On certification to the Superior Court, Appellate Division, whose opinion is reported at 211 N.J. Super. 584 (1986).
For Affirmance -- Chief Justice Wilentz and Justices Clifford, Pollock, Garibaldi, and Stein. For reversal and remandment -- Justices Handler and O'Hern. Handler, J., dissenting. Justice O'Hern joins this opinion.
The judgment is affirmed, substantially for the reasons expressed in the opinion of the Appellate Division, reported at 211 N.J. Super. 584.
Plaintiff, United Video Buyers Association ("UVB"), had an agreement with North Penn Transfer, Inc. ("NPT") to ship video recorders on a "Collect on Delivery" ("C.O.D.") basis. The eight bills of lading prepared by plaintiff failed to comply, however, with federal Rule of Freight Classification 190, which requires that the letters "C.O.D." be affixed before the name of the consignee and remittance instructions be properly filled out, in default of which the consignor (in this case NPT) has no duty to accept the shipments on a C.O.D. basis. In this case, the bills of lading clearly noted that the shipment was to be C.O.D., but did so only in the package description section and in a checked box noting that the C.O.D. charge was to be paid by the consignee; there was no C.O.D. notation immediately before the consignee's name, and the C.O.D. remittance instructions were left blank on all but one of the bills of lading. Defendant, NPT, treated the deliveries as C.O.D. shipments nonetheless, but the certified checks it received from the buyer proved uncollectible because they were unsigned by a bank officer. Plaintiff brought suit in tort for the value of the uncollectible checks; defendant moved for summary judgment,
claiming that the parties' noncompliance with Rule of Freight Classification 190 relieves it of all liability.
The trial court denied the defendant's motion, holding that the failure to comply with Rule 190 does not foreclose an action in tort for negligence in collection on delivery. 204 N.J. Super. 127, 131 (1985). The Appellate Division, in an opinion reported at 211 N.J. Super. 584 (1986), and adopted today by a majority of this Court, reversed, citing authority holding that the rules governing federal tariffs are to be interpreted strictly. I disagree with the majority's adoption of this opinion, and would reverse and remand for trial.
A carrier that accepts shipments on a C.O.D. basis acts both as a common carrier and bailee and as a collecting agent of the shipper. Its duties as a carrier/bailee to receive, transfer, care for, and deliver the goods are derived from common law; its duty to act as a collection agent, however, derives from the contract between the shipper and the carrier, and has no common-law foundation. Littleton Stamp & Coin Co., Inc. v. Delta Airlines, Inc., 778 F.2d 53, 55 (1st Cir.1985); Cermetek, Inc. v. Butler Avpak, Inc., 573 F.2d 1370, 1375 (9th Cir.1978); Annotation, Liability of Carrier for Delivery Goods Sent C.O.D. Without Receiving Cash Payment, 27 A.L.R. 3d 1320, 1324 (1969).
There is authority in the federal courts, moreover, for the proposition that a C.O.D. contract is invalid if it fails to comply strictly with applicable tariff regulations under the Interstate Commerce Act ("ICA"). In Davis v. Henderson, 266 U.S. 92, 45 S. Ct. 24, 69 L. Ed. 182 (1924), the Supreme Court held that an interstate carrier cannot waive compliance with tariff rules under the ICA, for "[t]he transportation service to be performed was that of common carrier under published tariffs. The rule was a part of the tariff." See also Keogh v. Chicago & N.W.R. Co., 260 U.S. 156, 43 S. Ct. 47, 67 L. Ed. 183 (1922) (Brandeis, J.) ("The rights, as defined by the tariff, cannot be
varied or enlarged by either contract or tort of the carrier"); cf. Rothschild v. American Ry. Express Co., 226 A.D. 187, 234 N.Y.S. 454 (App.Div.1929) (where plaintiff shipper sent two boxes C.O.D. but violated applicable tariff regulations by marking only one box C.O.D., shipper could not recover for carrier's failure to collect for the unmarked box). Judge Learned Hand explained the policy underlying these decisions in Empire Box Corp. v. Delaware L. & W.R. Co., 171 F.2d 389 (2d Cir.1948). Rejecting the argument that where delivery cannot be made, a carrier may give oral notice and thus waive the requirements of the tariff regulations, Judge Hand wrote:
Had the transactions been between the plaintiff and a party other than a common carrier, and had they not been subject to regulation under the Interstate Commerce Act the plaintiff [shipper, which was seeking to recover demurrage charges on the ground that the carrier's notice was not in writing] would have no standing. It had received the full benefit of the services for which it paid, and neither law nor equity would countenance a recovery that would result in the unjust enrichment which it is the chief purpose of the action for money had and received to prevent. Since, however, the charges were made and ...