E.W. Wylie Corp. v. Menard, Inc.

Decision Date31 October 1994
Docket NumberNo. 940078,940078
PartiesFed. Carr. Cas. P 83,950 E.W. WYLIE CORPORATION, Plaintiff and Appellant, v. MENARD, INC., Defendant and Appellee. Civ.
CourtNorth Dakota Supreme Court

Jon R. Brakke (argued), Vogel, Brantner, Kelly, Knutson, Weir & Bye, Ltd., Fargo, for plaintiff and appellant.

Michael F. Swensen (argued), Eau Claire, WI, for defendant and appellee.

MESCHKE, Justice.

E.W. Wylie Corporation (Wylie) appeals from a judgment denying it collection of unpaid freight charges from Menard, Inc. (Menard). Because contract law governs, we affirm.

Menard, located at Eau Claire, WI, is a retailer of building materials and home improvement products. Menard contracted with IKA Lumber Specialties Inc. (IKA) of Lackawanna, NY, for the purchase of lumber. The purchase orders dated January 11, 1993, called for delivery "F.O.B. Eau Claire" with "freight prepaid." The contract thus required IKA to pay the freight charges for transporting the shipments to Menard's Eau Claire facility. IKA then negotiated a contract with Wylie, an interstate motor carrier based in Fargo, to transport the lumber from Lackawanna to Eau Claire for $900 per load. IKA told Wylie to bill IKA for the freight charges.

During February and March 1993, Wylie carried seven shipments of lumber from IKA in Lackawanna to Menard in Eau Claire. Upon delivery, each bill of lading was signed by a Menard employee. The bills of lading did not indicate the amount of the freight charges or who was liable for them.

Menard paid IKA for each lumber shipment after the shipment was received. These payments included compensation for the freight charges. After each delivery, Wylie billed IKA for the freight charges, but received no payments. In May 1993, IKA informed Wylie that it was ceasing operations immediately and that there were few assets available to pay its unsecured debts. Wylie then demanded payment of the freight charges from Menard, who refused to pay.

Wylie sued Menard for $6,300 in unpaid freight charges for the seven shipments of lumber between Lackawanna and Eau Claire. Following a trial without a jury, the court concluded, because no contract existed between Wylie and Menard, Menard was not liable to Wylie for IKA's unpaid freight bills.

In this appeal from that judgment, Wylie asserts that the trial court erred in refusing to hold Menard, as consignee, liable because, under both the common law and the Interstate Commerce Act, 49 U.S.C. Secs. 10101 et seq., consignors and consignees are jointly and severally liable to an interstate freight carrier for unpaid shipping charges, regardless of contract law. We reject Wylie's argument that contract law does not apply to this case.

I

The Interstate Commerce Act declares, "[e]xcept as otherwise provided in this subtitle, the remedies provided under this subtitle are in addition to remedies existing under another law or at common law." 49 U.S.C. Sec. 10103. Wylie's claim that a consignor and consignee of shipped goods are always jointly and severally liable for a carrier's freight charges overstates the common law.

At one time, it was often said that a common law presumption existed that a consignee, the party entitled to delivery under a bill of lading, becomes liable for paying the carrier's freight charges upon delivery of the goods consigned. See, e.g., Louisville & Nashville R.R. Co. v. Central Iron & Coal Co., 265 U.S. 59, 70, 44 S.Ct. 441, 443-444, 68 L.Ed. 900 (1924); New York Cent. & H.R.R. Co. v. York & Whitney Co., 256 U.S. 406, 408, 41 S.Ct. 509, 510, 65 L.Ed. 1016 (1921); Pittsburgh, Cincinnati, Chicago & St. Louis Ry. Co. v. Fink, 250 U.S. 577, 582, 40 S.Ct. 27, 28, 63 L.Ed. 1151 (1919). However, as Central Iron explained, 265 U.S. at 67, 44 S.Ct. at 443, primary liability was presumed to attach to the consignor, the party from whom the carrier receives the goods for delivery.

The cases relied on by Wylie to support its argument stem from these three early Supreme Court cases, Fink, York & Whitney, and Central Iron. But the Supreme Court's statements of the general common law rule in those cases must be considered in context. In Fink, the carrier undercharged the consignee at the time of delivery of a shipment of goods and later sued him for the unpaid balance of the lawful tariff rate. Although the consignor and consignee had apparently not agreed on who should pay the freight charges, the consignee paid the incorrect freight bill when presented to him. The Court held that the consignee was liable for the full sum fixed by the filed tariff, even though the carrier mistakenly charged the consignee a lower, illegal rate, and that the consignee could not invoke estoppel principles to defeat collection of the legal rate because to do so would thwart the major purpose of the Interstate Commerce Act--the prevention of unjust rate discrimination. Likewise, in York & Whitney, the consignee, who had accepted delivery and paid the carrier less than required under the carrier's filed tariff, was found liable for the undercharge. Relying on Fink, the Court rejected the consignee's argument that it could "escape the liability imposed by law through any contract with the carrier." York & Whitney, 256 U.S. at 408, 41 S.Ct. at 510. Rather, the Court said, "[t]he transaction between the parties amounted to an assumption by the consignee to pay the only lawful rate it had the right to pay or the carrier the right to charge." Id.

Fink and York & Whitney better illustrate the "filed rate doctrine" than any common law rule. Simply put, the filed rate doctrine, deeply lodged in the complex history and turgid language of the Interstate Commerce Act, dictates that the rate a common carrier duly files with the Interstate Commerce Commission (ICC) is the only lawful rate it can charge for its services, and that deviation from the filed rate is not permitted under any pretext. See Security Services, Inc. v. K Mart Corp., --- U.S. ----, ----, 114 S.Ct. 1702, 1706, 128 L.Ed.2d 433 (1994); Maislin Industries, U.S. v. Primary Steel, Inc., 497 U.S. 116, 126-28, 110 S.Ct. 2759, 2766, 111 L.Ed.2d 94 (1990); Louisville & Nashville R. Co. v. Maxwell, 237 U.S. 94, 97, 35 S.Ct. 494, 495, 59 L.Ed. 853 (1915); 49 U.S.C. Secs. 10761(a) (carrier "may not charge or receive a different compensation for that transportation or service than the rates specified in the tariff....") and 10762(a)(1) (carrier must publish its rates in tariffs filed with ICC). Under the doctrine, agreements to charge a rate different than the filed tariff are disregarded, Reiter v. Cooper, --- U.S. ----, ----, 113 S.Ct. 1213, 1219, 122 L.Ed.2d 604 (1993), and "a carrier has not only the right but also the duty to recover its proper charges for services performed." Southern Pac. Transp. Co. v. Commercial Metals Co., 456 U.S. 336, 343, 102 S.Ct. 1815, 1821, 72 L.Ed.2d 114 (1982). Fink and York & Whitney do not hold that the common law presumptions, as distinguished from the statutory filed rate doctrine, cannot be altered by contract.

This distinction is emphasized in Central Iron, where the Court examined contractual terms in the bills of lading to determine whether the consignor was liable for the uncollected balance of the legally required tariff. The bills of lading expressly placed primary responsibility for payment of freight charges on the consignee. The Court explained that, although a consignor ordinarily had the primary obligation to pay freight charges if the tariff did not say when or by whom the payment should be made, "[a]s to these matters carrier and shipper were left free to contract, subject to the rule which prohibits discrimination." Central Iron, 265 U.S. at 66, 44 S.Ct. at 442 (footnote omitted). The Court pointed out that several earlier state and federal cases had "erroneously assumed that the mere fact of delivery of goods for shipment imports, under the Interstate Commerce Act, as matter of law, an absolute promise to pay the freight charges, and/or that an agreement to the contrary is void." Central Iron, 265 U.S. at 69 n. 7, 44 S.Ct. at 443 n. 7. Central Iron clarifies that contract law ordinarily determines who is liable for payment of freight charges under the common law.

We agree with those courts that have concluded that, because liability for payment of freight charges is largely a matter of contract, any common law presumption about responsibility for freight costs may be rebutted by evidence that the parties intended something else. See In re Roll Form Products, Inc., 662 F.2d 150, 154 (2d Cir.1981); Consolidated Freightways Corp. of Del. v. Admiral Corp., 442 F.2d 56, 61-62 (7th Cir.1971); New York Cent. R. Co. v. Trans-American Petroleum Corp., 108 F.2d 994, 997 (7th Cir.1939); Schneider Nat. Carriers v. Rudolph Exp. Co., 855 F.Supp. 270, 273 (E.D.Wis.1994); In re Chateaugay Corp., 78 B.R. 713, 722-723 (Bkrtcy.S.D.N.Y.1987); In re Penn-Dixie Steel Corp., 6 B.R. 817, 820 (Bkrtcy.S.D.N.Y.1980), aff'd, 10 B.R. 878 (S.D.N.Y.1981); Consolidated Freightways v. Peacock Eng., 256 Ill.App.3d 68, 194 Ill.Dec. 803, 807, 628 N.E.2d 300, 304 (1993); Consol. Rail v. Hallamore Motor Transp., 394 Mass. 56, 473 N.E.2d 1137, 1138, cert. denied, 474 U.S. 918, 106 S.Ct. 246, 88 L.Ed.2d 254 (1985). See also 13 Am.Jur.2d Carriers Sec. 473 (1964). Of "somewhat questionable lineage," C.F. Arrowhead Services, Inc. v. AMCEC Corp., 614 F.Supp. 1384, 1388 (N.D.Ill.1985), the common law presumption advanced by Wylie has no application where there is an express contract.

II

Wylie argues that an independent basis for Menard's liability is given in 49 U.S.C. Sec. 10744 (part):

Liability for payment of rates

(a)(1) Liability for payment of rates for transportation for a shipment of property by a shipper or consignor to a consignee other than the shipper or consignor, is determined under this subsection when the transportation is provided by a rail, motor, or water common carrier under this subtitle. When the...

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