Source: https://supreme.justia.com/cases/federal/us/336/465/case.html
Timestamp: 2016-09-30 06:46:53
Document Index: 411898251

Matched Legal Cases: ['§ 20', '§ 20', '§ 20', '§ 20', '§ 20', '§ 1013', '§ 20', '§ 1013', '§ 20', '§ 20', '§ 20', '§ 1004', '§ 1013', '§ 1013', '§ 20', '§ 1013', '§ 1013', '§ 1013', '§ 1013', '§ 20', '§ 1002', '§ 1', '§ 1', '§ 1008', '§ 1013', '§ 1004', '§ 1004', '§ 20', '§ 1013', '§ 20', '§ 20', '§ 20', '§ 20', '§ 20', '§ 20', '§ 1013', '§ 322', '§ 386', '§ 320']

Chicago, etc. v. Acme Freight, Inc. :: 336 U.S. 465 (1949) :: Justia U.S. Supreme Court Center Log In
› Chicago, etc. v. Acme Freight, Inc.
Chicago, etc. v. Acme Freight, Inc. 336 U.S. 465 (1949)
U.S. Supreme CourtChicago, etc. v. Acme Freight, Inc., 336 U.S. 465 (1949)Chicago, Milwaukee, St. Paul & Pac. R. Co. v. Acme Fast Freight, Inc.No. 65Argued December 8, 1948Decided April 4, 1949336 U.S. 465CERTIORARI TO THE UNITED STATES COURT OF APPEALS
(b) That § 20(11) forbids forwarders to limit to less than nine months the period within which claims must be filed by their shippers, and that forwarders must file their claims against the Page 336 U. S. 466 railroads within the same period is not sufficient to require a different result. The Interstate Commerce Commission has the experience and authority to prescribe the proper corrective for this inconsistency. Pp. 336 U. S. 488-489.
In 1942, Congress enacted what is popularly known as the Freight Forwarder Act. This legislation, which appears as Part IV [Footnote 1] of the Interstate Commerce Act, was designed to define freight forwarders, to prescribe certain regulations governing forwarder operations, and to bring this essential transportation business within the control of the Interstate Commerce Commission. The legislative and judicial history culminating in the Act need not now be detailed. See United States v. Chicago Heights Trucking Co., 310 U. S. 344 (1940); Acme Fast Freight, Inc. v. United States, 30 F.Supp. 968, aff'd, 309 U.S. 638 (1940). Page 336 U. S. 467
The forwarder thus has some of the characteristics of both carrier and shipper. In its relations with its customers, a forwarder is subjected by the Act to many of the requirements and regulations applicable to common Page 336 U. S. 468 carriers under Parts I, II, and III of the Act,. In its relations with these carriers, however, the status of the forwarder is still that of shipper. It is this duality of character that raises the question in this case.
Section 1013 of the Act [Footnote 3] provides that the Carmack Amendment, 34 Stat. 593, as amended, 49 U.S.C. § 20(11) [Footnote 4] and Page 336 U. S. 469 (12), [Footnote 5] shall apply to freight forwarders "in the case of service subject to this chapter" (Part IV), and that the freight forwarder shall be deemed both the receiving and delivering transportation company for the purposes of such § 20(11) and (12). Incorporation of the Carmack Amendment requires, as has been noted, that the forwarder issue bills of lading to its shippers, covering transportation of the individual shipments to their ultimate destinations. There can be no question but that, under § 20(11), the forwarder is liable to its shipper for loss or damage to the freight exactly as if it were an initial carrier subject to Parts I, II, and III. We are now asked to decide whether the right over given by § 20(12) to an initial carrier against its connecting carriers applies in the case of forwarders who have paid loss and damage claims to their shippers and seek recompense from the carrier responsible for the loss.
In this action, respondent freight forwarder sought a declaratory judgment that it is not bound by the nine-month limitation period provided in the railroad bill of lading for the filing of loss or damage claims. If § 1013 of the Act, by its incorporation of § 20(11) and (12), makes the forwarder an initial carrier with a right over against Page 336 U. S. 470 the carrier responsible for the loss or damage, the nine-month period is not applicable. If, however, the forwarder is still a shipper vis-a-vis the railroads, it must file its claims within the period specified in the railroad bill of lading. [Footnote 6] The District Court held, on an agreed statement of facts, that the forwarder must file its claims within the nine-month period. The Court of Appeals for the Second Circuit reversed, holding that, for the purposes of § 1013 alone, forwarders are to be considered carriers, and, as such, are entitled to the right over given by § 20(12). We granted the petition for a writ of certiorari, 335 U.S. 807, to resolve this important question under Part IV of the Interstate Commerce Act.
to mean that, while the forwarder is liable to its shippers under § 20(11) for loss or damage, no matter whose the ultimate responsibility, its right over under § 20(12) is limited to losses or damage occurring Page 336 U. S. 471 in "service subject to this chapter" -- i.e., in the business of forwarding freight. Thus, limited, the right over would apply as against other freight forwarders with whom joint loading agreements authorized by § 1004(d) were in effect, and against motor carriers who are permitted by § 1013 to issue bills of lading on behalf of the forwarders. The right over would not, however, apply against railroads, water carriers, and line-haul motor carriers.
(Italics added.) The emphasis supplied by the phrase is emphasis on the freight forwarder's activities, not upon the service performed by underlying carriers. Since the forwarder Page 336 U. S. 472 contracts with its shipper to deliver the shipment safely to its ultimate destination, its undertaking is obviously part of the "service subject to this chapter." But inclusion of that phrase in § 1013 indicates a limitation of applicability of the right over under § 20(12) to the forwarder's business, which, we are told by the House Report does not include "the services performed by the carriers whose services the freight forwarder utilizes in performing his undertaking."
That meaning is supported by the explanation of § 1013 given by Representative Wolverton, a member of the Page 336 U. S. 473 committee which drafted the section. However, doubt is cast upon the correctness of this interpretation by a contrary statement in the House Committee report. This report states flatly that,
"In its explanation of section 413 [§ 1013], the report which accompanied the bill is not strictly accurate in interpreting the intended legal effect of making section 20(11) and (12) of part I applicable to freight forwarders. It should be understood that, insofar as a given service to its shipper is covered by the published rate of a freight forwarder, the latter is the only person to which such shipper is entitled to look for recovery of damages, and it is Page 336 U. S. 474 in this sense that the forwarder is to 'be deemed both the receiving and delivering transportation company.' If damage to a shipment occurs on the line of a common carrier whose services are being utilized by the forwarder, the forwarder has no right of subrogation under section 20(12), since its own shipper never had any right of action against such carrier. The forwarder's recovery against the carrier would be upon the bill of lading issued to it by such carrier and under the provisions of law applicable thereto. The reference to paragraph (12) of section 20 was included in section 413 [§ 1013] to cover a combination of services performed directly for the owner of the goods, such as would occur when two or more forwarders were involved. [Footnote 10]"
In weighing the relative importance of this statement and the committee report, a number of additional facts assume importance. The bill under consideration was reported unanimously by the House Committee on Interstate and Foreign Commerce. [Footnote 11] Congressman Wolverton, who was the ranking minority member of the committee, spoke in behalf of the bill and presented the only extended exposition of its provisions. His explanation of its meaning was not challenged or contradicted by any member of the committee. On the contrary, his part in its drafting Page 336 U. S. 475 was recognized by the chairman of the committee, [Footnote 12] and his remarks have been quoted as authority by the Interstate Commerce Commission. [Footnote 13]
In this posture of events, the committee report can be given little weight. A report not previously submitted to members of the committee and expressly contradicted without challenge on the floor of the House by a ranking member of the committee can hardly be considered authoritative. The Committee of Conference, of which Representative Wolverton was a member, adopted § 1013 exactly as it appeared in the House amendment. It bore at that time the gloss placed upon it on the floor of the House. [Footnote 14] Under those circumstances, we cannot construe Page 336 U. S. 476 the statute to give forwarders the right over against underlying carriers under § 20(12).
It is clear that this relationship was not altered by the enactment of Part IV. Nowhere in the Act are freight forwarders referred to as carriers. Congress defined the term, "freight forwarder" in § 1002(a)(5) to mean any person which "otherwise than as a carrier subject to part I, II, or III of this title" consolidates goods for shipment, etc. In one section where, by inadvertence, forwarders were referred to as carriers, an amendment was passed less than two months later striking out "carrier" and substituting "freight forwarder." [Footnote 15] The statements by Page 336 U. S. 477 committee members on the floor of the House [Footnote 16] leave no doubt that it was not the intent of Congress to alter the forwarders' status as shippers vis-a-vis carriers by rail, highway, and water.
The fact that Congress studiously avoided characterizing forwarders as carriers, while at the same time subjecting them to many of the duties and responsibilities of such carriers, serves to emphasize the distinction drawn by the Act. The reason for this distinction has already been suggested. In their relations with shippers, forwarders unquestionably perform functions and have duties similar to the functions and duties of common carriers. Their activities are not essentially different from those of express companies, which are common carriers, by definition, under § 1(3) of the Interstate Commerce Act, 49 U.S.C. § 1(3). Nevertheless, Congress recognized Page 336 U. S. 478 that forwarders occupy a different position in their dealings with the carriers whose services they utilize. [Footnote 17] For that reason, they refused to sanction the joint rates that forwarders had established with certain motor carriers. See Acme Fast Freight, Inc. v. United States, supra. According to Representative Wolverton's statement on the floor of the House,
Carriers subject to Parts I, II, and III were permitted by § 1008 of the Act to establish so-called "assembling Page 336 U. S. 479 and distribution" rates, which were designed to give the forwarder the benefit of rates lower than those available to other shippers, because of savings to the carriers effected by some services performed by the forwarder. This was thought to be consistent with the position of the forwarder as shipper, however, and such rates could not be lowered beyond an amount which would reflect the savings. It is significant, too, that these rates were not applicable to line-haul or carload freight, but only to the services performed by carriers in bringing less than carload shipments from off-line points to the forwarder's concentration point and from break-bulk point to final destination. [Footnote 19] It is therefore clear beyond argument that Congress intended to preserve the existing shipper-carrier relationship between forwarders and those carriers regulated by Parts, I, II, and III of the Act.
Third. The Court of Appeals, while conceding that forwarders are still shippers vis-a-vis carriers under the Act, held that, for the purposes of § 1013 alone, they are to be regarded as initial carriers, while the railroads, motor vehicles, and boats whose services are utilized by forwarders are to be considered connecting carriers. Respondent goes farther. It contends not only that the liability provisions of the uniform rail bill of lading issued to the forwarder for his carload shipment may be disregarded, but that the railroad need not issue its bill of lading at all. In its view, Missouri, Kansas & Texas Page 336 U. S. 480 R. Co. of Texas v. Ward, 244 U. S. 383 (1917), which struck down conditions in the bill of lading issued without consideration by a connecting carrier, is decisive of the invalidity of the conditions imposed by the rail bill of lading here in controversy.
The real issue is whether, granting that both forwarder and underlying carrier must issue bills of lading, the liability provisions of bills issued by the latter are to be considered null and void when forwarder freight is being hauled. We think that the whole scheme of the Act, its language and history, negative that proposition. As has been noted, the forwarder remains a shipper in its relations with underlying carriers under the Act. It is a shipper to whom carriers are forbidden to give any undue or unreasonable preference in any respect whatsoever, under the specific provisions of the Act. § 1004(c). Page 336 U. S. 481 On the other hand, forwarders, like other shippers, may discriminate as they choose between carriers. § 1004(b).
In addition, the factors which Congress felt made the original Carmack Amendment workable are totally absent Page 336 U. S. 482 in the case of freight forwarders. Congressman Richardson, in explaining its purpose to the House, said:
The considerations that made § 20(12) workable as applied to railroads are not, however, applicable to freight forwarders. They enter into no "arrangements," "concerts," "cooperation," or "through route courtesies" with railroads. As shippers, they are forbidden by law to do Page 336 U. S. 483 so. Furthermore, the forwarder will always be in the position of a receiving or delivering carrier seeking the right over against "connecting" carriers, never in the position of a carrier against whom the right over is asserted. A railroad against which a claim has been filed as receiving or delivering carrier will ordinarily represent the connecting carrier as if no right over existed, since it must depend in other cases upon similar representation by other roads. Details of such representation are, in fact, prescribed by the Freight Claim Rules, which are subscribed to by nearly all railroads. But the forwarder is always its own representative, and, as between its customer, the shipper, and an underlying carrier allegedly responsible for loss or damage, the forwarder's tendency would naturally be to placate the former at the expense of the latter if the right over existed and was applicable. These facts are, we feel, persuasive that Congress meant the right over given in § 1013 to extend no farther than to actions against those with whom forwarders are permitted to enter into cooperative arrangements -- i.e., against those to whom the forwarder does not bear the relation of shipper.
Fourth. Two arguments are made as to the inequity that will result from requiring forwarders to comply with the requirements of § 20(11) without giving them the rights of initial carriers under § 20(12). It is said that Congress could not have intended to make the forwarder an insurer of freight while requiring at the same time that it file and prove claims against carriers as if it were an ordinary shipper. Secondly, it is argued that the forwarder must, under § 20(11), allow at least nine months for the filing of claims by shippers, and if the forwarder is subject to a similar limitation period, there will necessarily be some claims filed by shippers at the end of the period which the forwarder will not be able to refile against the carrier in time. Page 336 U. S. 484
This difference in function was recognized very early by the courts, and differing standards of liability were imposed. When goods handled by an agent forwarder were lost or damaged, it was liable to the shipper only for its own negligence, including negligence in selecting Page 336 U. S. 485 a carrier. [Footnote 23] If, on the other hand, the shipment had been entrusted to a forwarder of the second type -- i.e., one who contracted to deliver the goods to the consignee at rates set by itself -- the forwarder was subjected to common carrier liability for loss or damage whether it or an underlying carrier had been at fault. [Footnote 24] The fact that the forwarder did not own the carriers whose services it utilized was held to be immaterial. Its undertaking was to deliver the shipment safely at the destination. Common carrier liability was the penalty for failure of fulfillment of that undertaking.
"Any person which . . . holds itself out to the general public to transport or provide transportation of property . . . and which, in the ordinary and usual Page 336 U. S. 486 course of its undertaking, (A) assembles and consolidates or provides for assembling and consolidating shipments of such property, and performs or provides for the performance of break-bulk and distributing operations with respect to such consolidated shipments, and (B) assumes responsibility for the transportation of such property from point of receipt to point of destination, and (C) utilizes, for the whole or any part of the transportation of such shipments, the services of a carrier or carriers subject to chapter 1, 8 or 12 of this title. [Footnote 25]"
(Italics added.) As to this group, as has been pointed out, the liability of common carrier to its shippers has always been the rule. By making § 20(11) applicable to these forwarders, Congress did two things: (1) required forwarders to issue bills of lading; [Footnote 26] and (2) made a matter of federal law what had been uniformly adopted by the states as the rule of liability for loss or damage. As applied to railroads, the Carmack Amendment made a significant change, since it prevented the initial carrier from exercising the right given by decision is a majority of states to limit its liability to loss or damage occurring on its own lines. But that right had never been granted to forwarders of the type regulated by Part IV. Their liability has, from the beginning, been extended to loss or damage to the consignment Page 336 U. S. 487 occurring at any time between pick-up at the point of origin and delivery at destination. As shippers, they have, of course, always had a right of action against the underlying carrier at fault. The defense that the goods are not those of the forwarder is not open to the carrier, since, as we have held, the carrier is not concerned with questions of ownership, but must treat the forwarder as shipper. Interstate Commerce Commission v. Delaware, L. & W. R. Co., supra.
The Act thus leaves the freight forwarder in substantially the same position it had previously held with respect to its liability to shippers and its rights against underlying carriers. The hearings, committee reports, and debates are bare of any suggestion that forwarders needed relief from the requirement that they file their claims against carriers like other shippers. They have done so for over a century. They have continued to do so since enactment of the Freight Forwarder Act. See, e.g., Merchant Shippers Assn. v. Kellogg Express & Draying Co., 28 Cal.2d 594, 170 P.2d 923 (1946); J. R. Kelly Freight Forwarder Application, 260 I.C.C. 315, 318 (1944); Hugh F. Gannon, Inc. Freight Forwarder Application, 260 I.C.C. 219, 220 (1944). We would require a much clearer showing than has been made to find that Congress intended, without increasing the liabilities of forwarders regulated by the Act, to give them a right over against railroads, ship lines, and line-haul motor carriers as initial carriers under motor carriers as initial carriers under § 20(12). [Footnote 27] Page 336 U. S. 488
It is true that, under the provisions of § 20(11), forwarders are now forbidden to limit the period within which claims must be filed by shippers to less than nine months. If forwarders must, in turn, file claims with Page 336 U. S. 489 carriers within nine months, respondent contends that in the case of claims filed against a forwarder during the last day or two of the period, it will not have enough time to refile the claim with the proper carrier, and will thus have no recourse after having paid the claim. This objection obviously applies to an insignificant proportion of the total claims. Furthermore, if the Interstate Commerce Commission considers the matter to be of sufficient importance, it has the experience and authority to prescribe the proper corrective. In any event, this single inconsistency is hardly sufficient to justify the contention that Congress intended that § 1013 be interpreted to make the forwarder an initial carrier with right over against common carriers who must treat the forwarder as a shipper for all purposes.
We do not so read that analysis. Of course, shippers by freight forwarder have for many years been permitted to sue underlying carriers for loss or damage occasioned by the latter. New Jersey Steam Navigation Co. v. Merchants' Bank, 6 How. 344 (1848); Great Northern R. Co. v. O'Connor, 232 U. S. 508, 232 U. S. 509 (1914). The theory of these actions was that the shipper is the undisclosed principal of its agent, the forwarder, in the latter's contract with the carrier. The forwarder, as agent of an undisclosed principal, could, of course, sue on the contract. Merchant Shippers Assn. v. Kellogg Express & Drayage Co., 28 Cal.2d 594, 170 P.2d 923. See Bunge, Law of Draymen, Freight Forwarders and Warehousemen, p. 117. See also Restatement of Agency, §§ 322, 364. On the other hand, when a shipper sued a connecting for loss of goods delivered to an initial carrier by railroad, it did so as a disclosed principal. The initial carrier, like the forwarder, acted as agent to contract with the connecting carrier for carriage of goods on the latter's lines, but, since it acted for a disclosed principal, it was not a party to the contract. See Bichlmeir v. Minneapolis, St. P. & S.S.M. R. Co., 159 Wis. 404, 150 N.W. 508 (1915); 1 Roberts, Federal Liabilities of Carriers § 386. See also Restatement of Agency § 320.