Polaroid Corp. v. Hermann Forwarding Co.

• Decision Date: 01 September 1976
• Docket Number: Nos. 75-2308,75-2309,s. 75-2308
• Citation: 541 F.2d 1007
• Parties: POLAROID CORPORATION, a Delaware Corporation, Appellant, v. HERMANN FORWARDING CO., a New Jersey Corporation, Appellee. POLAROID CORPORATION, a Delaware Corporation, Appellant, v. KOWALSKY'S EXPRESS SERVICE, a New Jersey Corporation, Appellee.
• Court: U.S. Court of Appeals — Third Circuit

Page 1007

541 F.2d 1007

POLAROID CORPORATION, a Delaware Corporation, Appellant, v. HERMANN FORWARDING CO., a New Jersey Corporation, Appellee.

POLAROID CORPORATION, a Delaware Corporation, Appellant, v. KOWALSKY'S EXPRESS SERVICE, a New Jersey Corporation, Appellee.

Nos. 75-2308, 75-2309.

United States Court of Appeals Third Circuit.

Argued May 25, 1976.

Decided Sept. 1, 1976.

Ravin, Davis & Mandell, Edison, N.J., Isaac M. Barnett, Donald S. Hecht, New York City, for plaintiff-appellant.

Frederick J. Wortmann, Braff, Litvak, Ertag, Wortmann & Harris, Richard B. Livingston, Roy J. Konray, East Orange, N.J., for defendants-appellees.

Before ADAMS, GIBBONS and HUNTER, Circuit Judges.

JAMES HUNTER, III, Circuit Judge.

Plaintiff-appellant Polaroid Corporation entrusted two separate shipments of photographic goods to two common carriers for delivery in interstate commerce: one to defendant-appellee Hermann Forwarding Company ("Hermann") and the other to defendant-appellee Kowalsky's Express Service ("Kowalsky"). The shipments were hijacked and neither shipment was ever recovered. On April 23, 1973, Polaroid instituted the present action against Hermann and Kowalsky under 49 U.S.C. § 20(11) for damages sustained as a result of the loss by hijacking of the two shipments. The respective shipments were under uniform straight bills of lading approved by the Interstate Commerce Commission, which provided in pertinent part that "suits shall be instituted against any carrier only within two years and one day from the day when notice in writing is given by the carrier to the claimant that the carrier has disallowed the claim or any part or parts thereof specified in the notice." App. at 18a. The bill of lading is in conformity with section 20(11) of the Interstate Commerce Act, 49 U.S.C. § 20(11), which provides in part:

. . . it shall be unlawful for any such receiving or delivering common carrier to provide by rule, contract, regulation, or otherwise a shorter period for the filing of claims than nine months, and for the institution of suits than two years, such period for institution of suits to be computed from the day when notice in writing is given by the carrier to the claimant that the carrier has disallowed the claim or any part or parts thereof specified in the notice.

The primary issue presented is whether Polaroid filed suit on its claims within two years and one day from the date of written notice of disallowance of its claims.

The Hermann hijacking occurred on January 16, 1970 and the Kowalsky hijacking on November 10, 1970. Written notices of claims aggregating $58,941.83 were filed by Polaroid with Hermann on February 11, 1970; notices aggregating $131,168.95 were filed with Kowalsky on December 9, 1970. The timeliness of the filing of the claims is not disputed.

Transport Insurance Company ("Transport") insured both carriers and handled all communications with Polaroid concerning the claims. Polaroid's claim for $58,941.83 on the goods hijacked from the Hermann shipment represented the alleged dealer invoice price of those goods. On April 9, 1970, after preliminary letters had been exchanged between Polaroid and Transport, Transport informed Polaroid that it did not agree that Polaroid was entitled to the dealer invoice price, which included manufactured cost plus profit. The letter in pertinent part reads:

No doubt this shipment was reordered and your company received a profit on the reordered shipment. Your company would not be entitled to a double profit. Our obligation is to place your company in the exact same position it would have been if the loss had never occurred.

We would suggest that you resubmit your cargo loss claim not to include profit but to include only what you have lost. Your claim should include only your manufactured cost figures. We will await your comments.

App. at 68a. Polaroid responded on April 17, 1970: "It has also been requested that these claims be amended to our manufactured cost. . . . (W)e are not in a position to amend these claims to an amount less than dealer price." Id. at 69a.

Various letters subsequently passed between Polaroid and Transport concerning the proper measure of loss. On October 19, 1970, Transport wrote, regarding the Hermann claim:

We are not willing to accept your contention that you are entitled to the dealer's price on the basis you are simply acting on behalf of these dealers in settling the claims. You have not furnished us bills of lading as proof the shipments were effectively transferred to these dealers, nor have you furnished us anything in the way of proof that the dealers have paid you for the merchandise. Therefore, let's go back to the basics, which is the manufacturer's cost of the stolen merchandise.

On the basis of other claims we have had involving Polaroid, we are aware of the fact you add 54.9% operating cost to standard costs to determine what you consider manufacturing costs. On top of this you are adding on anywhere from 10 to 50% mark up on the dealer price, or an approximate average of one-third. In other words, you are between 30 and 60% above your actual loss in your demand of $58,710.30. In the spirit of compromise, however, we are willing to concede that the range is as low as 40% and are prepared to pay you $35,226.18 in settlement of the combined claims. We are therefore, enclosing a general release in like amount with the request that you have it properly executed and return to us. Immediately upon receipt of the release, we will issue our draft to Polaroid.

Id. at 78a. Enclosed with the letter was a "Release In Full of All Claims." ¹ On February 9, 1971, Transport responded to Polaroid's December 9, 1970, claim for the dealer invoice price of the merchandise hijacked from Kowalsky:

Our position on the above captioned matter (Kowalsky claim) is the same as our position in the case of Polaroid against Hermann Forwarding, your Claim Number 70-1000 thru 70-1019.

We are not going to pay you any more than the manufacturers cost. This represents about 60% of the total amount of your claim.

It doesn't appear that we are going to get any place in negotiating these claims by corresponding back and forth. We would prefer to set up a meeting with you, and anyone else in your company preferably representing your legal department to discuss these cases and possibly to at least work out settlements. If we can not settle we can not (sic) at least come to some understanding. We will await your advice.

App. at 115a.

Thereafter, various letters were sent between Polaroid and Transport concerning these claims. Some dealt with a case pending in the Eastern District of New York, Polaroid Corp. v. Long Island Delivery Company, No. 70C-1387 (E.D.N.Y., filed Oct. 12, 1971), in which the issue was whether dealer invoice price or manufactured cost was the proper measure for determining actual loss arising from a hijacked shipment. ² On May 19, 1972, Transport wrote Polaroid regarding the Hermann claim:

You indicated that your cost figures on this loss amounts to $43,000.00 and that your company would accept nothing less than $46,800.

We refer you to our letter of October 19, 1970 wherein we made an offer to you in the amount of $35,226.18.

You never formally turned down this offer.

Accordingly, we are taking the position that this offer was a notice of disallowance of the claim and the statute is running.

This letter was sent five months before Transport believed that the action would be barred against Hermann.

Thereafter, on April 23, 1973, Polaroid filed the instant actions against Hermann and Kowalsky. Transport, on behalf of Hermann and Kowalsky, contended in the court below that Polaroid had been given legally effective notice of disallowance of its Hermann claim by its letters of either April 9, 1970 or October 19, 1970 and of the Kowalsky claim by its letter of February 9, 1971, and that accordingly, the respective actions were time barred.

The parties agreed and stipulated that the issue as to liability be submitted on depositions and documents as if on cross-motions for summary judgment, with the damage issue to abide the determination as to liability. App. at 7a, 14a, 19a.

On June 18, 1975, the district court granted summary judgment in favor of Hermann and Kowalsky and against Polaroid. The court held, "(I)t is clear that at the very latest, the February 9, 1971 letter constituted notice of partial disallowance sufficient to begin the running of the limitation period in question as to both defendants." App. at 22a-23a (emphasis in original). Thereafter, Polaroid filed a timely motion to vacate the grant of summary judgment and for reargument pursuant to rule 59 of the Federal Rules of Civil Procedure, which motion was denied by the district court on September 8, 1975. Polaroid has appealed from both the order granting summary judgment in favor of appellees and the order denying the motion to vacate judgment and for reargument. Because we conclude that the district court did not err in granting summary judgment in favor of appellees on the basis that the actions were time barred and in denying the motion for vacation of judgment and reargument, we will affirm.

Under 49 U.S.C. § 20(11) and the uniform bill of lading, a claimant must file suit within two years and one day from the date of written notice of disallowance of its claim in whole or in part. Where a claim has been disallowed in part and suit has not been filed within the prescribed period, the entire claim, not simply the disallowed portion, is barred. 49 U.S.C. § 20(11); see H. Rouw Co. v. Texas & N. O. R.R., 260 S.W.2d 130, 131 (Tex.Civ.App.1953); Burns v. Chicago, M., St. P. & Pac. R.R., 192 F.2d 472, 477 (8th Cir. 1951). This is the key to the instant case. In our view, prior to two years and one day from when this suit was commenced, Transport had informed Polaroid, with notice sufficient under section 20(11), that its claims for dealer invoice...