Proctor v. Colonial Refrigerated Transportation, Inc.

• Decision Date: 27 March 1974
• Docket Number: No. 72-1211.,72-1211.
• Citation: 494 F.2d 89
• Parties: James M. PROCTOR, Appellant, v. COLONIAL REFRIGERATED TRANSPORTATION, INC., Appellee.
• Court: U.S. Court of Appeals — Fourth Circuit

494 F.2d 89 (1974)

James M. PROCTOR, Appellant, v. COLONIAL REFRIGERATED TRANSPORTATION, INC., Appellee.

No. 72-1211.

United States Court of Appeals, Fourth Circuit.

Argued November 6, 1973.

Decided March 27, 1974.

Henry Hammer, Columbia, S. C. (James W. Cothran, William P. Baskin, Bishopville, Lawerence M. Gressett, Jr., St. Matthews, S. C., on brief), for appellant.

Ronald E. Boston, Columbia, S. C. (H. F. Padget, Jr., and Turner, Padget, Graham & Laney, Columbia, S. C., on brief), for appellee.

Before CRAVEN, RUSSELL and FIELD, Circuit Judges.

FIELD, Circuit Judge:

James M. Proctor sustained serious injuries in an accident while riding as a passenger in a tractor-trailer being driven by one, E. O. Bales, under a lease arrangement with the defendant, Colonial Refrigerated Transportation, Inc. (Colonial). Proctor instituted this diversity action to recover damages from Colonial. Pursuant to a jury verdict, judgment was entered in the district court in favor of the defendant and the plaintiff has appealed.

Colonial is a certified interstate motor carrier, and about a year before the accident in question had entered into a written agreement with Bales under which he agreed to furnish a tractor and driver to transport commodities in trailers owned by Colonial. Colonial had also entered into an identical agreement with the plaintiff Proctor. Several days prior to the accident Proctor's tractor became disabled and was placed in a Maryland garage for repairs. Thereafter, Proctor was hired by Bales as an assistant driver in transporting a trailer of Colonial to Florida. While driving through South Carolina the tractor was involved in a collision with another truck killing Bales and seriously injuring Proctor.

Proctor's complaint alleged negligence on the part of Bales as an agent of Colonial, and also charged that Colonial permitted the tractor-trailer rig to be operated when it knew or should have known that the trailer had a defective coupler assembly.

The primary issue upon this appeal is whether a motor carrier operating under a certificate from the Interstate Commerce Commission is liable to an employee of a lessor for injuries resulting from the negligence of the lessor in the operation of his equipment in the business of the lessee-carrier. Incident to this issue the plaintiff challenges that part of the district court's charge which told the jury that if they determined the relationship between Bales and Colonial was that of independent contractor-employer at the time of the accident, they should return a verdict for the defendant.¹

In support of his position, plaintiff relies heavily on the South Carolina case of Reed v. Southern Ry.-Carolina Division, 75 S.C. 162, 55 S.E. 218 (1906). In that case the plaintiff's intestate had been injured by the negligence of the Southern Railway Company which had leased the railway lines and equipment from the defendant Southern Ry.-Carolina Division. The operating lessee Southern Railway Company, by whom plaintiff's intestate was employed, was originally made a party defendant to the action. When the case was removed to the federal court the plaintiff dismissed the action against Southern Railway Company, had the case remanded to the state court, and proceeded solely against the lessor Southern Ry.-Carolina Division. In recognizing that the plaintiff had a cause of action against the lessor-carrier the court stated:

"When a railroad company accepts a charter, it assumes the performance of all the duties to the public which are imposed upon it by the charter or the general laws of the state, and it cannot be permitted to escape from the obligations thus imposed upon it by transferring its chartered rights and privileges either to an individual or to another corporation. A corporation must of necessity always act through individuals, and whether such individuals are called its officers, or agents, or its lessee, cannot affect the question of its liability to perform the obligations which it has incurred, in consideration of its chartered rights and privileges. It cannot be permitted to enjoy the benefits conferred by its charter, without incurring the responsibilities incident thereto." 55 S.E., supra, at 221.

Upon consideration of Proctor's motion for a new trial the district judge concluded that the Reed decision was inapplicable to the present case since it was based to some degree upon the provisions of a legislative act as well as a section of the Constitution of the State of South Carolina. The legislation, which was designed to permit the consolidation of railroad companies and authorized leases of railroad lines within the state, provided that the lessor railroad should be and remain subject to suit for all causes of action arising out of the operation of the lines notwithstanding any lease thereof. The constitutional section extended to every employee of a railroad company the same rights and remedies for any injury sustained by him as were allowed by law to other persons who were not employees of the railroad. While we agree with the district court that the advertence to the legislative and constitutional provisions in Reed dilute its authority somewhat, nevertheless, we are of the opinion that the plaintiff's contention is supported by the underlying rationale of the case which was stated by the court as follows:

"A railroad company has the power to enter into a great many special agreements, but it cannot make a valid contract whereby it will be exempt from liability for negligence. * * * This principle is applied, even when the action is by an employe based on negligence. * * * The reason for the rule is that such contracts are against public policy." (citations omitted)

55 S.E. supra at 221.

However, aside from Reed, we think there is a more compelling reason which supports Proctor's position. As a certified interstate carrier Colonial was subject to the supervision and control of the Interstate Commerce Commission, and in augmenting its equipment through the lease agreement with Bales it was required to be in compliance with the Commission's Regulations, 49 C.F.R. §§ 1057.1-1057.6. These regulations and the statute under which they were promulgated require and provide that under such lease arrangements the lessee-carriers "will have full direction and control of such leased vehicles and will be fully responsible for the operation thereof * * * as if they were the owners of such vehicles * * *."² These regulations were promulgated by the Commission to correct widespread abuses incident to the use of leased equipment by the carriers, see American Trucking Assns. v. United States, 344 U.S. 298, 303, 73 S.Ct. 307, 97 L.Ed. 337 (1953), and "the intent of the regulations was to make sure that licensed carriers would be responsible in fact, as well as in law, for the maintenance of leased equipment and the supervision of borrowed drivers.", Alford v. Major, 470 F. 2d 132, 135 (7 Cir. 1972).³ The statute and regulatory pattern clearly eliminates the independent contractor concept from such lease arrangements and casts upon Colonial full responsibility for the negligence of Bales as driver of the leased equipment. Any language to the contrary in the lease agreement would be violative of the spirit and letter of the federal regulations and therefore unenforceable.

In its brief Colonial concedes its responsibility to the shipping or traveling public, but contends that this responsibility does not extend to Proctor in his posture as an employee of the lessor Bales. In support of this contention Colonial relies upon our decision in War Emergency Co-op...