Court Opinion

ID: 9519135
Source: CourtListenerOpinion
Date Created: 2023-08-07 01:10:06.501869+00
Date Added: 2024-06-11T12:43:49.374784
License: Public Domain

Mr. PRESIDING JUSTICE JOHNSON, dissenting: In this case the majority holds that Montgomery Ward became a joint payee under the terms of the release, and that full payment to Scott, the other payee, discharged Eastern from liability to both parties. I disagree with this holding because in my opinion, the release entered into by Eastern and Scott only discharged the shipper’s obligation to the freight forwarder and had no affect on Montgomery Ward’s negligence action. Therefore, I would affirm the decision of the trial court granting summary judgment to Montgomery Ward against Eastern. The threshold question becomes whether or not a shipper can sue an underlying carrier when goods are lost due to the negligence of the carrier. In the instant case, the majority seems to hold that Montgomery Ward does not have a right of action against Eastern, the negligent carrier, because Eastern’s liability runs directly to Scott. While Eastern’s liability does run directly to Scott, it is not limited to Scott because a shipper’s right to sue does not depend exclusively on the contract of carriage. In Chicago, Milwaukee, St. Paul & Pacific R. Co. v. Acme Fast Freight (1949), 336 U.S. 465, 93 L. Ed. 817, 69 S. Ct. 692, the Supreme Court recognized a shipper’s common law right of recovery against a negligent carrier by stating in footnote 27 (336 U.S. 465, 488, 93 L. Ed. 817, 830-31, 69 S. Ct. 692): “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 (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 Association v. Kellogg Express & Draying 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.” Then, in Delaware, L. & W. R. Co. v. United States (S. D.N.Y. 1954), 123 F.Supp. 579, a railroad sued the United States for freight charges it allegedly owed on shipments of food. The United States counterclaimed for damages sustained to the shipments of machinery owned by the government and delivered to the Ithaca Gun Company, the consignee. The court held that the United States could sue for damage even though it was named in the bill of lading. Likewise is Thompson v. American Abrasive Metals Co. (Tex. Civ. App. 1952), 253 S.W.2d 83, where a Texas court held that a shipper who delivered goods to a freight forwarder could sue the underlying carrier. Thus, it becomes clear that a shipper-owner like Montgomery Ward has a direct right of action against a carrier even though it is not a party to the contract of carriage; if it is a lawful holder thereof or entitled to recover thereon, the action may be maintained. (Valco Manufacturing Co. v. C. Rickard & Sons, Inc (1952), 22 N.J. Super. 578, 92 A.2d 501.) However, in the instant case, it is interesting to note that Montgomery Ward does not sue on the contract of carriage but, instead, it brings a common law negligence action. The majority does not think it makes a difference whether this is a contract action or a negligence action, but I think the nature of the action is a most significant factor. In Cain-Sloan Co. v. Louisville & Nashville R.R. Co. (1968), 221 Tenn. 70, 424 S.W.2d 787, a case relied on by the majority which held that a party bringing an action could not proceed ex contractu because it was not a party to the bill of lading, also held that recovery could be had ex delicto since a carrier like everyone else is hable for wrongful injury. In light of Cain-Sloan, Montgomery Ward’s cause of action for negligence would clearly he. Now that it has been established that Montgomery Ward had a cause of action against Eastern, it must be determined if the release signed by Eastern and Scott discharged Eastern’s obhgation to Montgomery Ward. Although the majority states that the law abounds in the proposition that as between two innocent parties the less blameful should prevail, they cite no authority for this legal proposition. I do not think that blame has anything to do with Eastern’s liability to Montgomery Ward. The general rule is that a release is a contract and its construction is governed by the rules of law that prevail in contract cases. (Affiliated Realty & Mortgage Co. v. Jursich (1974), 17 Ill. App. 3d 146, 150, 308 N.E.2d 118.) The question as to what persons are released depends on the intention of the parties as gathered from a construction of the instrument. While it has been held, as the majority points out, that one of several joint obligees may execute a valid release by which the entire obligation is discharged, a release by one person will not ordinarily discharge the claim of another who is not a party to the release, and whom the releasor has no power to bind against the releasee. (United States v. Standard Oil Co. (1947), 332 U.S. 301, 305, 91 L. Ed. 2067, 2070, 67 S. Ct. 1604; 76 C.J.S. Release §46 (1952).) The release in the instant case runs specifically in favor of Scott even though Eastern knew at the time it executed and mailed the second release that Montgomery Ward had an interest as the owner of the goods. And since the parties to the release were aware of Montgomery Ward’s claim, I don’t think the release was intended to or can be binding on Montgomery Ward. Moreover, Scott has no power to bind Montgomery Ward since this is not a suit on the contract of carriage but a negligence action. The release in the case at bar represented a promise to pay the releasor, Scott, the amount specified as consideration for Scott’s forbearance in suing. Since Montgomery Ward was not a party to the second release and received no consideration for the release that it did execute, I fail to see how Montgomery Ward’s cause of action would be extinguished. Furthermore, I don’t think the release in the instant case can be extended to cover parties that are neither named nor referred to therein, especially where that party has an entirely independent cause of action. To do otherwise will be to permit carriers like Eastern to escape liability for its negligent acts.