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Southern Pacific Co. v. Wheaton Brass Works

Decided: December 4, 1950.


On appeal from the Essex County District Court.

For reversal -- Justices Case, Heher, Oliphant, Burling and Ackerson. For affirmance -- Chief Justice Vanderbilt, and Justice Wachenfeld. The opinion of the court was delivered by Burling, J.


This is an appeal by the plaintiff from a judgment of the Essex County District Court in favor of the defendant. The case was submitted to the District Court upon the pleadings and an agreed state of facts and briefs. The notice of appeal is addressed to the Superior Court, Appellate Division, but has been certified on our own motion.

The only issue involved is one of law. The question to be determined is whether a common carrier may, under the Interstate Commerce Act, recover from a consignee the balance of the freight charges on an interstate shipment where the consignor misdescribed the goods in a bill of lading and prepaid the freight at a lower rate than that provided in the filed tariffs for the goods actually shipped, the consignee having refused to accept the shipment until assured that the freight was prepaid, and having changed his position in reliance on such representation.

The pertinent facts, as they appear in the stipulation of the parties, are that on May 16, 1947, the defendant entered into a contract with Bernard Pipe Supply, of Los Angeles, California, for the purchase of 291 boxes of loading assemblies, [5 NJ Page 597] by the terms of which contract the seller was to prepay the shipping charges. On or about June 1, 1947, the Officer in Charge, Construction Battalion Center, Port Hueneme, California, as agent of the seller, delivered the said assemblies to the plaintiff's agent at Oxnard, California, for shipment to the defendant, at Newark, New Jersey. The assemblies were described in the bill of lading as "291 BXS Pipe Fittings, NOIBN, I/S." The abbreviation "I/S" is accepted among carriers as meaning "Iron and Steel." The shipment actually consisted of iron and steel pipe with fittings and brass valves. The shipper's agent prepaid the plaintiff's agent charges of $1,082.42 on the basis of tariffs and schedules of the Interstate Commerce Commission applicable to shipments of iron and steel. The defendant received from the seller an invoice for the price of the goods which indicated that the shipping charges had been prepaid. Enclosed with the invoice was a uniform straight bill of lading indicating that the freight charges were to be collected from the consignee. The defendant also received a notice from the Pennsylvania Railroad Co., the terminal carrier, indicating that the goods had arrived at its Newark freight station and that the freight charges had been prepaid. In view of the conflicting statements on the invoice, the arrival notice and the bill of lading the defendant contacted the Pennsylvania Railroad Co., advising that it did not wish to accept the goods until it knew whether there were any shipping charges payable, and being informed that the shipping charges had been fully prepaid, accepted the goods and paid the shipper the full contract price therefor. At the time of such acceptance the defendant knew that the shipment consisted partly of brass but did not know the meaning of the abbreviation "I/S" on the bill of lading. Approximately 18 months after the acceptance of delivery by the defendant, and after substantially all of the goods had been resold, a representative of the Pennsylvania Railroad Co. discussed the shipment with the defendant, and, upon being apprised of the nature of the goods, informed the defendant that the goods had been improperly classified by the

shipper as a result of which additional freight charges were due. The defendant informed said representative that any unpaid freight charges would have to be collected by the railroad from the shipper as under the defendant's contract with the shipper the latter was liable therefor. The plaintiff has made no effort to collect the unpaid balance of the shipping charges from the shipper, which is still in business and solvent, but instituted the present suit on June 16, 1949, against the defendant to collect such unpaid charges in the amount of $738.37. The Essex County District Court decided that under the foregoing facts the defendant was under no liability to the plaintiff and judgment in favor of the defendant was accordingly entered on March 10, 1950. The present appeal is from that judgment.

The shipment giving rise to the present controversy is of an interstate nature and a determination of the question involved requires a consideration of the applicable provisions of the Interstate Commerce Act as construed by the federal courts whose decisions on federal problems are controlling. The pertinent provisions of the Interstate Commerce Act are contained in Title 49, U.S.C.A., § 6, par. (7) (Act February 7, 1887, c. 104, § 6, par. 4, 24 Stat. 381, as amended Act March 2, 1889, c. 382, § 1, pars. 4, 7, 25 Stat. 856, 857, Act June 29, 1906, c. 3591, § 2, § 6, par. 6, 34 Stat. 587, Act February 28, 1920, c. 91, § 411, § 6, par. 7, 41 Stat. 483), as follows:

"No carrier * * * shall engage * * * in the transportation of property * * * unless the rates * * * 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 * * * property * * * between the points named in such tariffs than the rates * * * 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 * * * and charges so specified * * *,".

The foregoing section of the Act has been construed on numerous occasions by the federal courts and it has become

well settled that the purpose of the act is to prevent preferences and to enforce compliance with the requirements of the pertinent paragraph that a carrier shall not charge less than the rates specified in his filed schedules, and that it is the right and duty of the carrier to collect the full tariff charges for freight delivered. Nor can any act or omission on the part of the carrier, except the running of the statute of limitations, estop or preclude the carrier from recovering the full amount of the proper charges from a person liable therefor, the parties to the consignment being, as a matter of law, charged with the proper schedule rates. See annotation, Title 49, U.S.C.A., § 6, par. (7), p. 284. One of objectives of the act is to prevent discrimination by carriers in their rates in favor of preferred shippers and to stabilize rates beyond the control of the carrier and the persons liable therefor. Failure by a carrier to collect the proper charges cannot release a person liable therefor as this would circumvent the purpose of the act and be in defiance of its provision forbidding a remission "in any manner or by any device any portion of the rates * * * and charges so specified." The application of the act, as construed by the courts, leads occasionally to a seemingly harsh result as is alluded to in Pittsburgh, C.C. & St. L.R. Co. v. Fink, 250 U.S. 577, 63 L. Ed. 1151 (1919), a leading case on the subject. In that case, a carrier delivered merchandise to the consignee, one Fink, upon payment by the latter of the sum of $15, being the amount specified in the waybill. The filed tariff rates so classified the merchandise that the charges should have been $30. Suit was instituted by the carrier for the difference and recovery was allowed. The rule was stated by Mr. Justice Day as follows:

"* * * The statute made it unlawful for the carrier to receive compensation less than the sum fixed by the tariff rates duly filed. Fink, as well as the carrier, must be presumed to know the law, and to have understood that the rate charged could lawfully be only the one fixed by the tariff. When the carrier turned over the goods to Fink upon a mistaken understanding of the ...

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