1. No contract of a carrier can reduce the amount of charges
legally payable to it under its tariff for an interstate shipment,
or release from liability a shipper who has assumed their payment,
nor can any act or omission of the carrier (except the running of
the statute of limitations) estop or preclude it from enforcing
payment of the full amount by the person liable. P.
265 U. S.
65.
2. But, in the absence of a governing tariff provision, delivery
of the goods for shipment does not necessarily import an obligation
of the shipper to pay the freight charges, and the carrier and
shipper are free to contract as to when and by whom payment shall
be made, subject to the rule against discrimination. P.
265 U. S.
66.
3. Where bills of lading acknowledged receipt of goods from the
shipper, but provided for delivery to the order of another as
consignee, were not signed by the shipper, and contained no express
agreement on his part to pay or guarantee payment of the freight
charges, and there was evidence that the goods were sold and
shipped by the shipper to the consignee upon agreement between them
that the latter should pay those charges, and were transferred by
the consignee with the bills of lading to a third party who
received delivery from the carrier,
held that a finding
that the
Page 265 U. S. 60
shipper did not assume the primary obligation to pay the freight
charges was justified. P.
265 U. S.
67.
4. To enforce payment of freight charge by a shipper only
secondarily liable, the carrier must first make effort to collect
from those primarily liable. P.
265 U. S.
69.
5. A consignee, by accepting the shipment, becomes liable as a
matter of law for the full amount of the tariff charges, whether
they are demanded at the time of delivery or later.
Pittsburgh,
etc. Ry. Co. v. Fink, 250 U. S. 577. P.
265 U. S. 70.
284 F. 250 affirmed.
Error to a judgment of the circuit court of appeals affirming a
judgment by the district court for the defendant coal company in an
action by the railroad to recover the difference between the amount
chargeable under its tariff for an interstate shipment and a less
amount collected.
Page 265 U. S. 63
MR. JUSTICE BRANDEIS delivered the opinion of the Court.
In January, 1917, the Central Iron & Coal Company sold
Tutwiler & Brooks ten carloads of coke to be delivered
Page 265 U. S. 64
f.o.b. cars at the seller's plant in Holt, Alabama. Before
delivery by the seller, the purchasers sold the coke to the Great
Western Smelters Corporation of Mayer, Arizona. Thereafter, under
instructions from Tutwiler & Brooks, and upon their agreement
to pay the freight, the Central company delivered at its plant the
cars of coke to the Louisville & Nashville Railroad, directed
shipment thereof to Mayer over that railroad and connecting lines,
and took bills of lading which it delivered immediately to Tutwiler
& Brooks. That firm made a draft for the purchase price on the
Smelters corporation, with bills of lading attached. The
corporation paid the draft, received the bills of lading, and, upon
surrendering them to the delivering carrier and payment to it of
the freight demanded, obtained possession of the coke. The amount
of the freight then demanded and paid was $5,082.15. The freight
legally payable according to the tariff was $8,545.61.
The undercharge as apparently not discovered until January,
1920. The Louisville & Nashville then made demand upon the
Central company for the amount ($3,463.46). Payment being refused,
this action to recover it was brought in the Federal Court for the
Northern District of Alabama, Western Division. Each party
requested a directed verdict. It was directed for the defendant,
judgment entered thereon was affirmed by the circuit court of
appeals, 284 F. 250, and the case is here on writ of error under §
241 of the Judicial Code. Most of the facts were agreed. The bills
of lading acknowledged receipt of the coke from the Central
company, stated that the coke was "consigned to order of Tutwiler
& Brooks, destination Mayer, Arizona, . . . notify Great
Western Smelters Corporation," and provided, among other so-called
conditions, that "the owner or consignee shall pay the freight, and
average, if any, . . . and, if required, shall pay the same
before
Page 265 U. S. 65
delivery." [
Footnote 1]
There was no suggestion that Tutwiler & Brooks were insolvent.
Whether collection could then have been made from the Smelters
corporation is a matter as to which there was conflicting evidence.
[
Footnote 2]
The shipment being an interstate one, the freight rate was that
stated in the tariff filed with the Interstate Commerce Commission.
The amount of the freight charges legally payable was determined by
applying this tariff rate to the actual weight. Thus, they were
fixed by law. No contract of the carrier could reduce the amount
legally payable, or release from liability a shipper who had
assumed an obligation to pay the charges. Nor could any act or
omission of the carrier (except the running of the statute of
limitations) estop or preclude it from enforcing payment of the
full amount by a person liable therefor.
Pittsburgh,
Cincinnati, Chicago & St. Louis Ry. Co. v. Fink,
250 U. S. 577;
New York Central, etc., R. Co. v. York & Whitney Co.,
256 U. S. 406.
Compare St. Louis Southwestern Ry. Co. v. Spring River Stone
Co., 236 U. S. 718. But
delivery of goods to a carrier for shipment does not, under the
Interstate Commerce
Page 265 U. S. 66
Act, impose upon a shipper an absolute obligation to pay the
freight charges. [
Footnote 3]
The tariff did not provide when or by whom the payment should be
made. As to these matters, carrier and shipper were left free to
contract, subject to the rule which prohibits discrimination.
[
Footnote 4] The carrier was at
liberty to require prepayment of freight charges, or to permit that
payment to be deferred until the goods reached the end of the
transportation.
Wadley Southern Ry. Co. v. Georgia,
235 U. S. 651,
235 U. S. 656.
Where payment is so deferred, the carrier may require that it be
made before delivery of the goods, or concurrently with the
delivery, or may permit it to be made later. Where the payment is
deferred, the contract may provide that the shipper agrees
absolutely to pay the charges, or it may provide merely that he
shall pay if the
Page 265 U. S. 67
consignee does not pay the charges demanded upon delivery of the
goods, or the carrier may accept the goods for shipment solely on
account of the consignee, and, knowing that the shipper is acting
merely as agent for the consignee, may contract that only the
latter shall be liable for the freight charges, or both the shipper
and the consignee may be made liable. Nor does delivery of goods to
a carrier necessarily import, under the general law, an absolute
promise by the shipper to pay the freight charges. We must
therefore determine what promise, if any, to pay freight charges
was in fact made by the Central company.
To ascertain what contract was entered into, we look primarily
to the bills of lading, bearing in mind that the instrument serves
both as a receipt and as a contract. [
Footnote 5] Ordinarily, the person from whom the goods are
received for shipment assumes the obligation to pay the freight
charges, and his obligation is ordinarily a primary one. This is
true even where the bill of lading contains, as here, a provision
imposing liability upon the consignee; for the shipper is
presumably the consignor, the transportation ordered by him is
presumably on his own behalf, and a promise by him to pay therefor
is inferred (that is, implied in fact), as a promise to pay for
goods is implied, when one orders them from a dealer. But this
inference may be rebutted, as in the case of other contracts. It
may be shown by the bill of lading or otherwise that the shipper of
the goods was not acting on his own behalf; that this fact was
known by the carrier; that the parties intended not only that the
consignee should assume an obligation to pay the freight charges,
but that the shipper should not assume any liability whatsoever
Page 265 U. S. 68
therefor, [
Footnote 6] or
that he should assume only a secondary liability. In this case, the
bills of lading acknowledge receipt of the coke from the Central
company. But it did not sign them. Nor was it described therein as
the consignor. There was no clause by which the shipper agrees
expressly either to pay the freight charges or to guarantee their
payment. The goods received were not declared to be deliverable to
the Central company's order. On the contrary, the form of the bills
of lading indicated that it was neither the owner nor the person on
whose behalf the shipment was being made, and that Tutwiler &
Brooks were either the owners or the persons in whose behalf the
shipment was being made. On these facts, the trial court was
justified in finding that the Central company did not assume the
primary obligation to pay the freight charges. [
Footnote 7]
Page 265 U. S. 69
It is urged that, if the Central company was not under a primary
obligation to pay the freight charges, it was secondarily liable,
because collection from the Smelters corporation of the balance
remaining due had become impossible before the undercharge was
discovered. But the trial judge was not compelled so to find. There
was evidence that such collection had not become impossible.
Confessedly no effort was made to collect from it. Nor was any
effort made to collect from Tutwiler & Brooks. Moreover, if a
secondary obligation of the Central company was to be implied from
the fact of its causing the
Page 265 U. S. 70
coke to be received for transportation, the promise was not
necessarily one to pay at any time any freight charges which the
carrier might find it impossible to collect from the consignee or
his assign. The court might have concluded that it guaranteed
merely that the consignee or his assign would accept the shipment .
For, under the rule of the
Fink case, if a shipment is
accepted, the consignee becomes liable, as a matter of law, for the
full amount of the freight charges, whether they are demanded at
the time of delivery or not until later. His liability satisfies
the requirements of the Interstate Commerce Act
Affirmed.
[
Footnote 1]
The bills of lading also contained these clauses: "If charges
are to be prepaid, write or stamp here. Received $ ___ to apply in
prepayment of ___. To be prepaid, ___." The blanks were not filled
by writing or stamp. The form of bills of lading used was what is
known as the standard form order bill of lading. But the goods
shipped were made deliverable to the order of a named consignee.
Compare Pere Marquette Ry. Co. v. French & Co.,
254 U. S. 538,
254 U. S.
539-540.
[
Footnote 2]
The corporation was not then technically insolvent; that is, no
proceeding in bankruptcy had been instituted by or against it,
there was no outstanding unsatisfied execution, and the corporation
was still in possession of some unencumbered property. If the error
had been discovered within a few months after delivery of the coke,
the delivering carrier might easily have obtained payment of the
amount of the undercharge by applying to that purpose funds of the
Smelters corporation then on deposit with it.
[
Footnote 3]
See Interstate Commerce Commission Conference Ruling
No. 314, Bulletin No. 7, issued August 1, 1917:
"The law requires the carrier to collect and the party legally
responsible to pay the lawfully established rates without deviation
therefrom. It follows that it is the duty of carriers to exhaust
their legal remedies in order to collect undercharges from the
party or parties legally responsible therefor. It is not for the
Commission, however, to determine in any case which party,
consignor or consignee, is legally liable for the undercharge, that
being a question determinable only by a court having jurisdiction
and upon the facts of each case."
This ruling, which was adopted May 1, 1911, and "interpreted"
May 4, 1918, was amended, on March 6, 1922, by calling attention to
the provision inserted in the Uniform Domestic Bill of Lading
prescribed October 21, 1921. By that provision, the consignor may
(
see § 7 of conditions and clause on face of bill) relieve
himself of all liability for freight charges. In the Matter of
Bills of Lading, 52 I.C.C. 671, 721; 64 I.C.C. 347;
id.,
357; 66 I.C.C. 63.
[
Footnote 4]
Compare Hocking Valley Ry. Co. v. United States, 210 F.
735, 741; Boise Commercial Club v. Adams Express Co., 17 I.C.C.
115, 121.
[
Footnote 5]
Pollard v. Vinton, 105 U. S. 7,
105 U. S. 8;
St. Louis, Iron Mountain & Southern Ry. Co. v. Knight,
122 U. S. 79,
122 U. S. 87; In
the Matter of Bills of Lading, 52 I.C.C. 671, 681.
Compare
Mobile & Montgomery Ry. Co. v. Jurey, 111 U.
S. 584.
[
Footnote 6]
Union Freight R. Co. v. Winkley, 159 Mass. 133;
Thomas v. Snyder, 39 Pa. 317, 322;
Wayland's Adm'r v.
Mosely, 5 Ala. 430;
Chicago, Rock Island & Gulf Ry.
Co. v. Floyd, 161 S.W. 954.
See Barker v. Havens, 17
Johns. 234, 237;
Grant v. Wood, 21 N.J.Law, 292, 300.
Compare Cincinnati, N. O. & T. P. Ry. Co. v. Vredenburgh
Sawmill Co., 13 Ala.App. 442.
[
Footnote 7]
In most of the cases in the state courts and the lower federal
courts relied upon by the carrier, either the facts on which the
shipper was held liable differed materially from those of the case
at bar or, because of the manner in which it was presented, the
question of law was different.
In
Chicago, Indianapolis & Louisville Ry. Co. v.
Peterson, 168 Wis.193, the bill of lading contained an express
agreement that the charges were guaranteed by the shipper.
See
also Chicago & Northwestern Ry. Co. v. Queenan, 102 Neb.
391, 393, 398. In
New York Central R. Co. v. Federal Sugar
Refining Co., 235 N.Y. 182,
New York Central R. Co. v.
Philadelphia & Reading Coal & Iron Co., 286 Ill. 267,
and
Portland Flouring Mills Co. v. British & Foreign Marine
Ins. Co., 130 F. 860, the goods were deliverable to the
shipper's order. In
New York, New Haven & Hartford R. Co.
v. Tonella, 79 N.H. 464, the goods were deliverable to a named
consignee, but the shipper was described as consignor and owner. In
Coal & Coke Ry. Co. v. Buckhannon River Coal & Coke
Co., 77 W.Va. 309,
Northern Pacific Ry. Co. v. Pleasant
River Granite Co., 116 Me. 496, 498, and
Montpelier &
W. R. Co. v. Bianchi & Sons, 95 Vt. 81, the goods were
deliverable to a named consignee, but the bill of lading was signed
by the shipper in his own name. In
Boston & Maine R. Co. v.
National Orange Co., 232 Mass. 351, the goods were deliverable
to a named consignee, but he was the agent of the shipper, who was
also the owner.
Atlas S.S. Co. v. Colombian Land Co., 102
F. 358. In
Wooster v. Tarr, 8 Allen 270, and
Great
Northern Ry. Co. v. Hocking Valley Fire Clay Co., 166 Wis.
465, the consignee was named, but there was not in the bill of
lading (or otherwise) any indication to the carrier that the
shipper was not acting on his own behalf. In
Jelks v.
Philadelphia & Reading Ry. Co., 14 Ga.App. 96; the
consignee was named, but refused to accept the shipment. In
New
York Central R. Co. v. Warren Ross Lumber Co., 234 N.Y. 261,
Chicago, Milwaukee & St. Paul Ry. Co. v. Greenberg,
139 Minn. 428, and
Waters v. Pfister & Vogel Leather
Co., 176 Wis. 16, it was the consignee who was held liable. In
Georgia R. Co. v. Creety, 5 Ga.App. 424, the shipper
appears to have been also owner and consignee.
In Cleveland,
C., C. & St.L. Ry. Co. v. Southern Coal & Coke Co.,
147 Tenn. 433, 442, 452,
Atchison, Topeka & Santa Fe Ry.
Co. v. Stannard & Co., 99 Kan. 720, 725,
Yazoo &
M. v. R. Co. v. Picher Lead Co., 190 S.W. 387,
Baltimore
& Ohio Southwestern Ry. Co. v. New Albany Box & Basket
Co., 48 Ind.App. 647, and
Wells Fargo & Co. v.
Cuneo, 241 F. 727, 729, it is erroneously assumed that the
mere fact of delivery of goods for shipment imports, under the
Interstate Commerce Act, as matter of law, an absolute promise to
pay the freight charges, and/or that an agreement to the contrary
is void.