Pennsylvania R. Co. v. Huston

• Decision Date: 05 February 1936
• Docket Number: No. 6868.,6868.
• Citation: 81 F.2d 704
• Parties: PENNSYLVANIA R. CO. et al. v. HUSTON.
• Court: U.S. Court of Appeals — Sixth Circuit

81 F.2d 704 (1936)

PENNSYLVANIA R. CO. et al. v. HUSTON.

No. 6868.

Circuit Court of Appeals, Sixth Circuit.

February 5, 1936.

Lawrence D. Stanley, of Columbus, Ohio (Sherman B. Randall and Henderson, Burr, Randall & Porter, all of Columbus, Ohio, on the brief), for appellants.

Thos. H. Clark, of Columbus, Ohio, for appellee.

Before MOORMAN, SIMONS, and ALLEN, Circuit Judges.

SIMONS, Circuit Judge.

The controversy revolves about the validity and assignability of contracts between railroads and a storage and transfer company for the handling by the latter of the former's unclaimed package freight. The suit below was by the assignee of the storage company against the lessee of the contracting railroads, and the questions here presented were preserved for review by a motion for directed verdict on behalf of the defendants. It is the denial of the motion, with the resulting verdict for the plaintiff, that is the principal error assigned.

In 1904 the Buckeye Transfer & Storage Company, a Maine corporation, entered into two contracts, one with the Cleveland, Akron & Columbus Railway Company, and the other with the Pittsburgh, Cincinnati, Chicago & St. Louis Railroad Company, whereby it agreed to call for unclaimed package freight at each of the roads, to remove such freight to its storage warehouse, to pay to the railroad all of the charges on such freight, to hold it in storage, and to deliver it to the consignee, shipper, or owner entitled to receive it upon proper evidence of ownership, with authority to sell all property remaining uncalled for at public auction according to law, and relieving the railroad from any liability for loss or injury to the property. The railroads agreed to deliver all such freight upon payment of charges free from any lien or claim on their part, either upon the property or the proceeds thereafter collected or realized by sale. The two contracts were substantially identical, and each contained a provision that it might be terminated by either party thereto upon six months' written notice to the other party.

In November, 1905, the Buckeye Transfer & Storage Company sold all of its assets to Buckeye Transfer & Storage Company, an Ohio corporation. In 1921, the appellee, Huston, acquired all the stock of the Ohio company, dissolved the corporation, surrendered its charter, and took over its property and business, which thereafter he operated individually. There was no specific assignment of the contracts here involved from the Ohio corporation to Huston. On March 26, 1921, the Pennsylvania Railroad Company leased all of the lines of the two contracting railroads, and by its lease it may be assumed for purposes of decision, though the point is in controversy, that it assumed all of their obligations and liabilities. The Pennsylvania permitted Huston to take care of its unclaimed freight until the end of May, 1922, when it made other arrangements, but failed to give notice to Huston of the termination of the contracts as therein provided. It is undisputed that the Pennsylvania had no knowledge of the fact that the Maine corporation had sold its assets to the Ohio corporation, or that Huston had acquired the latter's business until the time when it made the new arrangement for its unclaimed freight. The suit was for lost profits for the six months' period beginning June, 1922, and the judgment from which the appeal is taken was for the plaintiff.

The first defense to the plaintiff's action was on the ground that the contracts were not legal or enforceable because lacking in definiteness and mutuality. This contention was rested upon the provision in each that "the second party will from time to time as requested by the agents of the first party, call for all such unclaimed package freight," and upon the use of the phrase "may be delivered * * * for storage" in the clause dealing with the delivery and receipt of freight in carload or less than carload lots consigned to order. Whatever might be the implication of these phrases in other contexts, it is clear from the preamble to each contract, wherein is recited the need of the railroad to clear its freight station of unclaimed freight and its desire to have it removed and properly stored at the risk and expense of the shipper and to promptly receive its freight charges, and wherein is also recited the storage company's facilities for the storage of such goods, and it is likewise clear from the language of the second operable clause of the contract, which refers to "all such freight" that it was the intention of the parties, sufficiently expressed, that the storage company would call for and take away all unclaimed package freight and relieve the road from risk, expense, and responsibility therefor. Were there doubt about this, and we think there is none, it would be resolved by the practical construction given to the contract by each of the original parties thereto for a period of...