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Carmana Designs Ltd. v. North American Van Lines Inc.

filed: September 3, 1991.

CARMANA DESIGNS LTD., APPELLANT
v.
NORTH AMERICAN VAN LINES, INC., AMERICAN PRIORITY EXPRESS, INC., NORTH AMERICAN VAN LINES, INC., CROSS-CLAIMANT V. AMERICAN PRIORITY EXPRESS, INC., CROSS-CLAIMANT



Appeal from the United States District Court for the Eastern District of Pennsylvania; D.C. No. 90-02365.

Stapleton, Hutchinson, and Rosenn, Circuit Judges.

Author: Rosenn

Opinion OF THE COURT

ROSENN, Circuit Judge

This appeal from a grant of summary judgment requires us to determine whether a common carrier of goods in interstate commerce properly limited its liability to a shipper whose goods were destroyed by fire when the carrier's vehicle exploded on the highway. Prior to shipment, the customer, Carmana Designs, Ltd., signed two bills of lading with the carrier, North American Van Lines, Inc., (North American) comprising the agreement for the transport and delivery of Carmana Designs' goods, which were to be purchased for over $25,000. The United States Court for the District of Eastern Pennsylvania found that the bills limited North American's liability for the destruction of Carmana Designs' goods to $1.25 per pound of the actual weight of the shipment, stipulated by the parties after the accident as not more than 9,725 pounds. The district court, thus, entered judgment against North American for $12,156.25.

In this appeal, Carmana Designs contends that the court should have calculated Carmana's coverage based on either of the two net weight figures recorded on the two bills of lading by North American, 24,000 pounds or 34,000 pounds. Because the bills of lading and other undisputed evidence in this record shows that Carmana Designs reasonably believed it was fully covered, we conclude that, under federal law governing the interpretation of bills of lading, North American failed to limit effectively its liability for Carmana's shipment. We thus reverse.*fn1

I.

Carmen Vona and his wife own and operate Carmana Designs, a small company which designs, manufactures, and sells custom furniture and exhibits out of its sole place of business in Philadelphia, Pennsylvania. Carmana Designs has two employees who help to construct the furniture and make deliveries of small shipments by van.

On July 14, 1989, Carmana Designs entered into a contract with Macy's for the design, manufacture and delivery of custom display exhibits for two of Macy's Northern California stores. The displays consisted of fourteen lacquered, hollow, wooden pyramids, ranging in height from six to fourteen feet plus five other pieces for which Carmana Designs was to receive payment of $25,166. A tax of $1637.79 on these items and a delivery cost of $4,000 brought Macy's total bill to over $30,000. It appears that Carmana Designs' delivery charge of $4,000 was determined by the company which brokered the delivery arrangement, American Priority Express.

American Priority Express, a freight forwarder which obtains the services of carriers for its clients, brokered the contract between Carmana Designs and the defendant North American. The contract provided that North American, through its High Value Products Division, would timely deliver the exhibits to Macy's San Francisco and Santa Clara stores. According to his deposition, Vona believed he was to pay American Priority the $4,000 shipping charge, and American Priority in turn would pay the carrier North American $3,000. Vona never paid for this delivery, however, because on August 23, 1989, the truck carrying Carmana Designs' exhibits was involved in a one vehicle accident resulting in the total destruction of the exhibits. Because of the failure of the plaintiffs to timely deliver the exhibits, Macy's in California severely limited its future business with Carmana Designs.

Because the shipment had two different destinations, the transport and delivery contract between Carmana Designs and North American's High Value Products Division consisted of two bills of lading with sequential contract numbers. The bills of lading, bearing North American's name and logo, are standardized documents which allow the customer to declare a value for the shipment and thus fix the carrier's liability in case of loss. The customer could value it at $.60 a pound, $1.25 a pound, or state a lump sum value. Carmana Designs' officer Vona signed both bills of lading declaring North American's liability to be $1.25 a pound.

On the face of the bill of lading is a column for determining the weight and covered value of the shipped goods. That column is divided vertically into four sections. The bottom section, in bold red print, is reproduced in part below:

THE SHIPMENT WILL MOVE SUBJECT TO THE RULES AND CONDITIONS OF THE CARRIER'S TARIFF. SHIPPER HEREBY RELEASES THE ENTIRE ...


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