Missouri Pacific Railroad Co. v. National Milling Co.

• Decision Date: 03 April 1969
• Docket Number: No. 17134.,17134.
• Citation: 409 F.2d 882
• Parties: MISSOURI PACIFIC RAILROAD COMPANY, Appellant, v. NATIONAL MILLING COMPANY, Inc.
• Court: U.S. Court of Appeals — Third Circuit

409 F.2d 882 (1969)

MISSOURI PACIFIC RAILROAD COMPANY, Appellant, v. NATIONAL MILLING COMPANY, Inc.

No. 17134.

United States Court of Appeals Third Circuit.

Argued October 11, 1968.

Decided April 3, 1969.

Rehearing Denied May 9, 1969.

John P. Mason, Dechert, Price & Rhoads, Philadelphia, Pa. (Mark M. Hennelly and R. W. Yost, St. Louis, Mo., on the brief), for appellant.

Edwin P. Rome, Blank, Rudenko, Klaus & Rome, Philadelphia, Pa. (Samuel Kalikman, Leonard Dubin, Philadelphia, Pa., on the brief), for appellee.

Before McLAUGHLIN, STALEY and VAN DUSEN, Circuit Judges.

OPINION OF THE COURT

PER CURIAM.

Appellee, a New Jersey corporation, purchased four carloads of hardwood flooring from an Arkansas consignor to be delivered to it in New Jersey. The plaintiff carrier specifically assumes in this court that it acknowledged on the straight bill of lading for the flooring that the full amount of freight charges had been paid by the shipper when in fact the shipper had not paid said charges. Appellant further assumes that relying on that notation appellee paid the freight charges. Even so says the plaintiff appellant carrier "Under the law, the consignee is still liable to the carrier for the freight charges." On that theory it brought this suit for said freight charges.

The entire asserted foundation of the action is the Interstate Commerce Act, 49 U.S.C.A. § 6(7) which provides that a carrier charging in accordance with tariffs filed and in effect, cannot charge greater or less and cannot refund or remit any portion of said charges. Great stress is also laid on a 1927 amendment to the Act (Section 3(2)) which states "No carrier by railroad * * * shall deliver or relinquish possession at destination of any freight or express shipment transported by it until all tariff rates and charges have been paid, except under such rules and regulations as the Commission may from time to time prescribe to govern the settlement of all such rates and charges and to prevent unjust discrimination * * *." Appellant also cites Section 7 of the Uniform Bill of Lading which states "The owner or consignee shall pay the freight and average, if any, and all other lawful charges accruing on said property; * * *."

Appellant follows with the statement "A private consignee's established liability may not be overcome by equitable considerations." For this the landmark decision of Pittsburgh C. C. & St. L. Railway Co. v. Fink, 250 U.S. 577, 40 S.Ct. 27, 63 L.Ed. 1151 (1919) is presented. That case is of no help whatsoever as to our problem. There the carrier asked for and received a freight charge of $15. The correct charge was $30 and the carrier later sought to collect the $15 balance. The Court held that the carrier could not be estopped from collecting the legal rate. The undisputed situation before us is that, because of the carrier's express statement on the bill of lading that the freight had been prepaid, appellee in paying for the merchandise, reimbursed as it thought, the consignor for the amount of the freight charge which the carrier by its statement had notified the consignee and all concerned that consignor had paid. The other opinion heavily relied upon by appellant is United States v. Western Pacific R.R., 352 U.S. 59, 77 S.Ct. 161, 1 L.Ed.2d 126 (1956). This is stated to be exactly like Fink except that the consignee was the Government. The holding is that the Government under certain conditions was not estopped from showing that the shipment involved should have been carried at a lower rate. Again there is no quarrel with the law outlined but it has no relevance to this appeal.

Appellant therefore concludes that the Act in the instant situation will be complied with only when the consignee pays the carrier. It quarrels with the holding of the District Court that appellee "has discharged in full measure its obligations to pay its debt as required by law." Appellant says "However, the consignee had two legal obligations, one to the shipper under its contract with him, and the other to the carrier by operation of law upon acceptance of the shipment." What the carrier really did was to deliberately and affirmatively mark the shipment prepaid on the bill of lading. By so doing it in effect directed the consignee to reimburse the shipper for the freight the latter had prepaid. As a result, the consignee in paying its bill to the consignor included the freight charges solely because the carrier had formally notified it that these had been prepaid by the consignor. There is no contention by appellant that appellee could at this time obtain reimbursement of the freight charges from consignor company which is apparently insolvent.

The litigation was before the district court initially on the carrier's motion for judgment on the pleadings. From the record the carrier's only reason for bringing the suit was that the railroad had been unable to collect the freight charges from the shipper who was, according to plaintiff, in financial difficulty. Plaintiff's motion was supported by an affidavit from one of its regional managers who did not mention a word about his railroad having marked the shipment prepaid. Defendant filed a counter affidavit stating it had paid the freight bill and asking for permission to add the affirmative defense of estoppel to its answer. We find that said motion was rightly allowed by the trial judge.

The district court heard the merits of the case on the pleadings, the undisputed facts in the affidavits, briefs and oral argument. Plaintiff's position was the same as now. It asserted it had not been paid for carrying the particular freight, that it was unable to obtain the payment from consignor, therefore consignee must pay. It here continues that line of argument. It cites Boston & Maine RR. Co. v. Hooker, 233 U.S. 97, 34 S.Ct. 526, 58 L.Ed. 868 (1914) where the proper freight charges had to be paid regardless of error in the statement of charge by the carrier. It alludes to other instances where there has been a deviation from the published rate. Illinois Steel Co. v. B. & O. RR. Co., 320 U.S. 508, 513, 64 S.Ct. 322, 88 L.Ed. 259 (1944) is said to state the governing principles for this appeal. The holding there is that "If the non-recourse clause is not signed by the consignor, he remains liable to the carrier for all lawful charges. * * * if delivery is made 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 made for the prepayment of freight, delivery of the shipment to the consignee relieves the consignor of liability, * * * and acceptance of the delivery establishes the liability of the consignee to pay all freight charges." In this appeal the consignor did not sign the no-recourse clause and plaintiff carrier had disposed of any possible doubt regarding the prepayment of the freight by stamping the straight bill of lading "prepaid". On that express representation and with unchallenged good faith, appellee, in paying the shipper for its merchandise, performed the balance of its purchase agreement by including the amount of the freight charges. Appellant asserts it is suing as a trustee for the protection of the public and contends that under Great Northern Ry. Co. v. Hyder, 279 F. 783, 786 (W.D.Wash.1922) it is not estopped from collecting the freight charge from appellee. In that opinion the expressly stated reason for the holding that the carrier there was not estopped was, "because it did no act and made no representation on which the consignee relied, and when the consignee accepted the goods, it deprived the public of that lien." In this suit as noted the railroad by its acts and representations advised appellee that its consignor had prepaid the freight thus pointing out that appellee in accordance with its agreement with the shipper should reimburse the latter for the freight charges it had paid.

We find no authentic public policy problem involved in this dispute. The little decisional law there is dealing with our situation supports that view. Davis v. Akron Feed & Milling Co., 296 F. 675, 677 (6 Cir. 1924); So. Pacific Co. v. Valley Frosted Foods Co., 178 Pa.Super. 217, 219, 116 A.2d 70 (1955). Appellant argues that this opinion was impliedly overruled in Acme Fast Freight, Inc. v. Heffler, 197 Pa.Super. 633, 180 A. 2d 110 (1962). We find no justification for that conclusion. The vital factual differentiation is that there is nothing in Acme to suggest that the bill of lading there was marked "prepaid" or that the consignee would be forced to pay again after so doing. See also Griffin Grocery Co. v. Pennsylvania RR. Co., 93 Ga.App. 546, 92 S.E.2d 254, 256 (1956).

This brings us to appellant's final point, "even if the defense of estoppel has been appropriately pleaded defendant still must prove that defense at a trial on the merits." Our United States v. Blumenthal, 3 Cir., 315 F.2d 351, 352-353 is named as upholding this view in the circumstances before us. We said there "In considering such a motion by the plaintiff for judgment on the pleadings, the question for judgment determination is whether on the undenied facts alleged in the complaint and assuming as true all the material allegations of fact in the answer, the plaintiff is entitled to judgment as a matter of law." In this appeal we must agree with the trial judge that in the district court "The matter is presented on the pleadings, the undisputed facts contained in the affidavits and upon the briefs and oral arguments of counsel." The court decided the issue on the pleadings themselves since "The affidavits of the parties raise no new matters outside of the pleadings, but merely particularize them * *." And the court said "No genuine issue of material fact being presented, but only a question of law upon the merits, a judgment will be entered on the pleadings, as amended in favor of the defendant." We are...