Wisconsin Packing Co., Inc. v. Indiana Refrigerator Lines, Inc.

• Decision Date: 03 December 1979
• Docket Number: No. 78-2305,78-2305
• Citation: 618 F.2d 441
• Parties: WISCONSIN PACKING CO., INC., Plaintiff-Appellant, v. INDIANA REFRIGERATOR LINES, INC., Defendant-Appellee. . Rehearing En Banc
• Court: U.S. Court of Appeals — Seventh Circuit

Page 441

618 F.2d 441

WISCONSIN PACKING CO., INC., Plaintiff-Appellant, v. INDIANA REFRIGERATOR LINES, INC., Defendant-Appellee.

No. 78-2305.

United States Court of Appeals Seventh Circuit.

Rehearing En Banc Dec. 3, 1979.

Decided March 18, 1980.

John P. Brady, Milwaukee, Wis., for plaintiff-appellant.

H. Barney Firestone, Chicago, Ill., for defendant-appellee.

Before FAIRCHILD, Chief Judge, and SWYGERT, CUMMINGS, PELL, SPRECHER, TONE, BAUER, WOOD and CUDAHY, Circuit Judges.

CUMMINGS, Circuit Judge.

This is the second time this case has been before this Court. In August 1979, a divided panel of this Court upheld the district court's summary judgment for defendant. 604 F.2d 1022. On November 1, 1979, we granted plaintiff's petition for rehearing en banc and the case was subsequently reargued before all active judges. We now vacate the district court's judgment and remand the cause for trial.

In this action under the Carmack Amendment to the Interstate Commerce Act (49 U.S.C. § 20(11)), plaintiff seeks $13,092.66 in damages arising from the U.S. Navy's rejection of approximately 33,465 pounds of frozen meat shipped by plaintiff via defendant carrier from Milwaukee, Wisconsin, to the Naval Supply Center in Norfolk, Virginia. With the allegations in plaintiff's affidavits taken as true for purposes of reviewing defendant's summary judgment motion, ¹ the record in this case discloses the following: On July 29, 1974, plaintiff shipper transferred the goods to defendant for delivery at Norfolk on July 31. The plaintiff had previously had the meat tested for compliance with Navy temperature regulations and had specified that the carrier was to maintain the meat en route in a refrigerated trailer at zero degrees Fahrenheit (Plaintiff's Supp. App. 18). When the goods arrived at Norfolk on the appointed day, the Naval Supply Center refused delivery because the cargo temperature was 1.2 degrees over tolerances (Plaintiff's Supp. App. 19). Defendant immediately notified plaintiff of the rejection and subsequently brought the shipment back to Milwaukee, stopping in Pittsburgh so that the refrigeration unit on the trailer could be tested.

Defendant carrier retained exclusive possession of the meat during this period. Thus one of its representatives was present when the seals were broken and the trailer opened in Norfolk and he observed the tests that indicated the meat was not within acceptable military standards. A carrier representative was also present when the meat was returned to the shipper's Wisconsin premises on August 2. He remained there while the meat was again tested and found to be 1.2 degrees over the required tolerances. Recognizing that the temperature of the meat represented a fatal deviation from the shipper's specifications, the carrier's agent chose not to investigate any further the circumstances surrounding the damage to the cargo. The shipper then refused the carrier's tender of the returned meat, and the carrier removed the trailer and its cargo from plaintiff's premises with the intention of attempting to resell the meat. Carrier representatives also rechecked the refrigeration unit on the trailer and continued to perform tests on the unit for three days. On August 5, the carrier's Milwaukee terminal manager advised the shipper he had been unable to dispose of the meat and the shipper agreed to take back the meat to dispose of on the carrier's behalf. Thereafter plaintiff kept the meat in cold storage, eventually selling it at a loss in two separate lots on September 30, 1974, and April 3, 1975, respectively.

During the August 2 examination of the trailer in Milwaukee, Karl Brown, one of plaintiff's local officers, orally informed James Stevenson, defendant's Milwaukee terminal manager, that the shipper would look to the carrier for reimbursement for the damage to the meat. Stevenson thereupon told Brown to prepare a letter "summarizing the situation." Accordingly, at the same meeting Brown handed Stevenson the following notice:

"Wisconsin Packing Company refused to accept meat on trailer no. 4013 because of Army (Navy) rejection of temperatures averaging 1.2 degrees over acceptable allowance temperatures. Return temperatures checked out and ranged from nine to twenty-five degrees."

Stevenson accepted this letter which he apparently forwarded to defendant's headquarters in Muncie, Indiana, without comment. Neither he nor any other carrier representative ever sought additional information from plaintiff about the damage. The record also indicates that on April 10, 1975, shortly after the second lot of damaged meat was sold, Brown prepared on a formal claim notice an itemized list of plaintiff's losses (Attachment to Record Items 4 and 5). It was stipulated below, however, that plaintiff and defendant exchanged no written notice other than the August 2 letter during the nine-month period after the refusal of the meat by the Navy. ²

Defendant's refusal to honor plaintiff's claim for its losses from the Navy's rejection of the meat led plaintiff to file this action in the district court. Defendant moved for summary judgment, arguing that plaintiff had failed to file a written claim for damage within nine months, as required by the standard bill of lading. Finding that a notice of loss is not equivalent to a claim for damage, the district court held that the August 2 letter was insufficient to meet the writing requirement of the bill of lading. The court also concluded "as a matter of law" that defendant lacked the actual knowledge of loss a written notice would have provided and that absent some further writing, plaintiff could not recover from defendant. Accordingly, Judge Reynolds entered summary judgment for defendant.

Congress adopted the Carmack Amendment to prevent carriers from insulating themselves from damage actions filed by shippers. Consequently, the Amendment requires carriers to issue a receipt or bill of lading for property received for transportation and makes the carrier liable to the lawful owner of the bill of lading for any damage caused by the carrier. The Amendment also makes it unlawful for the carrier to provide "a shorter period for the filing of claims than nine months (formerly four months) and for the institution of suits than two years" from the date the carrier disallows the claim. 49 U.S.C. § 20(11). In the case at bar, the carrier's bill of lading provided this minimum period for filing claims and instituting suits, adding that "in case of failure to make delivery, then (a claim must be made) within nine months after a reasonable time for delivery has elapsed." The bill of lading also specified that the claim must be "in writing," although the Carmack Amendment neither requires written claims nor imposes any other restrictions on the form of notice.

The Supreme Court has indicated that a bill of lading requirement that claims be made "in writing" within a specified period of time will be enforced (St. Louis, Iron Mountain & Southern Ry. Co. v. Starbird, 243 U.S. 592, 604-605, 37 S.Ct. 462, 467, 61 L.Ed. 917), but the Court has also expressed a willingness to construe such writings liberally. Thus in Georgia, Florida & Alabama Ry. Co. v. Blish Milling Co., 241 U.S. 190, 36 S.Ct. 541, 60 L.Ed. 948, the Court stated that a bill of lading requiring written claims for losses within four months after the delivery of the property was intended simply "to secure reasonable notice" and "to facilitate prompt investigation." Accordingly, it held that a written notice that "sufficiently apprised the carrier of the character of the claim * * * " was adequate. The Court noted that compliance with the written notice provision of a bill of lading "does not require documents in a particular form," and that "It is addressed to a practical exigency and it is to be construed in a practical way." 241 U.S. at 198, 36 S.Ct. at 545. Therefore it permitted the shipper in that case to recover even though its communications with the carrier consisted of a series of telegrams about the damage to the cargo, one of which stated a mere intention to file a claim at some later date.

The principle that emerges from Blish should dispose of this case. Although lacking in formality, plaintiff's August 2 letter gave defendant "reasonable notice." When "construed in a practical way," it clearly represented an attempt to formalize the claim inherent in plaintiff's refusal to take back the meat and its oral assertions that defendant was at fault. It thus sufficed to advise the carrier that the shipper was seeking reimbursement for the loss. It is incontrovertible that the notice identified the goods by reference and set forth a formal statement of the damage. It is also apparent that the carrier not only was aware of the need to investigate, but actually conducted a thorough inquiry. Moreover, since the carrier had itself spent three days unsuccessfully endeavoring to dispose of the meat, it knew at least as well as the shipper what the maximum loss could be. Thus within a few days of the damage defendant had all the information necessary to protect its interests in the face of plaintiff's claim. Accordingly, the August 2 letter was "an adequate statement * * * deemed to satisfy this (written claim) requirement" of the bill of lading. 241 U.S. at 198, 36 S.Ct. at 545. ³

The carrier insists, however, that a prevailing Interstate Commerce Commission (ICC) regulation requires more formal notice than was available here. The section of the regulation relied on by the court below provides:

"Bad order reports, appraisal reports of damage, notations of shortage or damage, or both on freight bills, delivery receipts, or other documents, * * * shall, standing alone, not be considered by carriers as sufficient to comply with the minimum claim filing requirements (of this regulation)." 49 C.F.R. § 1005.2(c) reproduced in Ex Parte No. 263, 340 I.C.C. 515, 719 (1972).

That this provision is inapplicable...