Shippers Service Co. v. Norfolk & W. Ry. Co.

• Decision Date: 23 February 1976
• Docket Number: No. 75--1353,75--1353
• Citation: 528 F.2d 56
• Parties: SHIPPERS SERVICE COMPANY, a partnership, Plaintiff-Appellant, v. NORFOLK & WESTERN RAILWAY COMPANY, a corporation, Defendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 56

528 F.2d 56

SHIPPERS SERVICE COMPANY, a partnership, Plaintiff-Appellant, v. NORFOLK & WESTERN RAILWAY COMPANY, a corporation, Defendant-Appellee.

No. 75--1353.

United States Court of Appeals Seventh Circuit.

Argued Nov. 6, 1975.

Decided Jan. 22, 1976.

Rehearing and Rehearing En Banc

Denied Feb. 23, 1976.

Melvin S. Cahan, Merwin R. Burman, Chicago, Ill., for plaintiff-appellant.

Marvin F. Metge, Chicago, Ill., for defendant-appellee.

Before CUMMINGS, ADAMS, ^* and SPRECHER, Circuit Judges.

CUMMINGS, Circuit Judge.

Plaintiff, a carlot receiver and jobber of perishable produce at the Detroit (Michigan) Union Produce Terminal ('Terminal'), sued under the Carmack Amendment of the Interstate Commerce Act (49 U.S.C. § 20(11)) to recover damages for the allegedly tardy delivery of 105 shipments of fruits and vegetables from the West Coast and Arizona. Plaintiff claimed some $35,000 in damages because of declines in the market price between the times when the shipment would ordinarily arrive and the times when they actually were available for sale. Defendant was the delivering railroad within the meaning of the foregoing statute which makes a delivering carrier responsible for the entire transportation service. The district Judge ordered that the issues of liability and damages be tried separately. He heard the liability phase without a jury and rendered judgment for the defendant. Shippers Service Co. v. Norfolk & Western Ry. Co., 389 F.Supp. 1225 (N.D.Ill.1975). The plaintiff appeals.

The parties stipulated to certain facts. The originating carrier prepared a bill of lading naming the plaintiff as the consignee. The produce was loaded either in railroad cars or piggyback containers which were placed on flat cars. Depending upon the origin of the shipments, the produce was transported by several railroads until it was delivered to the defendant at Kansas City and St. Louis, Missouri, from which the cars were taken to Decatur, Illinois. From Decatur, the defendant carried the produce to its Oakwood Yards facility outside Detroit. At the Oakwood Yards, the flatcars were placed at an unloading ramp where the piggyback containers were transferred to trucks for delivery to the Terminal. The railroad cars were transported directly to the Terminal.

The bill of lading is the governing contract between the parties. Section 2(a) provides that the carriers are bound to transport the property with 'reasonable dispatch.' See New York, Philadelphia & Norfolk R. Co. v. Peninsula Produce Exchange, 240 U.S. 34, 40--41, 36 S.Ct. 230, 60 L.Ed. 511. Plaintiff's trial theory was that each shipment arrived beyond the customary and usual or scheduled time and that this constituted a violation of Section 2(a). Plaintiff's injury occurred because the shipments missed at least one market; damages are sought for the difference between the market price at the scheduled arrival time and at the actual sale. Plaintiff attempted to establish liability by two methods. First, plaintiff introduced evidence of the usual and customary or scheduled arrival time and then showed that the actual delivery was late. Second, plaintiff sought to introduce evidence, based on internal railroad files, which would show where delays had taken place along the various routes.

Through its prime witness, Albert E. Ellenson, who runs a traffic bureau specializing in pursuing claims against railroads on behalf of perishable receivers at Detroit, the plaintiff showed that the usual and customary transportation time from the pertinent origin points to the Terminal was the fifth, sixth or seventh morning delivery, depending upon the particular route. Ellenson also discussed, based on the Official Guide of the Railways, the scheduled arrival times for the shipments involved. In most instances, the scheduled transportation times and the usual and customary transportation times coincided. Railroad cars were planned for placement at the Terminal at 5:00 a.m. Mondays and 6:00 a.m. Tuesdays through Fridays; piggyback trailers were scheduled for pickup by truckers by 7:00 a.m. at the latest. The schedules were designed to have the produce available at or near the opening of the market.

The Terminal opened at 6:00 a.m. on Mondays and at 7:00 a.m. on Tuesdays through Fridays. The removal of the piggybacks from the ramp at the Oakwood Yards to the Terminal would take from a minimum of 45 minutes to a maximum of one and one-half hours; to unload the railroad cars, plaintiff's employees needed about one-half hour. At the Terminal, the biggest part of the business is gone after 8:00 a.m. A reporter for the United States Department of Agriculture would visit plaintiff's auction floor between 8:00 a.m. and 8:30 a.m. for quotations which were used in preparing a market newsletter. If the produce was delayed, the plaintiff would be forced to sacrifice the merchandise or watch it deteriorate. Thus plaintiff contends that the defendant is liable for any decline in market price when it fails to meet its schedules.

The plaintiff then introduced evidence with respect to each of the 105 shipments, which showed the trailer or car number, the place of origin, the routing, the date and hour of shipment, the date and hour of arrival of the piggyback containers at the Oakwood Yards, and the date and hour of arrival of the railroad cars at the Terminal. Under Plaintiff's theory, each of the shipments was late.

The defendant rebutted plaintiff's evidence by claiming that the applicable tariff, if valid, prohibited liability unless the delay was more than 24 hours, and that the schedules were optimum, not guaranteed times. Note 2 of Tariff 44--P provided in pertinent part that 'Delay for market decline purposes shall be deemed to exist only if placement occurs more than 24 hours later than the time scheduled to elapse between origin tender and destination placement * * *.' Note 12 of Tariff 64--N was to the same effect. ¹

Defendant also elicited testimony from railroad employees who explained the difficulties of operating railroads and the problems of scheduling trains. The evidence was intended to show the potential for delays inherent in the cross-country transportation of the goods so that it would be unreasonable to equate reasonable dispatch with compliance with the schedules. To establish liability, the railroad contended, the plaintiff must show the cause for the delays.

As a subsidiary issue, the plaintiff contended that the defendant's cancellation of a train constituted a breach of its duty to transport the goods with reasonable dispatch. Some of the 105 shipments in question had formerly moved from Decatur, Illinois, to Detroit, Michigan, on Train KSD--14. This train was not operated to Detroit from mid-1970 but was not removed from defendant's schedule until May 22, 1971. The defendant countered this claim, arguing that because the plaintiff, according to the stipulated facts, was informed of the movements of the cars on a daily basis, the plaintiff must have been aware of the change almost immediately.

The second element of plaintiff's evidence attempted to show the points in the delivery of the produce at which delays occurred. The parties stipulated that:

'Plaintiff was informed of the location of each railroad car and trailer on flat car at various points while same were enroute between origin and destination, and upon arrival at the Oakwood Yard(s) of Defendant, arrival at Detroit Union Produce Terminal of railroad cars and arrival at the piggyback facilities in Defendant's Oakwood Yards in Detroit, Michigan of trailers on flat cars.'

To show the reasons for the delays, the plaintiff then attempted to introduce into evidence the claim files of the defendant on the 105 shipments. The files contained information with regard to the movements of the shipments gathered by the defendant from communications with the other carriers. The court refused to admit the files, sustaining defendant's hearsay objection.

In its opinion, referring to Mr. Ellenson's testimony, the district court acknowledged that plaintiff's evidence 'tended to show that it was 'usual and customary' for defendant to deliver goods to the Detroit Terminal in time for the opening of the market.' However, the court held that merely showing the failure to meet the usual and customary time for delivery was not sufficient to create an inference that the railroad had failed to move the produce with reasonable dispatch. Rather, it was incumbent upon the plaintiff 'to show what circumstances delayed a given shipment and then to show that these were either the fault of the carrier (e.g., mechanical deficiency) or that the carrier did not solve the problem with due diligence.' Similarly, the trial court held that a failure to conform to published schedules did not shift the burden of proof to the railroad to show the cause of the delay. The court thus held that to prove a breach of the duty to transport with reasonable dispatch, the burden is on the...