United States v. Mason & Dixon Lines

• Decision Date: 25 May 1955
• Docket Number: No. 12265.,12265.
• Citation: 222 F.2d 646
• Parties: UNITED STATES of America, Appellant, v. MASON & DIXON LINES, Inc., Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

222 F.2d 646 (1955)

UNITED STATES of America, Appellant, v. MASON & DIXON LINES, Inc., Appellee.

No. 12265.

United States Court of Appeals Sixth Circuit.

May 25, 1955.

Richard M. Markus, Washington, D. C., Warren E. Burger, Samuel D. Slade and T. S. L. Perlman, Washington, D. C., John C. Crawford, Jr., Knoxville, Tenn., on the brief, for appellant.

Edwin O. Norris, Kingsport, Tenn., Clifford E. Sanders, Jackson C. Raulston, Edwin O. Norris, Kingsport, Tenn., on the brief, for appellee.

Before MARTIN, McALLISTER and MILLER, Circuit Judges.

MARTIN, Circuit Judge.

The United States has appealed from a judgment of the district court awarding the appellee common carrier recovery of freight charges on a consignment to an agency of the United States of a quantity of paint, transported over the motor carrier's lines. The background facts are that a branch of the United States Department of Commerce entered into a contract for the purchase of the paint from Spar-Tex Corporation of New York. The purchase contract stipulated that the paint was to be delivered to the government agency as specified, and the purchase order which was incorporated into the contract provided that the purchase price was to be "f. o. b. destination."

The appellee carrier was aware of the terms of this contract of purchase, including the provision for delivery f. o. b. destination. Three shipments of paint over appellee's lines ensued: two consignments to the government agency at Wilmington, North Carolina; and the third to its agent at Mobile, Alabama. The bills of lading covering all three shipments were forwarded to the consignees, with the word "prepaid" as to shipping charges marked thereon by the carrier. In a letter dated April 29, 1952, mailed to the government agency, appellee stated that the paint had been shipped "on a prepaid basis"; but, as a matter of fact, the freight charges had not been actually paid.

Spar-Tex assigned its rights under the foregoing sales contract to a New York bank, which gave the government agency due notice of the assignment. Pursuant to this notice, the United States Department of Commerce Agency paid the bank the purchase price provided in its contract with Spar-Tex Corporation. After making a fruitless demand upon Spar-Tex for payment of the freight charges, the carrier requested the government agency to withhold from its payment of the purchase price of the paint the amount due the carrier for transporting the goods. But when this request was received, the government agency had already paid the bank. The Spar-Tex Corporation having become insolvent, the common carrier brought this action under the Tucker Act, U.S.C.A., Title 28, section 1346(a) (2), against the United States, seeking recovery of its aforementioned freight charges. It stood upon the proposition that the government, by accepting delivery of the goods as consignee, had become liable for payment of the freight.

Defensively, the government asserted that the carrier was estopped to deny that the freight had been paid, for the reasons that the government agency had accepted the shipments as prepaid upon representation by the carrier to that effect, and that the carrier had knowledge that the agreed purchase price in the contract between the government agency and the consignor included the cost of the freight.

The judgment for the freight charges entered by the district court in favor of the carrier, against the United States, was based upon conclusions of law, stated as follows: "1. Under the provisions of the Interstate Commerce Act, paragraph 7 of Section 6 of Title 49, U.S.C., common carriers are prohibited from granting, by any means, discrimination and undue preferences in freight rates to shippers on shipments in interstate commerce. 2. A consignee who accepts delivery of goods transported in interstate commerce by common carrier incurs an absolute liability for payment of freight charges. 3. Plaintiff could not under the facts in the case waive or estop itself from collecting the lawful freight rates on the shipments received by defendant." The district court held further that, in an action brought against the United States, no award of interest or costs was allowable.

The statute cited by the district court as determinative, section 6, paragraph (7), of the Interstate Commerce Act, as amended, 49 U.S.C.A. § 6(7), reads: "(7) Transportation without filing and publishing rates forbidden; rebates; privileges. No carrier, unless otherwise provided by this chapter, shall engage or participate in the transportation of passengers or property, as defined in this chapter, unless the rates, fares, and charges upon which the same are transported by said carrier have been filed and published in accordance with the provisions of this chapter; nor shall any carrier charge or demand or collect or receive a greater or less or different compensation for such transportation of passengers or property, or for any service in connection therewith, between the points named in such tariffs than the rates, fares, and charges which are specified in the tariff filed and in effect at the time; nor shall any carrier refund or remit in any manner or by any device any portion of the rates, fares, and charges so specified, nor extend to any shipper or person any privileges or facilities in the transportation of passengers or property, except such as are specified in such tariffs."

The government maintains that the conduct of the carrier in this case was of such character as would give rise to the appropriate application of the doctrine of equitable estoppel, in that the appellee misrepresented to the government agency a material fact, peculiarly within the carrier's knowledge. The government insists that the carrier should have known that the agency would act in reliance on the carrier's representation that the freight had been prepaid; and that, had it known the true situation, the government would have withheld a portion of the purchase price sufficient to cover the shipping charges which were included therein. The government, in its main brief, concedes that, in carrying out the public policy established in paragraph (7) of section 6 of the Interstate Commerce Act, supra, the carrier may hold liable a private consignee, as well as the shipper, for the published tariff rates, notwithstanding an agreement to accept a lower rate and despite any circumstances which would ordinarily call for the applicability of the principle of estoppel.

In Pittsburgh, C., C. & St. L. Ry. Co. v. Fink, 250 U.S. 577, 582, 583, 40 S.Ct. 27, 28, 63 L.Ed. 1151, the Supreme Court said that, while it may constitute a hardship upon a consignee who has accepted delivery of the goods shipped and paid all demanded by the carrier as freight at that time to be called upon later to pay an extra sum in order to comply with the tariff rate, "instances of individual hardship cannot change the policy which Congress has embodied in the statute in order to secure uniformity in charges for transportation"; and that "estoppel could not become the means of successfully avoiding the requirement of the Act as to equal rates, in violation of the provisions of the statute." See also Atchison, Topeka & Santa Fe Railway Co. v. United States, 256 U.S. 205, 41 S.Ct. 456, 65 L.Ed. 891; New York Central & Hudson River Railroad Co. v. York and Whitney Company, 256 U.S. 406, 41 S.Ct. 509, 65 L.Ed. 1016; Louisville & N. R. Co. v. Central Iron & Coal Co., 265 U.S. 59, 65, 44 S.Ct. 441, 68 L.Ed. 900.

In its main brief, the government conceded that the doctrine of the foregoing cases extends, in cases of private consignees, to situations where the carrier issues a bill of lading incorrectly marked "prepaid" and delivers the goods on that basis but later discovers its mistake and seeks recovery from the consignee. See Central Warehouse Co. v. Chicago, R. I. & P. Ry. Co., 8 Cir., 20 F.2d 828, 829; Wheaton Brass Works v. Southern Pacific Company, 1951, 341 U.S. 904, 71 S. Ct. 614, 95 L.Ed. 1343, denying certiorari from the Supreme Court of New Jersey, 5 N.J. 594, 76 A.2d 890. See also Great Northern R. Co. v. Hyder, D.C.W.D. Wash., 279 F. 783; Western & Atlantic R. Co. v. Underwood, D.C.N.D.Ga., 281 F. 891; Southern Ry. Co. v. Mayer Myers Paper Co., 191 Tenn. 164, 171, 232 S. W.2d 20. But, in its reply brief, the government states that, in accepting the premise that there can be no estoppel in favor of a private consignee, the decision of this court in Davis v. Akron Feed & Milling Co., 6 Cir., 296 F. 675, had been overlooked. In that case, it was held that where the consignee, relying on representations made by the carrier that all freight on the consignment had been paid from Kansas City to Chicago, accepted the goods, paid the freight charges from Chicago to Akron demanded by the carrier, and then paid an Akron bank on the bill of lading the purchase price of the goods shipped f. o. b. cars at Akron, less the freight charges, the railroad company was estopped from demanding payment of the additional freight charges from Kansas City to Chicago which had not been paid and had been overlooked by the railroad company. Judgment was entered against the carrier.

Inasmuch as that decision was published in 1924 by the court of appeals for this circuit and, unless it has been overruled by the Supreme Court or is now overruled by us, is still the law of the circuit, we deem it important to quote at length from the opinion, as follows: "The law is well settled that representations or claims made by the carrier as to the correct amount of freight to...