Prince Line v. American Paper Exports

• Decision Date: 08 February 1932
• Docket Number: No. 165.,165.
• Citation: 55 F.2d 1053
• Parties: PRINCE LINE, Limited, v. AMERICAN PAPER EXPORTS, Inc.
• Court: U.S. Court of Appeals — Second Circuit

55 F.2d 1053 (1932)

PRINCE LINE, Limited, v. AMERICAN PAPER EXPORTS, Inc.

No. 165.

Circuit Court of Appeals, Second Circuit.

February 8, 1932.

McManus, Ernst, Ernst & Lynch, of New York City (Irving L. Ernst and Hugo I. Epstein, both of New York City, of counsel), for appellant.

Kirlin, Campbell, Hickox, Keating & McGrann, of New York City (Charles T. Cowenhoven, Jr., and Richard L. Sullivan, both of New York City, of counsel), for appellee.

Before L. HAND, SWAN, and CHASE, Circuit Judges.

L. HAND, Circuit Judge.

The Prince Line, the libellant, is a common carrier, engaged in foreign trade between New York and the Far East. Between March, 1926, and March, 1927, it carried a number of parcels of paper for the American Paper Exports, Inc., the respondent, upon which that company paid the freights as charged. This suit is to recover for additional amounts alleged to be due for the following reasons: The line was one of a number of carriers which had entered into an "agreement" (the "Far East Conference"), by which fixed rates were established for the carriage of goods from the United States to Asiatic ports. This was filed with the Shipping Board, which approved it under the powers vested in it by section 814 of title 46 of the United States Code (46 USCA § 814); it thus became a tariff for the regulation of freights, for some purposes having the force of law. From the outset the company shipped all its paper under bills of lading which described it only as "paper," and the dock receipts read the same way. The tariff contained twelve specified classes of paper and a final class, "Not Otherwise Specified," each with its appropriate rate, though not all different. The company prepared the bills of lading, leaving the rates blank; the line entered them at its own office and then sent back a counterfoil. The parties differ as to how the rates were ascertained, and the judge did not decide the issue. The line says that when the company brought in the bills, they told it what the shipments contained, and that, relying on this information, it then entered the appropriate rates as fixed by the tariff. The company says that both parties always understood that the paper should be accepted at one of two agreed rates, the choice being left to the company's pleasure. The issue of fact is therefore whether the parties had agreed upon the rates, regardless of contents, or whether they had agreed upon the established rates to be allocated by contents, the company declaring what that was. As will appear, the dispute is irrelevant to the disposition of the suit, though not to the theory on which part of the recovery must rest.

Whatever the original arrangement, in October, or at the latest November, complaints from the company's competitors in the Orient reached the line that unclassified paper was being shipped at cut freights, and the parties had an interview. The company then at any rate took the position that if the line wished to hold their business, it must be content to accept unclassified paper at rates to be fixed by them and without information as to its class, which they would under no circumstances disclose. This the line accepted; at least it continued to receive the paper marked as before, and to charge such rates as the company dictated. The line filed this suit on the theory that the contract was to carry at the established rates, but that, if it contemplated cutting rates, it was invalid, and the established rates could be recovered. The judge took the second view and entered an interlocutory decree.

At least after December, 1926, the company had definitely declared their position, and the line was violating the Shipping Act (section 815 (second), title 46, U. S. Code 46 USCA § 815, subd. 2), which forbade a carrier in foreign trade to "allow any person to obtain transportation for property at less than the regular rates then established and enforced on the line of such carrier, by means of false billing, false classification, false weighing, false report of weight, or by any other unjust or unfair device or means." The billing was indeed not false; probably the classification was, because the selection of the rate presupposed a classification of the merchandise, and to select rates which both sides knew to have no relation to the contents, was to classify the goods falsely. However, we need not here go that far. It is conceded that the billing was to conceal the contents from the company's competitors, and it thus facilitated the preference which had been conceded. This was an "unfair device or means," for it destroyed that equality of treatment between shippers, which it was the primary purpose of the section, and for that matter of the whole statute, to maintain. The company answer that this is exactly what the section does not do, and they are right to this extent, that unless the carrier is complaisant to some unfair means used to obtain the lower rate, it has not violated the section. The law did not forbid all concessions to a shipper; apparently it assumed that if these were above board, and known or ascertainable by competitors, the resulting jealousies and pressure upon the carrier would be corrective enough. But it did forbid the carrier to grant such favors, when accompanied by any concealment, and its command in that event was as absolute as though it had been unconditional. It was among the evils aimed at, when the company with the line's acquiescence refused to allow the goods to be classified and insisted upon the right to choose the rates.

Whether the line can take advantage of its own violation of the statute by recovering the amount of the preference is another matter. Prima facie it may not; volenti non fit injuria. But the situation is similar to that arising under the Interstate Commerce Act (section 6 (7), title 49 U. S. Code, 49 USCA § 6 (7), where the courts have found warrant for raising civil liabilities against the shipper by which the desired equality will be secured, refusing to leave the remedy to criminal prosecution alone. Thus, not only may the carrier withhold the goods for the difference in rates, regardless of any agreement to ship for less than those established (Gulf, etc., Ry. v. Hefley, 158 U. S. 98, 15 S. Ct. 802, 39 L. Ed. 910; Texas & Pacific Ry. v. Mugg, 202 U. S. 242, 26 S. Ct. 628, 50 L. Ed. 1011); but it may also recover the difference from the shipper or consignee, as the case may be, after it has delivered the goods (Louisville & Nashville Ry. v. Maxwell, 237 U. S. 94, 35 S. Ct. 494, 59 L. Ed. 853, L. R. A. 1915E, 665; Pittsburgh, etc., Ry. v. Fink, 250 U. S. 577, 40 S. Ct. 27, 63 L. Ed. 1151; Louisville & Nashville Ry. v. Central Iron & Coal Co., 265 U. S. 59, 44 S. Ct. 441, 68 L. Ed. 900).

It...