act of Congress, amended by Act June 29, 1906, c. 3591, 34 Stat. 586, as seeking or soliciting a rebate or concession, and rot maintainable. Duplan Silk Co. v. Am. & For. Marine Ins. Co., 205 Fed. 724, 124 C. C. A. 18. A carrier may recover from a shipper, who has paid the legal rate, a refund made to the shipper by carrier's agent, either by mistake of carrier or through agent's illegal act. Cent. of Ga. R. Co. v. Curtis, 14 Ga. App. 716, 82 S. E. 318; L. & N. R. Co. v. Allen, 152 Ky. 145, 153 S. W. 198 (s. c. reaffirmed, 152 Ky. 837, 154 S. W. 371); Ga. R. Co. v. Creety, 5 Ga. App. 424, 63 S. E. 528; Schenberger v. Union Pac. R. Co., 84 Kan. 79, 113 Pac. 433, 33 L. R. A. (N. S.) 391.

It all comes to this: That the carrier is bound to collect and the shipper to pay the published rates, even though the agent of the carrier has by his conduct caused the shipper to pay a lower rate to his prejudice in fixing the price of his goods, or in any other way. La. R. & N. Co. v. Holly, 127 La. 615, 53 South. 882; Baldwin S. & L. Co. v. Columbia S. R. Co., 58 Or. 285, 114 Pac. 469; So. Pac. Co. v. Frye & Bruhn, 82 Wash. 9, 143 Pac. 163; Hamlen v. 111. Cent. R. Co. (D. C.) 212 Fed. 324. Ignorance of shipper as to the correct rates will not excuse him, and he should not rely on representations of carrier or his agent as to them. St. L., etc., R. Co. v. Faulkner, 111 Ark. 430, 164 S. W. 763; Wyrick v. Mo., etc., R. Co., 74 Mo. App. 406; Baldwin S. & L. Co. v. Columbia S. R. Co., supra. Those cases show how strictly the courts have required carriers and shippers to live up to the letter of the law enacted by Congr...