No. 12144 INTHE SUPREME COURT OF THE STATE OF MONTANA 1972

EISENMAN SEED COMPANY, a Corporation, Plaintiff and Respondent,

CHICAGO, MILWAUKEE, ST PAUL AND PACIFIC RAILROAD, a Corporation, Defendant and Appellant.

Appeal from: District Court of the First Judicial District, Honorable Gordon R, Bennett, Judge presiding. Counsel of Record : For Appellant: Garlington, Lohn and Robinson, Missoula, Montana, Robert E. Sheridan argued, Missoula, Montana, For Respondent: Brazier, Dowling and Erickson, Helena, Montana, Geoffrey L, Brazier argued, Helena, Montana,

Submitted: November 29, 1972 Decided: JAfj -:

### ;.*:7 2 

## 3kN16

## 1973 Filed: J

ClerkMr. JusticeWesley Castles delivered the Opinion of the Court. This appeal is taken from a judgment for plaintiff entered by the district court of the first judicial district, Lewis and Clark County, and the court's subsequent denial of defendant's exceptions to the findings of fact and conclusions of law and itsmotion to amend such findings of fact and conclusions of law. The principal issue involved is whether defendant is liable to plaintiff for loss of grain occurring after defendantdelivered the shipment to the consignee. Plaintiff,Eisenman Seed Company (hereinafter referred to as Eisenman), commenced this action in the district court seeking to recover from defendant Chicago, Milwaukee, St. Paul and Pacific Rai

### 1road (hereinafter referred to as Milwaukee), certain sums of money as the result of

an alleged loss ofmalting barley occurring on shipments from Fairfield, Montana to Duluth,Minnesota. The basis for Eisenman'sclaimwas that the grain was transported in defective equiventbelonging toMilwaukee and further, thatMilwaukee was negligent in the transportation,handling and delivery of the grain. During theyear 1968,Eisenman shipped numerous carloads of malting barley from various points along the Agawam branch line of Milwaukee in Montana for delivery to Capita1 Elevator Co. (hereinafter referred to

as Capital)

### ,the consignee in Duluth,Minnesota. Prior to loading, the grain was weighed by Eisenman on automatic scales and this weight was used in preparing the bills of lading. The grain

was again weighed upon arrival at Capital in Duluth. According to the testimony of Joe Eisenman, president of Eisenman, the grain was not weighed at Capital until after itwas unloaded from the railroad cars. The grain was also weighed on track scales of Milwaukee at Great Falls,but these weights are not at issue in this appeal. The loss covering 39 carloads amounted to 19,200 pounds, or 492pounds per car. The total judgment here

was for $499.20.As a result of discrepancies between Eisenman'sweights and those obtained by Capital,thirty-nine claimswere filed with Milwaukee,which form the basis of this litigation. 

### All of the claims involved are commonly referred to as "clear record claims". 

### A clear record claimwas defined by Harold Whatmore, a freightclaim agent of Milwaukee, as "a movement of a car,which from the point of origin to its point of destination,had no detectable leaks." Each car upon which a claim was filed was inspected by the Duluth Board of Trade after arrival at Capital,and an official weight inspection certificate issued on the contents after unloading. The following excerpt fromMr. Eisenmenls testimony indicated,as did the individual weight and inspection certificates, that no defects were noted on any of the cars and

no leakswere detected. 

### "Q. Well, let me ask you this: For each one of the claims thatyou have filed, you have received from the railroad a copy of the Duluth Board of Trade official weight certificate, is that not correct? 

### A. That'sright. "Q. And for each one of the weight certificates,an inspection formmust be filled out by the supervising weighmaster, is this not also true? A. That'sright. "Q. And on each one of these cars, or these claims that are filed, it'snoted that that particular weighmaster checked the box car and noted no leaks detected? 

### A. Yes." The testimonyofMr. Eisenman was corroborated by that of Mr. Whatmore. Thus,the proof that the 39 cars were delivered intact. Capital, the consignee,had been designated by Eisenman through its broker, Hufford & Hufford. Milwaukee had nothing to do with the designation of the consignee. The grain was unloaded at Duluth by Capital and no employees or agents of the railroad took part 

### in the unloading process. There was also no affiliation or agreement between Milwaukee and Capital by which the latter could have been construed as the agent of Milwaukee. The unloading of the grain took place at a private siding belonging to Capital in Duluth. Milwaukee was then notified by Capital that each car

was released to the railroad after itwas unloaded.The uncontroverted testimony of Mr. Eisenman was that the grain loss was occurring because the cars were improperly unloaded atCapital, with the result that grain was being left inthe cars. Because of the importance of this testimony, we quote verbatim the following excerpts from the transcript: "Q. (By 

### Mr. Sheridan, counsel for defendant) In the unloading of the grain, the grain isoften left in the car---now, isthat clear enough in that form of question? A. Yes. 

### "Q. The grain simply is not all dumped out of the car, isthat not right? A. Yes. "Q. The grain isjust not a11 dumped out of the car--- A. Right. "Q. ---by themechanism they use? A. That's right. "Q. And could you describe for me how Capital Elevator Company, if you know, unloads the grain out of these cars? A. Well, I can't give you the exact procedure that they use tounload them, other than the regular unloading methods thatyou'd find atany terminals. "And that is, that they dump these cars into hoppers and then they are automatically weighed after they are dumped into hopper cars and then set back 

### on the track, and that isthe actual grain that's dumped out of the cars---the actual weight, but our point isthis: How much was actually left inthe car after itwas dumped.

"Q. So it'syour feeling that these cars aren't being properly unloaded when they arrive atDuluth, isthat not correct? A. I would have to say 'Yes' tothat question. "Q. And that you're not being given credit for the grain which you shipped from Great Falls simply because the grain was not being properly unloaded atCapital Elevator? A. Yes. "Q. And there was grain being left inthe cars that were returned toyou, or towhoever else that car isreturned to? A. That's right. "Q. And you feel that this happens on practically every car? A. Well, I would not say every car, but ithappens on a good percentage of the cars, Mr. Sheridan, yes." Two other facts areessential to a determination of this case. (1) On October 9, 1970, Eisenman submitted requests for admissions toMilwaukee, one of which was: "15. That sloppy unloading and car cleaning practices atthe point of destination may cause losses in the

### deliveries of grains by interstate common carriers for hire, including railroads." On October 23, 1970,

### Milwaukee admitted the above request but emphasized that in this instance the unloading and car cleaning was not performed by, nor was it the responsibility of Milwaukee. (2) The freight tariff,which controlled this shipment and which

was admitted in evidence by the trial court, specifically stated that the duty to unload rested upon the shipper. Throughout the trial, the trial judge expressed concern over the question ofwhen the railroad lost control of the shipmentand who was responsible for losses occurring due to the failure of the consignee to properly and completelyunload. At the conclusion of the trial, the trial judge stated he wanted to know justwhen the responsibilityof the railroad ended. Milwaukee contends that this is indeed the crucial question in this

case and appeals from the trial court ruling that the railroad'sresponsibility for the grain and liability for its loss continued beyond the time the grain was delivered to the siding of the consignee. Two issues are presented on appeal: 

### 1. Whether the trial court erred in applying state rather than federal law. 2. Whether the trial court erred in holding Milwaukee liable for the loss of grain where the evidence clearly showed the railroad carswere not defective, and that the loss occurred after the grain was in the possession of the consignee. Counsel for both parties admitted in their respective trial briefs that the controlling law was 49 U.S.C. § 

### 20(11). However,the trial court, in its findings and conclusions of lawreferred to section 8-812,R.C.M. 1947, as controlling. Specifically,in finding of factVII and conclusion of law 111, the court stated that the railroad was not entitled to relief from 

### 1iabili

### ty under the exceptionsprovided 

### in section 8-81 

### 2.The shipment of ma1ting barley originated in Montana and terminated in Duluth, Minnesota. That such a shipment was in interstate commerce is

so obvious as 

### tonot require discussion or elaboration. Suffice itto say that the shipment involved crossed several state lines and involved persons and businesses of several different states. The Constitution of the United States has reserved and granted to Congress the power toregulate commerce among the several states. Art. I, Section 8, United States Constitution. While there is authorityto the effect that states may legislate on certain matters affecting interstate commerce, unless and until Congress legislates, there isno question that once Congress regulates interstate commerce by enacting a statute, it preempts the field and supersedes all state legislation affecting the same subject. In referring specifically 

### to49 U.S.C. 5 20(11), known as the Carmack Amendment, in Adams Express Co. 

### v. Croninger, 226 U.S. 491, 33 S.Ct. 148, 57 L.ed. 314, 320, the United States Supreme Court said: "That the 1 egislation supersedes a11the regulations and policies of a particular stateupon the same subject results from its general character. Itembraces the subject of the liabilityof the carrier under a bill of lading which he 

### must issue, and limits his power to exempt himself by rule, regulation, or contract. Almost every detail of the subject iscovered so completely that there can be no rational doubt but that Congress intended 

### totake possession of the subject, and supersede all stateregulation with reference to it. Only the silence of Congress authorized the exercise of the police power of the state upon the subject of such contracts. Butwhen Congress acted in such a way as tomanifest a purpose to exercise itsconceded authority, the regulating power of the state ceased to exist." See also: New York, New Haven & Hartford Railroad Co. 

### v. Nothnagle, 346 U.S.

The liabilityof Milwaukee should have been determined with reference to the provisions of the Carmack Amendment and related case decisions, and not with regard toMontana law. Atbest, the Montana statuteupon which the trial court relied could have only been controlling with respect to shipments purely intrastate in character. Where, as here, the shipment was ininterstate commerce, the trial court erred in applying staterather than

### federal law. Thewording of the Carmack Amendment is important in determining the liabilityof the comoncarrier,specifically, 

### in this instance, the Milwaukee Railroad. 49 

### U.S.C. 9 

### 20(11), states, in part, that the carrier: 

### " 

### *

## ** shall be liable to the lawful holder of said

-. . 

### receipt or bill of lading

## * ** for the full actual loss,damage, or injury to such property caused by it". ]Emphasis added.) The emphasized portions are importantbecause they indicate that liability shall be placed upon the carrier only when it causes the loss. Here, the record is entirely devoid of any testimony which would indicate that any 

### 1oss of grain occurred while the grain was in the possession ofMilwaukee. To the contrary,the record indicated that each car upon which a claimwas filed was inspected on arrival at Capital in Duluth, by a disinterested third party, namely,the Duluth Board of Trade, and no leaks of any nature

were detected. On the other hand, the record is repletewith testimony,including that ofMr. Eisenman, president of Eisenman Seed Co., that the grain loss was occurring because that grain was being improperly and incompletelyunloaded at Capital. The principal issue then becomes---whohad the responsibility for unloading the grain? By virtue of the inspection reports issued by the Duluth Board of Trade, it is apparent the shipments arrived in good order at the place designated by the bills of lading, the siding at Capital. While there are no Montana cases directly in point, there are numerous decisions from other jurisdictionsholding that the carrier is absolved from responsibilityfor unloading bulk commodities in carload lots when the car or cars are delivered to the consignee. In Republic Carloading & 

### Distributing Co. 

### v. Missouri Pacific R. Co., 302 F.2d 381, 386, the court said: "Commoncarrier 1

### iabili

### ty ceases upon delivery of the shipment to the consignee. Delivery of a carload shipment, such 

### as 

### is involved in this category, is normally effected - - 

### when the car is placed on a team track or ~potted.'~ (Emphasis suppli

### ed

# .) 

### In Jones

### v. Thompson, 360Mo. 285, 228 

### S.W.2d 673, 676,the court said:"The general rule, atleastastodead freight, is that the carrier is primarilybound both toload and unload in a proper manner freight delivered to itfor transportation. And for breach of thatduty resulting in damage itwill generally be liable. But by custom or usage an exception generally obtains inthe case of bulky freight incarload lots. 

## * * * Thereunder the carrier is not required tounload such freight from the car." (Emphasis added.) Respondent Eisenman urges thatMilwaukee has not carried its burden of proof citing Joseph Toker Co. v. Lehigh Valley R. Co., 12N.J. 608, 97 A.2d 598, 599. Here, the documentary evidence, uncontradicted, was that the shipments arrived in good order. Thus, Milwaukee did carry its burden of proof. Clearly, on the basis of the shipments involved being bulk shipments incarload lots, itis apparent the duty tounload was not that of the railroad, but rather that of Capital. However, there isa second basis upon which the burden tounload is placed upon the consignee. The carswere placed upon a private siding atCapital. 13C.J.S. Carriers

### s 67, p. 124, states: "The general rulerequiring the carrier to load and unload shipments is alsonot applicable toa casewhere the cars arenot tobe loaded or unloaded atthe station or on the lands and tracks of the carrier. Where cars aredelivered on a private siding off the land of the carrier, itis under no obligation tounload them. I' (Emphasis added.) In Secretaryof Agriculture 

### v. United States, 347 U.S. 645, 74 S.Ct. 826, 98 L.ed 1015, 1020, the Court said: "In the case of private sidings, the railroad's job ends when ithas placed the caron the consignee's siding." (Emphasis added.) Milwaukee had neither the equipment nor thefacilities atDuluth to unload grain. The carswere spotted atCapital's siding for the consignee tohandle from then on. The railroad's duty ended there. Thereafter, the employees or agents of Capital unloaded the grain and, in sodoing, left

a considerable amount of grain in the cars. According tothe testimony of Mr. Eisenman, not all of his grain was unloaded and he suffered a loss as

a result. That loss was directlyand proximately caused by the actions

### and derelictions of Capital, and not by any act or omission on the part of Milwaukee. The evidence presented did not support the trial court's finding that the loss of grain was caused by Milwaukee. Therefore,the judgment of the district court is reversed and this cause is remanded with instructions to enter judgment in favor of de

### fendant.

Mr. Justice John Conway Harrison dissenting: 0 

### I dissent.