Missouri Pacific Railroad Co. v. National Milling Co.

• Decision Date: 27 November 1967
• Docket Number: Civ. A. No. 580-67.
• Citation: 276 F. Supp. 367
• Parties: MISSOURI PACIFIC RAILROAD COMPANY, Plaintiff, v. NATIONAL MILLING COMPANY, Inc., Defendant.
• Court: U.S. District Court — District of New Jersey

276 F. Supp. 367

MISSOURI PACIFIC RAILROAD COMPANY, Plaintiff, v. NATIONAL MILLING COMPANY, Inc., Defendant.

Civ. A. No. 580-67.

United States District Court D. New Jersey.

November 27, 1967.

Starr, Summerill & Davis, by S. Lewis Davis, and William C. Davis, Camden, N. J., for plaintiff.

Samuel Kalikman, Camden, N. J., Blank, Rudenko, Klaus & Rome, Philadelphia, Pa., of counsel, for defendant.

OPINION

COHEN, District Judge:

The sole question here is whether a common carrier, under the Interstate Commerce Act,¹ is entitled to recover freight charges on an interstate shipment of goods, where the carrier issued a uniform straight bill of lading which it itself marked "freight prepaid," and when in reliance thereon, the consignee accepted delivery and paid the purchase price and full freight charge to the consignor who never remitted to the carrier; do these circumstances require double payment by the consignee?

Plaintiff-carrier, Missouri Pacific Railroad Company, a Missouri corporation, in 1964 delivered four carloads of hardwood flooring from Arkansas to defendant, National Milling Company, Inc., a New Jersey corporation, at Merchantville, New Jersey, for which it demands payment from the defendant of $2,992.61 for its freight charges, plus interest.

Defendant's answer admits receipt of the merchandise, but states that it had paid its consignor, Ozark Lumber Industries, Inc., of Clarksville, Arkansas, in full for both the purchase price of the lumber and the freight charges, as its arrangement with its consignor called for prepaid freight, and the notations on the uniform straight bill of lading issued by the plaintiff-carrier stated that the freight had been prepaid by Ozark.

The matter is presently before the Court on plaintiff's motion for judgment on the pleadings pursuant to Rule 12(c), F.R.Civ.P., and its companion motion to strike defendant's written interrogatories pursuant to Rule 33, F.R.Civ.P. Plaintiff supports its motion for judgment with an affidavit by E. C. Kerschen, its Regional Manager, of St. Louis, Missouri, which recites the pertinent facts and states that repeated demands for payment from both Ozark, the consignor, and defendant, National Milling, the consignee, have been ignored. Defendant filed a counter-affidavit setting up payment in full and cross moved for an order permitting it to amend its answer to set forth an affirmative defense of estoppel.

Considering, in reverse order, the defendant's motion to amend its answer to raise the defense of estoppel on the ground of payment in full to the consignor on a bill of lading marked prepaid by the plaintiff, that motion hereby is granted; and the answer will be considered so amended in order to close the pleadings so that present disposition of plaintiff's motion for a judgment on the pleadings can be made on the merits of this litigation. Rule 15, F.R.Civ.P.; 3 Moore's Fed.Pract. § 15.02 p. 813; Barron & Holtzoff, 1A Fed.Pract. & Proced. § 358, pp. 395-396. An order to this effect shall be submitted as hereinafter provided.

The matter is presented on the pleadings, the undisputed facts contained in the affidavits, and upon the briefs and oral arguments of counsel.

After futile demands for payment from Ozark, the consignor, the plaintiff-carrier made demand upon the defendant-consignee on April 13, 1966, some seventeen months after the last delivery for which defendant had paid Ozark, at which time the plaintiff advised the defendant that the consignor was in financial difficulty and could not, or would not, pay. The defendant-consignee, claiming it had paid Ozark as required by the bill of lading prepared by the plaintiff and in accordance with its agreement with Ozark previous to shipment, refused to pay a second time. The plaintiff filed suit on May 31, 1967, approximately a year later.

Plaintiff's argument for judgment in its favor is substantially that under the Interstate Commerce Act, supra, and in particular section 6, par. (7),² its right to collect payment in full for its freight charges is absolute and that the obligation of a consignee who accepts delivery of the goods brought to him by the common carrier to make payment is equally absolute. Plaintiff contends further that it is not only the right of a carrier, but also its statutory duty under the Act, and in furtherance of the public interest, to collect from any person legally liable thereafter, be it consignor or consignee, and that, hence, its conduct, intention or mistake, or any combination of those factors, constitutes no defense to its action for recovery of its lawful, published, statutory tariff rates. Plaintiff cites National Carloading Corp. v. A. T. & S. F., 150 F.2d 210 (9 Cir. 1945) and Bernstein Bros., etc. v. Den. & R. G. W. R. Co., 193 F.2d 441, 444 (10 Cir. 1951), as authority for requiring it to collect the full lawful tariff rate under the Act. In seeking to impose an absolute obligation upon the consignee to pay the carrier, plaintiff also relies upon Duncan v. United Steel Co., 244 F. 258 (D.C.Ohio, 1917), Pittsburgh, Cincinnati, Chicago & St. Louis R. Co. v. Fink, 250 U.S. 577, 40 S.Ct. 27, 63 L.Ed. 1151 (1919), and contends that neither mistake by the carrier in marking the freight charges as prepaid, Great Northern Railway Co. v. Hyder, 279 F. 783 (D.C.D.C.1922), nor collusion between a shipper and a railroad agent, F. Burkhart Mfg. Co. v. Fort Worth & D. C. Railway Co., 149 F.2d 909 (8 Cir. 1945), can defeat the carrier's absolute right to collect proper freight charges. Plaintiff concedes that requiring the consignee to pay twice in the present case would be a hardship and that the law might be harsh in a particular case, Fink, supra, but urges that under the statute and in the public interest, it has no choice other than to legally compel payment to it, regardless of whether it results in double payment or not by the consignee, so long as the carrier is in fact properly paid once in full.

Defendant maintains that, inasmuch as the plaintiff itself marked the bills of lading as "freight prepaid," it, the defendant, in reliance thereon, accepted the goods and paid the consignor in full, including proper freight charges, and that consequently the equity of the matter lies with it, thus foreclosing double payment. Defendant cites Davis v. Akron Feed & Milling Co., 296 F. 675 (6 Cir. 1924), and Southern Pacific Co. v. Valley Frosted Foods Co., 178 Pa.Super. 217, (1955), 116 A.2d 70.

The issue is not without difficulty. Does statutory construction sustain the plaintiff's claim so as to interdict considerations of common law equity? Our answer is that it does not. For the plaintiff's position is that, while the law is harsh, nevertheless, it must bring this action whether it wants to or not, because it is compelled by public policy to do so under the Act which forbids the granting of preferences in tariff rate treatment in any guise. We disagree. As was stated in Southern Pacific Company v. Valley Frosted Foods Co., supra, at page 71 of 116 A.2d:

"Any time a litigant appears before this or any other Court with such a proposition, they must be absolutely certain of two things. First, that there is a binding precedent which inhibits the Court from examining the equities of the case, and second, that the overpowering public policy requiring the strict application of the law is actually involved in the case."

The public policy underlying the Act seems clear, the express purpose of which is to prevent preferences in tariff rates. Boston & M. R. Co. v. Hooker, 233 U.S. 97, 110-113, 34 S.Ct. 526, 58 L.Ed. 868 (1914). To enforce compliance with the statutory prohibition against discriminatory freight charges by an interstate common carrier, the statute imposes upon the carrier both the right and the duty to collect the full, scheduled, published tariff charges for freight delivered, regardless of any error in the statement of charge by such carrier. F. Burkhart Mfg. Co. v. Fort Worth & D. C. R. Co., 149 F.2d 909 (8 Cir. 1945); Louisville & N. R. Co. v. Maxwell, 237 U.S. 94, 35 S.Ct. 494, 59 L.Ed. 853, 855 (1915); Southern Pacific Co. v. Wheaton Brass Works, 5 N.J. 594, 599, 76 A.2d 890 (1950). The theme of those cases is that where there has been a deviation from the legal tariff rate, such as an undercharge or no payment by anyone at all among those engaged in the triangular transportation arrangement, then the public policy underlying the Act which imposes full freight charge is unrelenting. This is so, even where the charge is represented to have been prepaid in full, either by the carrier or shipping consignor, if in fact the legal tariff has not been charged. See Annotation, 88 A.L.R.2d § 3, p. 1378 et seq. Aside from any defense which a consignee may have as against his consignor in such instances, Louisville & N. R. Co. v. Central Iron and Coal Co., Infra, the doctrine of estoppel as against an interstate common carrier for an incorrect charge is no defense against enforcement of the balance of the published legal tariff. For, as was said by Chief Justice Stone in Scott Paper Co. v. Marcalus Mfg. Co., 326 U.S. 249, at page 257, 66 S.Ct. 101, 105, 90 L.Ed. 47 (1945).

"For no more than private contract can estoppel be the means of successfully avoiding the requirements of legislation enacted for the protection of a public interest."³

The authorities relied upon by the plaintiff do not sufficiently simulate our facts. The Fink case, supra, of course, is the classic authority for imposing absolute liability for full payment of a lawful freight charge, where there has been an underpayment, in order to avoid a preference, and this includes a consignee. This rule has been followed in a number of cases by both federal and state courts; Louisville & N. R. Co. v. Central Iron and Coal Co., 265 U.S. 59, 44 S.Ct. 441, 68 L.Ed. 900 (1924); Illinois Steel Co. v. Baltimore & Ohio R. Co., 320 U.S. 508, 64 S.Ct. 322, 88 L.Ed. 259 (1944); Chicago, R....