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United Video Buyers Association v. North Penn Transfer Inc.

Decided: June 27, 1986.


On appeal from the Superior Court of New Jersey, Law Division, Hudson County whose opinion is reported at 204 N.J. Super 172 (Law Div. 1985).

King, O'Brien and Scalera. The opinion of the court was delivered by King, P.J.A.D.


This case involves the right of a consignor of cargo to recover against the carrier where the consignor's bill of lading was not filled out strictly in accordance with the applicable federal tariff regulations. The case is here on our grant of leave to appeal from the denial of a summary judgment motion by the carrier, North Penn Transfer, Inc. (North Penn). R. 2:2-4. We disagree with the ruling of the Law Division judge and reverse the order denying summary judgment.

The facts are essentially uncontroverted. Plaintiff, United Video Buyers Association (United Video), contracted with the carrier, North Penn, to ship video recorders worth about $34,000 from Fairfield, New Jersey to North Providence, Rhode Island on eight occasions between December 22, 1981 and January 18, 1982. Although United Video intended that the shipment be on a C.O.D. basis and North Penn, in fact, treated the shipment as C.O.D., United Video did not make the proper C.O.D.*fn1 notations on its bills of lading. In treating this as a C.O.D. shipment North Penn accepted certified checks which did not bear the signature of a bank officer and which were uncollectible. United Video brought this suit against the shipper

for the amount of the certified checks, claiming that its employees negligently accepted "bogus and worthless checks."

In its motion for summary judgment, North Penn argues that as a matter of law it was not liable for negligently performing the C.O.D. shipment because United Video's bill of lading did not conform to tariff Regulation No. 190 governing C.O.D. shipments. North Penn relies on case law which holds that a shipper's nonconformance with the requirements of published tariff regulations cannot be waived by the carrier. North Penn contends that even though a carrier is aware of the shipper's improperly placed C.O.D. notations and still treats the shipment as a C.O.D. delivery, but does so negligently, the carrier is not liable. North Penn contends that if the shipper's C.O.D. designation did not comply with the tariff regulations, a C.O.D. contract was not created. At the hearing on North Penn's motion for summary judgment its attorney did not deny that North Penn actually treated this shipment on a C.O.D. basis.

United Video admits that the shipment in this case was technically not a C.O.D. shipment under the regulations. They admit that on filling out the bill of lading, which was a preprinted form supplied by North Penn, its agent put the C.O.D. instructions in the description section of the form, which was apparently customary practice for United Video. Rule No. 190 of the tariff regulations, which governs C.O.D. shipments, states that "the letters C.O.D. must be printed, stamped, typed or written on Bills of Lading and Shipping Orders immediately before name of consignee."*fn2 (Emphasis added).

By the same token, as noted, North Penn does not deny that it treated this shipment on a C.O.D. basis anyway. In its

receipts for each United Video shipment, North Penn itself acknowledged a specific C.O.D. amount, cash or certified check. North Penn contends, however, that, as a matter of law, it cannot be held liable for negligent C.O.D. services without a C.O.D. contract, i.e., a bill of lading with the proper notations, and since United Video's bill of lading for these shipments did not have correct C.O.D. notations, there was no such contract created. North Penn also contends that the tariff rules governing C.O.D. shipments are not waivable.

The established precedent appears to be on North Penn's side. In North Coast Mfg. Corp. v. Union Pacific Railroad Co., 185 F. Supp. 287 (D.Ore.1960), the facts were almost identical. There a consignor-shipper contracted with defendant carrier for shipment of goods. The consignor-shipper filled out bills of lading intending a C.O.D. shipment, but put the C.O.D. notation in a place other than that authorized by the carrier's tariff. On previous occasions when this was done, the carrier's billing clerks noticed the C.O.D. notations and treated the shipment accordingly. In the shipment at issue the billing clerks did not notice the C.O.D. notations, although the shipper claimed that the carrier's truck drivers were notified, and consequently C.O.D. charges were not collected.

The consignor brought suit for damages and the judge granted the carrier's motion for summary judgment. Plaintiff argued that the railroad, in accepting a C.O.D. bill, functioned as a "collection agent," and therefore the C.O.D. bill of lading was a private contract. As a private contract, terms such as the exact location of ...

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