Yellow Freight System, Inc. v. North American Cabinet Corp.

• Citation: 670 S.W.2d 387
• Decision Date: 17 April 1984
• Docket Number: No. 9242,9242
• Parties: YELLOW FREIGHT SYSTEM, INC., Appellant, v. NORTH AMERICAN CABINET CORP., Appellee.
• Court: Court of Appeals of Texas

Page 387

670 S.W.2d 387

YELLOW FREIGHT SYSTEM, INC., Appellant, v. NORTH AMERICAN CABINET CORP., Appellee.

No. 9242.

Court of Appeals of Texas,

Texarkana.

April 17, 1984.

Earl Sharp, John Sharp, Sharp, Ward, Price & Hightower, Longview, for appellant.

Don Stokes, Stokes & Stokes, Marshall, for appellee.

CORNELIUS, Chief Justice.

Yellow Freight System, Inc. appeals from a judgment awarding North American Cabinet Corporation $2,800.00 damages and $750.00 attorney's fees because of damage to a saw being transported in interstate commerce by Yellow Freight.

North American contracted to sell two used table panel saws to North Creek Woodworks in Rochester, New York for $6,100.00. North Creek was to select and pay for the shipping by a common carrier. As directed by North Creek, North American crated the saws and Yellow Freight transported them from Texas to New York. The F.O.B. shipment was on North American's bill of lading signed only by Yellow Freight. During the shipment the saws were damaged, one slightly and the other extensively. North Creek refused to accept the shipment. Representatives of North American and the New York office of Yellow Freight discussed the situation and orally agreed that North American would allow the shipment to be split so that North Creek could purchase only the one good saw and pay the freight on it. In return Yellow Freight agreed to pay for the other saw or repair it. North American complied with its part of the agreement but Yellow Freight refused to repair or pay for the damaged saw, claiming that their recorded tariffs and the bill of lading limited their liability to $.10 per pound of total weight, amounting to $235.00. The trial court, sitting without a jury, found for North American and entered judgment accordingly.

When proper tariffs are filed with the Interstate Commerce Commission, an interstate carrier may limit its liability for freight damage if the value of the property shipped is declared in writing by the shipper, or the carrier and shipper otherwise agree in writing on a released value of the property. 49 U.S.C.A. § 20(11) (1951); 11 Tex.Jur.3d Carriers § 373 (1981). North American's bill of lading here contained a collection figure of $5,450.00, but no declared or released value was listed. Yellow Freight's tariff provides that if no value is declared or agreed upon, a used property value of $.10 per pound of total weight of the items shipped will control.

Under 49 U.S.C.A. § 20(11), a prerequisite to a valid limitation of liability is that the shipper be given a fair opportunity to choose between higher or lower liability by paying a correspondingly greater or lesser freight charge. Trans-American Van Serv., Inc. v. Shirzad, 596 S.W.2d 587 (Tex.Civ.App.--Houston [1st Dist.] 1980, no writ); Nationwide Horse Carriers, Inc. v. Johnston, 519 S.W.2d 163 (Tex.Civ.App.--Houston [1st Dist.] 1975, writ ref'd n.r.e.). There must be an absolute, deliberate, and well-informed choice by the shipper, Anton v. Greyhound Van Lines, Inc., 591 F.2d 103 (1st Cir.1978), and reasonable notice is necessary to provide the shipper with a genuine opportunity to choose between higher and lower rates based upon valuation. Chandler v. Aero Mayflower, 374 F.2d 129, 135 (4th Cir.1967). In this case, North American did not sign the bill of lading, and there is no evidence that it had reasonable notice or opportunity to agree to a limitation of the carrier's liability. Consequently, the oral agreement found by the trial court controls the carrier's liability rather than the tariffs and bill of lading.

Yellow Freight argues there was no valid oral agreement because the parties failed to agree upon a value, and the testimony of North American's official about the agreement was hearsay. ...