Thayer v. Pacific Elec. Ry. Co.

Citation11 Cal.Rptr. 560,55 Cal.2d 430
Parties, 360 P.2d 56 Ernest H. THAYER, Respondent, v. PACIFIC ELECTRIC RAILWAY COMPANY (a Corporation), Appellant. L. A. 26080.
Decision Date02 March 1961
CourtUnited States State Supreme Court (California)

E. D. Yeomans, Walt A. Steiger and John H. Gordon, Los Angeles, for appellant.

Dryden, Harrington, Horgan & Swartz and Vernon G. Foster, Los Angeles, for respondent.

WHITE, Justice.

This is an appeal by the Pacific Electric Railway Company from a judgment for the plaintiff in the amount of $3,750 in an action for damages to freight of which defendant was the terminal carrier. The principal question raised is whether the plaintiff complied with the requirement of the bill of lading that in order to recover for damages to freight, a claim in writing must be filed with the carrier within nine months after delivery of the property.

The plaintiff is a Long Beach manufacturer of precision made aircraft parts. In 1955, he purchased a precision grinding machine that was then located in Illinois, and arranged to have the machine shipped to Artesia, California. The machine was in good condition when delivered to the originating carrier. On March 29, 1955, defendant's agent notified the plaintiff that the machine had arrived. Plaintiff contacted a firm of machinery movers and instructed them to remove it from the railroad car. When they went to pick up the machine on March 30, 1955, the movers observed that the machine was damaged. Before moving it from the railroad car, they contacted the plaintiff who made a personal inspection that same day.

The machine was severely damaged, even though it was bolted to heavy, wooden skids which in turn were bolted to the bottom of the box car. The boards on the bottom of the car had been jerked loose, breaking the blocks which were supporting the machine. The plaintiff had photographs taken of the damaged interior of the car and the damaged machine. After the plaintiff had returned to his office, he telephoned defendant's station agent, Carl Hileman, and complained about the condition of the machine. In response to the complaint, the agent visually inspected the machine and the box car and filled out a standard company form used for the inspection of damages. The plaintiff did not accompany the agent when the inspection was made or when the inspection form was filled out. Hileman's inspection report became a part of defendant's permanent files.

After completing the inspection, Hileman returned to plaintiff's office and there ensued a discussion over the condition of the machine. Before departing, the agent gave the plaintiff standard claim forms, explaining that they could be filled out and returned by plaintiff when the extent of the damage was ascertained. After the photographer had performed his function and Hileman had completed his inspection, plaintiff had the movers take the machine from the box car.

Representatives of the defendant negotiated with plaintiff over the amount due for freight charges, and after plaintiff rejected two bills because of the application of improper rate and weight standards, the freight charges were fixed at approximately $550. However, in spite of requests by defendant's agents, plaintiff refused to pay the charges. He insisted that the defendant owed him money because of the extensive damage to the machine.

On April 20, 1955, Hileman went to plaintiff's office in an attempt to collect the freight charges. He explained to plaintiff that the damage claim was a separate matter from the freight charges and that the freight bill had to be paid in spite of the damage. The plaintiff continued to object to payment, since he did not want to waive any of his rights to collect for the damages. Finally, while in plaintiff's office, the agent wrote on the freight bill, 'Damage on this shipment, 4/20/55, C. D. Hileman.' The plaintiff then wrote a check for the amount of the charge and received a copy of the annotated freight bill. Plaintiff testified that he would not have paid unless Hileman had made the above notation on the freight bill. A copy of the annotated freight bill was kept as a permanent record in defendant's offices. The latter's damage claim agent testified that claims for damaged freight are not always filed with his office and that they may be filed 'With any agent of the company.'

Determination by the plaintiff of the extent of damages to the machine took considerable time. It was necessary to secure cost estimates from machinery repairmen, and then, because of the extent of the damage, ascertain whether it would be cheaper to obtain another machine. After inquiry in the eastern machinery market, plaintiff had his machine repaired at an approximate cost of $3,500.

Plaintiff's attorney wrote to the defendant's claim agent on January 27, 1956, over nine months after the delivery of the machine, and detailed the extent of plaintiff's damages. On February 2, 1956, the claim agent replied to plaintiff's attorney, specifying the documents that must accompany the formal claim and enclosing formal claim forms. The claim agent's letter began, 'Referring to your letter of January 27, notifying this company that you represent Mr. Ernest Thayer in matters pertaining to claims for damages to a Cincinnati Grinding Machine, which occurred in transit on or about March 29, 1955. * * *' The letter ended, 'On receipt of claim properly supported, as indicated, the matter will be progressed. In replying, please make reference to our above file.'

The plaintiff's completed claim forms were received by defendant's claim agent on May 18, 1956. Four days later, that office sent plaintiff a postal card acknowledging receipt of his formal claim. The latter card was a routine communication sent out when a claim was assigned a claim number. On June 29, 1956, the claim agent formally rejected plaintiff's claim, on the grounds that it had not been filed in writing within nine months, as required by a condition set forth on the bill of lading.

Section 2(b) of the bill of lading provided: 'As a condition precedent to recovery, claims must be filed in writing with the receiving or delivering carrier, or carrier issuing this bill of lading, or carrier on whose line the loss, damage, injury or delay occurred, within nine months after delivery of the property * * *; and 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. Where claims are not filed or suits are not instituted thereon in accordance with the foregoing provisions, no carrier hereunder shall be liable, and such claims will not be paid.'

Trial was commenced before a jury, but after all the evidence was in the jury was excused by consent of both parties. It was stipulated that if the plaintiff was to recover at all, he was to recover $3,750. Defendant did not deny liability, if notice by the plaintiff complied with the requirements in section 2(b) of the bill of lading. The trial court found that the inspection report made by the agent, Hileman, coupled with the notation made on the freight bill on April 20, 1955, constituted sufficient writings within the requirements of section 2(b) as construed in the federal cases. The trial court was of the opinion that because these two writings became a part of defendant's records, the instant carrier was on written notice that the plaintiff was claiming damages, so that the defendant could make a timely investigation in order to protect itself.

Whether the plaintiff complied with the requirements of section 2(b) of the bill of lading for this interstate shipment presents a question of federal law. Chesapeake & Ohio Ry. v. Martin, 283 U.S. 209, 213, 221, 51 S.Ct. 453, 75 L.Ed. 983; Insurance Co. of North America v. Newtowne Mfg. Co., 1 Cir., 187 F.2d 675, 680; see New York Cent. R. R. Co. v. Frank H. Buck Co., 2 Cal.2d 384, 389, 41 P.2d 547; American Fruit Distributors of California v. Hines, 55 Cal.App. 377, 379, 203 P. 821. There is no question of the validity of such a provision requiring timely written notice to the carrier, as a condition precedent to the prosecution of a claim for damages to freight. 49 U.S.C.A. § 20(11); Chesapeake & Ohio Ry. v. Martin, supra, 283 U.S. 209, 212-213, 51 S.Ct. 453, 75 L.Ed. 983; Northern Pac. Ry. Co. v. Mackie, 9 Cir., 195 F.2d 641, 642. Nor may the doctrines of waiver or estoppel be applied against the defendant carrier in order to obviate the requirement of written notice. Southern Pac. Co. v. Stewart, 248 U.S. 446, 449-450, 39 S.Ct. 139, 63 L.Ed. 350; Loveless v. Universal Carloading & Distributing Co., 10 Cir., 225 F.2d 637, 639; but see Chesapeake & Ohio Ry. v. Martin, supra, 283 U.S. 209, 222, 51 S.Ct. 453, 75 L.Ed. 983; Insurance Co. of North America v. Newtowne Mfg. Co., supra, 187 F.2d 675, 681-682.

However, even though as a rule the carrier must be given written notice of a claim within the period specified in the bill of lading, it has been said that the notice requirement, 'does not require documents in a particular form. It is addressed to a practical exigency, and it is to be construed in a practical way.' Georgia, Fla. & Ala. Ry. v. Blish Co., 241 U.S. 190, 198, 36 S.Ct. 541, 544, 60 L.Ed. 948; see Thompson v. James G. McCarrick Co., 5 Cir., 205 F.2d 897, 901. The principal object of the provision is to give the carrier written notice of the claimed damage to a particular shipment, and written notice that the shipper intends to make a claim for damage to that shipment, so that the carrier may make a timely investigation and protect itself from fraudulent claims. St. Louis, I. Mt. & So. Ry. Co. v. Starbird, 243 U.S. 592, 606, 37 S.Ct. 462, 61 L.Ed. 917; Loveless v. Universal Carloading & Distributing Co., supra, 225 F.2d 637, 639; Thompson v. James G. McCarrick...

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