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Video Station v. Frey''s Motor Express Inc.

Decided: February 18, 1983.

THE VIDEO STATION, PLAINTIFF-RESPONDENT,
v.
FREY'S MOTOR EXPRESS, INC., A NEW JERSEY CORPORATION, DEFENDANT-RESPONDENT, AND CASSWAY'S TRUCKING CORPORATION, A NEW JERSEY CORPORATION, DEFENDANT-APPELLANT



On appeal from the Warren County District Court.

Michels, Pressler and Trautwein. The opinion of the court was delivered by Michels, P.J.A.D.

Michels

Defendant Cassway's Trucking Corporation (Cassway's) appeals from a judgment of the Warren County District Court that awarded plaintiff The Video Station damages against it and codefendant Frey's Motor Express, Inc. (Frey's) in the sum of $2,435.65 and declared that Frey's was entitled to be indemnified by Cassway's for all sums paid to plaintiff by reason of said judgment. The trial judge, based on a stipulation of facts and exhibits, held that Cassway's failed to conform to reasonable commercial standards in carrying out its contractual undertaking with Frey's by accepting a check, stamped certified but not signed by the drawee bank, when delivering goods to plaintiff's consignee.

Although we agree with the judge's ultimate holding, we disagree in part with the reasons that underlie it. Contrary to the conclusions of the trial judge and the parties, the relevant standard of care applicable in this case is not that established by § 7-404 of the Uniform Commercial Code, N.J.S.A. 12A:7-404. In our view, Cassway's liability to plaintiff did not depend upon

statute. The overwhelming weight of modern authority is that a carrier's liability for failure to pick up cash or its equivalent under a C.O.D. shipment is a matter of contract between the parties, separate from and unrelated to the contract for delivery and its attendant statutory duties.*fn1 See, generally, 13 C.J.S. Carriers § 186a at 382-383; Annotation, "Liability of Carrier for Delivering Goods Sent C.O.D. Without Receiving Cash Payment," 27 A.L.R. 3d 1320, 1324 (1969). Thus, it is frequently said that

Under a c.o.d. shipment, the carrier acts in two capacities, as bailee to transport the goods, which is a duty imposed by law upon common carriers, and as agent to collect the price of the goods, which is not a duty imposed by law, but is a matter of private contract, express or implied, which the carrier may enter into or refuse at its option. [27 A.L.R. 2d at 1324]

Accord, e.g., Cermetek, Inc. v. Butler Avpak, Inc., 573 F.2d 1370, 1375 (9 Cir.1978); National Van Lines, Inc. v. Rich Plan Corp., 385 F.2d 800, 802 (5 Cir.1967); Bond Rubber Corp. v. Oates Bros., 136 Conn. 248, 70 A.2d 115, 117 (Sup.Ct.Err.1949); Joseph Mogul, Inc. v. C. Lewis Lavine, Inc., 247 N.Y. 20, 159 N.E. 708 (Ct.App.1928). As explained in the Cermetek case:

A carrier who enters into a C.O.D. contract is acting in two separate capacities. The first is that of a common carrier and bailee. As such, he has all of the common law duties: to receive, transport, care for and deliver goods. These are the duties in all carriage contracts. The second capacity is either that of an agent of the shipper to collect or that of an agent to sell. By such C.O.D. contract, the carrier assumes a duty he would not have under the common law. Breaches of the two different sets of duties call for different measures of damages.

[573 F.2d at 1375]

Here, the terms of the contract are clear and simple: Frey's (and therefore Cassway's) agreed to release the goods to plaintiff's consignee only upon receipt of cash or a certified

check and to remit either the cash or the certified check to plaintiff. Plaintiff, on the other hand, agreed to pay a C.O.D. fee for this service. The effect of this contract was to create an agency in Frey's (which Frey's subsequently delegated to Cassway's) to collect a debt for plaintiff. ...


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