Thousand Springs Trout Farms, Inc. v. IML Freight, Inc.

• Decision Date: 29 July 1977
• Docket Number: No. 75-1414,75-1414
• Citation: 558 F.2d 539
• Parties: THOUSAND SPRINGS TROUT FARMS, INC., a corporation, Appellee, v. IML FREIGHT, INC., a corporation, Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 539

558 F.2d 539

THOUSAND SPRINGS TROUT FARMS, INC., a corporation, Appellee, v. IML FREIGHT, INC., a corporation, Appellant.

No. 75-1414.

United States Court of Appeals, Ninth Circuit.

July 29, 1977.

William S. Richards, Gary A. Frank, argued, Richards & Richards, Salt Lake City, Utah, for appellant.

Elam, Burke, Jeppesen, Evans & Boyd, Gardner W. Skinner, Jr., argued, Eberle, Berlin, Kading, Turnbow & Gillespie, Boise, Idaho, for appellee.

Appeal from the United States District Court for the District of Idaho.

Before ELY and WALLACE, Circuit Judges, and BYRNE, District Judge. ^*

ELY, Circuit Judge:

In this "diversity" action brought by a shipper (Thousand Springs) against a carrier (IML) for damage to a load of fresh trout, we attempt to apply well-settled principles of generally applicable law to an unusual fact situation involving perishable goods.

I.

Thousand Springs operates a trout farm and packing plant near Buhl, Idaho, and IML Freight is an interstate motor carrier of freight for hire with terminals in a number of cities, including Twin Falls, Idaho. ¹ In early September, 1972, Kroger Company entered into an oral contract with Thousand Springs. It was agreed that Kroger would purchase 24,450 pounds of fresh trout from Thousand Springs. For the fish, Kroger agreed to pay 84 cents per pound, a total of $20,538. Thousand Springs arranged with IML that a "reefer" (a trailer with refrigeration capabilities) be delivered to the facility of Thousand Springs on the morning of October 5th. Additionally, it was agreed that the fish should be loaded, the trailer and cargo to be picked up by noon, October 6th, and that delivery to Kroger in Columbus, Ohio should be made on or before October 9th.

On October 5th, at approximately 10 a. m., IML delivered a trailer equipped with a liquid nitrogen cooling system to the Thousand Springs plant. Under the terms of the agreement between the parties, a "shipper's load and count" agreement, Thousand Springs' employees were responsible for the loading of the fish onto the trailer; however, none of these employees had experience with a liquid nitrogen truck. One Roske, IML's terminal manager, was called and asked to furnish a mechanical refrigeration unit with which Thousand Springs' people were familiar, but he reported that there was no mechanical unit available and that the nitrogen unit would maintain refrigeration at 33o ² at all times during transit.

Thousand Springs employees were told not to expect any noise from the unit, inasmuch as cooling was effected by liquid nitrogen droplets which vaporized when fed into the interior of the trailer. Both Roske and the IML driver instructed Thousand Springs personnel in respect to the operation of the nitrogen unit. Before noon on October 5th, Thousand Springs' shipping foreman activated the cooling unit for the purpose of pre-cooling before loading. Unknown to the foreman, however, was the fact that the nitrogen tank was empty. At a later time Roske maintained that he thought the tank was 20% full when it was sent to the plant, but the driver for IML testified that he tested the valve before delivering the trailer and it would not work, indicating to him that the tank was empty. The driver advised no person at Thousand Springs that the nitrogen tank was empty.

Since Thousand Springs' refrigeration facilities could only accommodate 9000 pounds of trout at one time, the loading operation was carried on in stages, 3000 pounds loaded during each stage. The trailer doors remained open during most of the loading process.

On October 6th, at about 1:30 a. m., Thousand Springs' employees became concerned when it appeared that the fish were not being refrigerated. They decided to load no additional fish that morning, and dry ice was placed in the trailer in an attempt to cool the 9000 pounds of trout that had already been loaded. At 8:30 a. m., Mr. Erkins, the president of Thousand Springs, called Roske to tell the latter that the refrigeration unit was not properly functioning and was apparently without the necessary liquid nitrogen. Roske acknowledged that he understood the problem and that he also understood that Thousand Springs intended to hold IML liable for the value of the fish if the load did not reach Columbus in marketable condition. Roske explained to Erkins that since liquid nitrogen could not be transported to the Thousand Springs plant from Burley, Idaho, the nearest location where the refrigerant was available, it would be necessary, in order to fill the tank, to take the transporting unit to Burley. Following this conversation, the loading of the trout continued. During the loading Thousand Springs' quality control biologist monitored the temperature of the fish that had been placed in the trailer during the night. ³ Although the temperature of the fish was 38o when the fish were placed in the trailer, by the morning of October 6th their temperature had risen to a range from 47o to 56o . At 2:00 p. m. that afternoon, IML's driver, knowing that the trailer was loaded with fresh fish to be delivered to Columbus, Ohio, that a portion of the load had been in the trailer overnight, and that Thousand Springs was concerned by the rising temperature of the fish, accepted the load for transportation to Columbus.

The Bill of Lading, issued by Thousand Springs and accepted by IML, provided that a temperature of 33o should be maintained at all times during shipment. One Wold, a quality control biologist, accompanied the load to Burley, where, at 5:00 p. m. a full tank of nitrogen was used in an effort to cool the fish. This caused the temperature of the trout to drop to between 44o and 52o . Additional nitrogen was added and by 7:00 p. m. the temperature of the fish ranged from 38o to 51o . Wold, hopeful that the temperature of the trout would continue to lower, was assured that the thermostat on the trailer would be reduced to 28o for the trip. Both Wold and the IML driver were unaware that a liquid nitrogen unit cannot effectively lower the temperature of a product to any substantial degree but is only effective in maintaining the existing temperature of a particular load.

The load was delivered to Kroger at 1:30 p. m. on October 9th, and Kroger employees examined several bags of the fish in the back of the trailer. While the fish appeared to be in a fit condition, the temperature of these samples was 42o . Worried over the high temperature reading, Mr. Callahan, a meat merchandiser for Kroger, called Thousand Springs and was told by Erkins that the fish might still be in good condition but that they should be refrigerated at once. The trout were then placed into cooling rooms and blast freezers which maintained a temperature of 34 degrees. Early on October 10th, half the fish were distributed to 63 Kroger retail food stores and shortly thereafter, Kroger received complaints from a number of stores that the fish were spoiled. On checking 7 to 10 boxes of fish that remained in the blast freezers, Kroger's employees discovered that over half the fish in each box had definite visible signs of decomposition.

Sometime prior to noon on October 10th, Kroger called Erkins of Thousand Springs and revoked Kroger's acceptance of the fish. After telling Kroger to dispose of the fish, Erkins called Roske and also IML's claims agent in Salt Lake, advising them that the shipment had been refused and that they should immediately send an agent to inspect the load. Although IML operates a terminal in Columbus, an IML agent did not even appear at Kroger's plant to inspect the fish until 1:00 p. m. on the following day. Kroger then already had released the fish to a rendering plant for disposition.

II.

We need not decide whether the appropriate disposition of this appeal requires the application of local law of any particular jurisdiction. ⁴ Both parties agree that the controlling and common law is set forth by Missouri Pacific Railroad Co. v. Elmore, 377 U.S. 134, 84 S.Ct. 1142, 12 L.Ed.2d 194 (1964):

"Accordingly, under federal law, in an action to recover from a carrier for damage to a shipment, the shipper establishes his prima facie case when he shows delivery in good condition, arrival in damaged condition, and the amount of damages. Thereupon, the burden of proof is upon the carrier to show both that it was free from negligence and that the damage to the cargo was due to one of the excepted causes relieving the carrier of liability." Id. at 138, 84 S.Ct. at 1145. (Two of the exceptions relieving the...