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Transcon Lines v. Lipo Chemical Inc.

December 28, 1983

TRANSCON LINES, A CORPORATE BODY, PLAINTIFF,
v.
LIPO CHEMICAL, INC., A CORPORATE BODY, DEFENDANT, THIRD-PARTY PLAINTIFF, V. E. PIZANTE, LTD., THIRD-PARTY DEFENDANT



Mandak, J.s.c. (Temporarily assigned).

Mandak

Plaintiff Transcon Lines (Transcon) brought this action to recover freight charges from defendant Lipo Chemical, Inc. (Lipo). Lipo served a third-party complaint on E. Pizante, Ltd. (Pizante) alleging an unauthorized shipping arrangement. Third-party defendant, Pizante, did not defend and default has been entered.

This case was tried in part upon the following stipulation of facts:

Defendant, Lipo, ordered from third-party defendant, Pizante, five 55-gallon drums of jojoba oil. The terms of the shipment were F.O.B. point of origin. Lipo received the property from Transcon, as carrier, and no claim for loss or damage

was filed by Lipo with regard to the property. There was no dispute regarding authenticity of the exhibits presented, namely the bill of lading, the freight bill for the shipment in question and the freight bill for a prior shipment not in question. Lipo has stipulated that if the court should find that the shipments were correctly made with a release value*fn1 of $10,000 a drum, that the principal amount demanded in Transcon's complaint, the published lawful rate, is the correct measure of damages. Transcon has stipulated that in the event the court finds Transcon improperly shipped the goods with a release value of $10,000 a drum, that the correct tariff rate is 19.71 a hundred-weight, that the total rate charges for the shipment in question would have been $422.77 and that defendant had paid the sum of $379.55 prior to the institution of suit.

In addition to stipulations of the parties, this court made the following findings of fact: According to the purchase agreement between Pizante and Lipo, Pizante was to arrange to have the goods shipped to Lipo. Lipo insured its property in transit for any loss in excess of the minimum release value of 50 cents a pound. It had been customary for Pizante to arrange a low release value because Lipo had excess insurance through a third party.

On December 21, 1981 at its Arizona terminal, Transcon received five 55-gallon drums of jojoba oil for carriage pursuant to a uniform domestic straight bill of lading. Pizante's supplier, Desert Whale Jojoba, the consignor, consigned the drums to Pizante, the consignee, at Brooklyn, New York. After receipt of the property for shipment, Transcon received a telephone call from Pizante instructing Transcon to change the bill of lading to reflect Pizante as consignor and Lipo as consignee.

Transcon diverted the shipment and tendered delivery to Lipo in Paterson. The property arrived accompanied by the original bill of lading, unchanged by Pizante's instructions to divert, indicating the original consignor and consignee, a $10,000 a drum release value and marked "collect." Lipo's representative accepted the drums and endorsed the bill of lading.

Transcon subsequently billed Lipo at a tariff rate of $97.92 a hundred-weight, which represents the correct tariff for such goods carrying a $10,000 release value. Lipo objected to the excess release value and has stipulated that its liability is limited to a tariff rate of $19.71 a hundred-weight, which represents the correct tariff for such goods carrying the minimum release value of 50 cents.

The issue to be resolved therefore is whether Lipo, a reconsignee, is liable to Transcon, the carrier, for the full amount of the published tariff rate on goods delivered to it. The court concludes that Lipo is not liable for the published tariff rate.

The Interstate Commerce Act controls questions of liability for payment of freight rates arising from interstate shipment of goods. 49 U.S.C.A. § 10701 et seq. In interpreting and applying the Interstate Commerce Act, our courts are bound by federal case law. Checker Van Lines v. Siltek International, Ltd., 169 N.J. Super. 102, 105 (App.Div.1979). The section governing the question in the case at bar is 49 U.S.C.A. § 10744 which provides in relevant part:

(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 shipper or consignor instructs the carrier transporting the property to deliver it to a consignee that is an agent only, not having beneficial title to the property, the consignee is liable for rates billed at the time of delivery for which the consignee is otherwise liable, but not for ...


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