Orscheln Bros. Truck Lines, Inc. v. Ferguson Mfg., Inc.

• Court: Missouri Court of Appeals
• Writing for the Court: GAITAN
• Citation: Orscheln Bros. Truck Lines, Inc. v. Ferguson Mfg., Inc., 793 S.W.2d 525 (Mo. App. 1990)
• Decision Date: 26 June 1990
• Docket Number: No. WD,WD
• Parties: ORSCHELN BROTHERS TRUCK LINES, INC., Barry Schermer, Trustee, Appellant, v. FERGUSON MANUFACTURING, INC., Respondent. 42343.

Page 525

793 S.W.2d 525

ORSCHELN BROTHERS TRUCK LINES, INC., Barry Schermer Trustee, Appellant, v. FERGUSON MANUFACTURING, INC., Respondent.

No. WD 42343.

Missouri Court of Appeals Western District.

June 26, 1990.

Thomas M. Pressman, Pavelko, Norman W. Pressman, St. Louis, for appellant.

Richard N. Bien, Kansas City, for respondent.

Before TURNAGE, P.J., and LOWENSTEIN and GAITAN, JJ.

GAITAN, Judge.

Orscheln Brothers Truck Lines, Inc., appeals from an order granting Ferguson Manufacturing, Inc.'s motion for summary judgment in an action brought by the carrier's bankruptcy trustee for collection of tariff undercharges. We reverse.

Appellant Orscheln Brothers Truck Lines, Inc., ("Orscheln"), a Missouri corporation and common carrier, engaged in the transportation of property in interstate commerce pursuant to the authority of the Interstate Commerce Commission ("ICC"). Between January, 1981, and August, 1983, Ferguson Manufacturing, Inc., ("Ferguson") a Missouri corporation which produced plastic goods, hired Orscheln to transport property to five different consignees. The agreements between the two corporations were memorialized through several hundred bills of lading, which conformed to the straight uniform bill of lading short form prescribed by the ICC. As such, each bill of lading was subject to the terms and conditions of the long form, including § 7, a "nonrecourse clause"; however in each case, Ferguson, as the consignor, failed to execute the clause. Handwritten on each bill of lading was the term "coll.", which Orscheln concedes, in both its amended petition and its brief on appeal, referred to "freight collect." Orscheln transported the goods for compensation commensurate under tariffs filed with the I.C.C. in accordance with the requirements of the Interstate Commerce Act, Chapter 49 U.S.C.A. (Supp.1990).

Orscheln filed a Chapter 7 Bankruptcy petition on October 19, 1983, in the United States District Court for the Eastern District of Missouri. The district court appointed Barry S. Schermer, trustee. The trustee retained Carriers Traffic Service ("CTS"), by and through its president, Charles Byes, to audit Orscheln's freight bills for the purpose of determining if bills were properly rated according to tariffs filed by Orscheln with the ICC. As a result of his audit, Byes alleged that the claimed density of materials shipped was inaccurate and that, therefore, over sixty-eight thousand dollars of undercharges had occurred on bills of lading created between Orscheln and Ferguson.

On May 2, 1985, CTS requested, by letter, reimbursement of the undercharges from each consignee who received shipment. When CTS failed to receive satisfaction from the consignees, it made demand upon Ferguson for the undercharges, citing its authority to do so under 49 U.S.C.A. § 10761 et seq. (Supp.1990). When Ferguson denied responsibility, Orscheln's trustee filed an adversarial action against Ferguson on October 2, 1985, seeking collection of the undercharges.

Both parties filed motions for summary judgment, together with supporting affidavits. After a hearing on the motions, the trial court overruled Orscheln's motion and entered summary judgment in favor of Ferguson on June 29, 1989, holding that: (1) although Ferguson failed to execute § 7 on each bill of lading, evidence that the parties agreed that the shipments were to be transported freight collect through the notation on each bill of lading, and the circumstances surrounding the course of business, established that Orscheln agreed to collect freight charges from the consignees and waived any claim against Ferguson for undercharges; (2) the bills of lading established prima facie evidence of what property was actually shipped; and (3) Orscheln was equitably estopped from collecting additional charges. Orscheln now appeals from the summary judgment entered in favor of Ferguson.

A review of summary judgment is the equivalent to a review of a court-tried or equity proceeding to determine whether the judgment is sustainable as a matter of law. Roberts Fertilizer, Inc. v. Steinmeier, 748 S.W.2d 883, 886 (Mo.App.1988); Schwartz v. Mills, 685 S.W.2d 956, 957 (Mo.App.1985). This Court must determine whether there is any genuine issue of material fact requiring trial, and whether the judgment is correct as a matter of law. Roberts Fertilizer, Inc. v. Steinmeier, 748 S.W.2d at 886; State v. Board of Election Commissioners, 686 S.W.2d 888, 892 (Mo.App.1985); Rule 74.04(c). We review the entire record in a light most favorable to the party against whom summary judgment is entered. Thompson v. Parker, 608 S.W.2d 415, 416 (Mo. banc 1980).

I.

The primary issue in this case focuses on the allocation of liability for freight charges under the terms of a uniform bill of lading as well as the Interstate Commerce Act, 49 U.S.C.A. § 10701 et seq. (Supp.1990). As this involves interstate commerce, the rights and liabilities of the parties are governed by federal statute, the bills of lading issued, and "common law rules as accepted and applied in federal tribunals." Illinois Central R. Co. v. H.B. Friedman & Co., 236 Mo.App. 946, 161 S.W.2d 440, 443 (1942); see e.g., Interstate Motor Freight System v. Wright Brok., 539 S.W.2d 764, 766 (Mo.App.1976).

Since 1919, the ICC has prescribed a Uniform Bill of Lading for use on all interstate domestic shipments of freight. See Southern Pac. Transp. Co. v. Commercial Metals, 456 U.S. 336, 342, 102 S.Ct. 1815, 1820, 72 L.Ed.2d 114 (1982). "A bill of lading serves three distinct functions: 'First a receipt for the goods; second a contract for their carriage; and third, documentary evidence of title to the goods.' " In Re Chateaugay Corp. v. David Graham Co., 78 B.R. 713, 717 (Bkrtcy.S.D.N.Y.1987), citing, In re Bills of Lading, 52 I.C.C. 671, 681 (1919). As the basic transportation contract between the shipper/consignor and carrier, its terms and conditions bind the shipper and all connecting carriers. Southern Pac. Transp. Co. v. Commercial Metals Co., 456 U.S. at 342, 102 S.Ct. at 1820; citing, Texas & Pac. R. Co. v. Leatherwood, 250 U.S. 478, 481, 39 S.Ct. 517, 518, 63 L.Ed. 1096 (1919). In order to ascertain the agreement of the contracting parties, the provisions of the contract must be reviewed. See Louisville & Nashville R.R. Co. v. Central Iron & Coal Co., 265 U.S. 59, 67, 44 S.Ct. 441, 442, 68 L.Ed. 900 (1923); In re Bills of Lading, 52 I.C.C. at 581; the terms of each provision have the force of statute. Southern Pacific Transp. Co. v. Commercial Metals Co., 456 U.S. at 343, 102 S.Ct. at 1820.

Section 7 of the Conditions of the Bill of Lading provides that the consignor remains primarily liable for the freight unless otherwise indicated on the bill. ¹ See Southern Pac. Transp. Co. v. Commercial Metals Co., 456 U.S. at 343, 102 S.Ct. at 1820. To invoke § 7, the following provision, placed on the front of the bill of lading, must be signed by the consignor.

Subject to section 7 of conditions of applicable bill of lading, if this shipment is to be delivered 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.

By executing the § 7 nonrecourse provision, "a shipper can eliminate all liability whatsoever on the shipment, if shipped collect, or may eliminate any liability for any 'balance due' billing." Wade, Hidden Liability For Freight Bills, 43 J. of Mo.Bar 175, 177 (1987); see also Atchison, Topeka & Santa Fe R.R. Co. v. C.G.F. Grain Co., 550 F.Supp. 1021, 1023 (D.Kan.1982).

In the present case, Ferguson, as the consignor, failed to sign the nonrecourse clause on the front of each bill of lading. However, the trial court, in its order for summary judgment, held that there was no genuine issue of material fact regarding the agreement of the parties that the shipments would be freight collect, as to the meaning of the term "freight collect," and that the parties' contracts, as embodied in the bills of lading, did not provide for Ferguson to be liable for freight charges. We disagree.

The United States Supreme Court in Southern Pacific Transport Co., held that the failure to execute the nonrecourse provision in the bill of lading specifically placed upon the consignor primary liability for freight charges. Southern Pac. Transp. Co., 456 U.S. at 351, 102 S.Ct. at 1824. However, in finding original liability in such situations, the Court also noted that goods could be received or transported under such circumstances as to clearly indicate an exemption. Id. at 343, 102 S.Ct. at 1820, citing, In re Bill of Lading, 52 I.C.C. at 721. Thus failure to sign the § 7 nonrecourse provision does not create mandatory liability.

Section 7 allows allocation of primary liability. As the Court in Southern Pac. Transp. Co. recognized, the consignor could absolve itself of all liability for freight charges through its agreement with the carrier. The nonrecourse clause provides a means by which such an agreement can be evidenced. There is a presumption that the consignor is primarily liable, which may be rebutted by proof, either by the bill of lading, § 7, or other evidence which clearly indicates that the parties agreed that the consignor would assume no liability for payment of freight charges. See, Flota Mercante GranColombiana v. Fla. Const. Equip., 608 F.Supp. 1515, 1524-25 (E.D.La.1985).

In the case at bar, Orscheln established a prima facie case of liability against Ferguson for freight charges by demonstrating that the § 7 provisions on the bills of lading were not signed. The burden then shifted to Ferguson to rebut this presumption. Thus this Court turns to the record to determine if the facts surrounding the business relationship between Orscheln and Ferguson clearly indicated an agreement to absolve Ferguson of primary liability.

While we concur with the trial court's determination...