Court Opinion

ID: 9725929
Source: CourtListenerOpinion
Date Created: 2023-08-26 12:21:03.4877+00
Date Added: 2024-06-11T18:25:21.482459
License: Public Domain

KNOUS, District Judge
(dissenting).
The Utah Poultry & Farmers Cooperative, a Utah corporation, brought this suit against the Interstate Commerce Commission and the United States to set aside and annul an order of the Commission which approved as reasonable a five per cent, damage tolerance on eggs shipped by railroads and not processed at the rail point of origin, and a three per cent, tolerance on eggs processed at the rail point of origin, 284 I.C.C. 377, and to enjoin its enforcement. The Secretary of Agriculture of the United States filed a motion to intervene as a party plaintiff. The United States was a statutory defendant and in opposing the damage tolerance rule is represented here by representatives of the Department of Justice. In order to present its interest as a shipper, the United States in its answer admitted each and every allegation of the complaint and asked for the same relief as the plaintiff. Since the plaintiff is seeking to enjoin the enforcement of an order of the Interstate Commerce Commission, the proceeding is required to be heard and determined by a district court of three judges. 28 U.S.C.A. § 2325.
The Interstate Commerce Commission on its own motion instituted an investigation of the reasonableness and lawfulness of the special regulations governing descriptions, marks, inspection and delivery, and the handling of claims in connection with the transportation, in interstate or foreign commerce, of shell eggs from, to, and between points in the United States with a view to making findings and presenting reasonable rules, regulations, and practices relative to such transportation.
Prior to July 24, 1948, the rules and regulations governing the transportation of eggs were those which became effective July 15, 1919. Under those rules and regulations, no inspection of the contents of cases containing eggs was permitted at Boston, New York or Philadelphia when no cases showed external evidence of damage; or the cases had not been recoopered in transit; or no part of the lading had shifted; or the lading had not been transferred in transit from one car to another. At all other points the consignees were permitted to lift the lids of twenty-five per cent, of the cases, not exceeding twenty in one shipment, and examine the top *865layers - for damage. If damage to the contents was disclosed by such inspection, the rules permitted further examination of the top layers of other cases selected by the consignee. All cases containing damaged eggs were then set aside for reconditioning. The tariffs have not been basically changed since 1918.
The prior regulations required shippers of eggs to note on the shipping order and bill of lading the character of the shipment. These classifications included rehandled and repacked eggs, checked or dirty eggs, and others which were not specifically classified in connection with egg shipments except storage packed eggs, storage packed dirties, and rehandled and repacked eggs. If not more than five per cent, of the eggs were damaged, no claim was allowed. This five per cent, allowance was referred to as a tolerance. Where the damage exceeded five per cent., claims were allowed for all damage in excess thereof if the examination showed carrier liability. The tolerance applied only in connection with eggs. described on the shipping order and bill of lading as current receipts and rehandled current receipts. On shipments of storage packed eggs, storage packed dirties, and rehandled or repacked .eggs, claims for actual damage as evidenced by a notation made on a freight receipt by the inspectors was allowed. Under the former regulations, the carriers were paying large payments for damage to shipments of shell eggs. In an effort to improve the situation certain changes in the regulations were proposed and were permitted to become effective by the Commission. On July 24, 1948, the instant proceeding was instituted to test the validity of these regulations.
The proposed regulations differed principally from the old regulations in the following respects: (1) They authorized the opening by the consignee of each package in the shipment, and (2) they substituted tolerances of four per cent, and six per cent, respectively, on shipments of eggs of all descriptions whether placed in packages at the rail point of origin of the shipment or at points other than the rail point of origin. The requirements under the old regulations that shippers must note on the shipping order and bill of lading the description of the shipment were eliminated in the proposed regulations.
After extensive hearings the Commission found that five per cent, tolerance on eggs, other than those rehandled and repacked at the rail point of origin, was not unreasonable or unlawful. The Commission further found that the proposed tolerances of four per cent, on eggs packed at the rail point of origin, and six per cent, on eggs packed at points other than the rail point of origin were not justified, but that tolerances of three per cent, and five per cent., respectively, would be reasonable.
In the course of its report the Commission states at page 383:
“Respondents are not attempting by the proposed regulations to limit carrier liability, in that they are directed against losses due to the inherent nature of shell eggs rather than against losses caused by the carriers. These regulations merely establish a means to determine the amount of damage existing at the time the shipment is received by the carrier and the amount of damage resulting solely during transportation because of the inherent nature of the shipment.”
The plaintiff, the Secretary of Agriculture and others opposing the tariff allege that the damage tolerance rules approved by the Commission are attempts to limit common carrier liability and are, therefore, null and void as a matter of law because they are contrary to the provisions of 49 U.S.C.A. § 20 (11),1 and ask this court to hold unlaw*866ful and set aside the Commission’s report, and to direct the Commission to reject and to strike from its tariff files the damage tolerance rules approved by its report.
The intervening railroads2 contend that there is no limitation of liability involved, and that, therefore, Section 1 (6) and not Section 20(11) applies, and deny that the Commission’s order is unreasonable or without support in the evidence. They further contend that the provisions of the tariffs are just and reasonable practices affecting the classification of eggs established by them in compliance with their duty imposed by virtue of Section 1(6) of the Act.3
The issue presented is whether the order approving a tolerance tariff was a limitation of liability prohibited by the Carmack Amendment. Section 20(11) of the Interstate Commerce Act. The railroads and the I. C. C. conce'de that if it is a limitation of liability it is invalid. They say, however, that tolerance damage rules and practices are designed to relieve carriers from paying claims for damages which are not attributable to the negligence of the railroads or caused by them. In other words, it is the fixing of a damage which is due to the inherent character of eggs, one which is the natural result of producing, packing and moving eggs and for which the carrier is not responsible.
The tariffs approved by the Commission provide in part:
“Upon arrival at destinations of shipments of ‘current receipts’ or ‘graded’ eggs in CL or LCL lots, consignee or his authorized representative shall have the privilege before eggs leave the possession of carrier and under supervision of carrier's representative, of lifting the lids of twenty (20) cases in any carload, or of twenty-five per cent. (25%) with a maximum of twenty *867(20) cases, of the cases of any LCL lot chosen by him, and of examining the top layer thereof for the purpose of ascertaining the actual damage in that case.
“If such examination shows five per cent. (5%) or less damage, it shall be considered complete and final for the entire shipment, and a good order receipt shall- be required of consignee.
“If such examination, however, discloses more than five per cent. (5%) damage, consignee shall have the right to make further examination of shipment and to set aside all cases containing more than five per cent. (5%) damage. Joint inspection of all such cases set aside shall be conducted by representative of carrier and consignee, or his representative, and extent of damage, together with facts pertaining thereto, shall be noted on paid freight receipt or other document and signed by joint inspectors.
* • * * * * *
“Section 6. — In connection with shipment of eggs, except storage packed eggs, storage packed dirties, and rehandled and repacked eggs, if not more than five per cent. (&%) of the eggs are damaged, no claim will be allowed. Where damage exceeds' five per cent. (&%), claims shall be allowed for all damage in. excess of five per cent (&%)' if investigation develops carrier’s liability.
“Each case shall be used as a unit, provided information is furnished the carrier by joint inspection or otherwise of the damage in each case. In other instances, the consignment shall be the unit.”
The position of the Railroad and the I.C.C. is plausible and practical, but I am.unable to arrive at a conclusion that the. tariff is not a limitation on their liability to shippers of eggs. Eggs are not inherently perishable. Checked and cracked eggs, when properly handled, can be shipped interstate without further damage and can be sold to consumers. External force must be applied to such eggs, as well as to perfect eggs, before they are damaged to the extent that they become unmarketable or claims made for damage.
The order does not authorize or approve a regulation which states that the presence of five per cent, or less of damaged eggs is not evidence by itself of negligence, or that unless negligence is proved by the shipper, he cannot recover for five per cent, of his damages. The tariff provides that .when damage exceeds five per cent, claims shall be allowed for all damage in excess of five per cent., if investigation develops carrier liability. In all damage claims a shipper may recover only his loss less the tolerances provided for. Thus, one shipper who sends a carload of eggs containing two per cent, checked or cracked eggs, collects the same amount as another shipper who sends a carload of eggs, five per cent, of which are checked or cracked, if the contents of both cars are destroyed or damaged as a consequence of the carrier’s negligence. A shipper might ship two cases of eggs from the lot, one car having a five per cent, damage, the other none. The consignee would accept the undamaged car at full price and the shipper would lose five per cent, of the value of the second car. To me it appears inescapable that such results limit the liability of the carrier and violate the prohibition of Section 20(11) of the Act.
This proceeding is not analogous to the cases cited by the defendants.5 There the shippers sued the carriers for damages to certain perishables and the court fixed a tolerance on the basis that *868“there will always be- a certain amount of damage which can not be avoided even by the most careful handling” and that it was necessary “to fix a norm or limit of tolerance, within which the presence of damaged melons in the cars will not amount to proof of negligence.” 6 Bronstein v. Baltimore & Ohio R. Co., supra, 29 F.Supp. at page 839.
I have no doubt but that the courts have the power to fix a tolerance if the evidence warrants it in a particular ease, but the Commission does not have that power generally to fix a tolerance in all cases because Section 20(11) prohibits the execution of any contract, receipt, rule or regulation which exempts a carrier from liability. Although I am reluctant to so decide, it appears to me that to hold otherwise paves the way for the establishment of damage tolerance for all commodities shipped and permits allowance which should be determined in courts of law.
I think the order of the Interstate Commerce Commission in Numbers 5792 and 30030, entitled “Special Regulations, Eggs” should be set aside and annulled.

. This section provides in part: “Any common carrier, railroad, or transportation company subject to the provisions of this chapter receiving property for transportation from a point in one State or Territory or the District of Columbia *866to a point in another State, Territory, District of Columbia, or from any point in the United States to a point in an adjacent foreign country shall issue a receipt or bill of lading therefor, and shall be liable to the lawful holder thereof for any loss, damage, or injury to such property caused by it or by any common carrier, ‘ railroad, or transportation company to which such property may be delivered or over whose line or lines such property may pass within the United States or within an adjacent foreign country when transported on a through bill of lading, and no contract, receipt, rule, regulation, or other limitation of any character whatsoever shall exempt such common carrier, railroad, or transportation company from the liability imposed; “* * * for the full actual loss, damage, or injury to such property caused by it or by any such common carrier, railroad, or transportation company * * * notwithstanding ' any limitation of liability or limitation of the amount of recovery or representation or agreement as to value in any such receipt or bill of lading, or in any contract, rule, regulation, or in any tariff filed with the Inter-State Commerce Commission; and any such limitation, without respect to the manner or form in which it is sought to he made is hereby declared to he unlatoful and void: * * * (Emphasis supplied.)”

. One hundred and thirty-one railroads intervened as parties defendant to this proceeding.

. This section provides: “It is made the duty of all common carriers subject to the provisions of this chapter to establish, observe, and enforce just and reasonable classifications of property for transportation, with reference to which rates, tariffs, regulations, or practices are or may be made or prescribed, and just and reasonable regulations and practices affecting classifications, rates, or tariffs, the issuance, form, and substance of tickets, receipts, and bills of lading, the manner and method of presenting, marking, packing, and delivering property for transportation, the facilities for transportation, the carrying of personal, sample, and excess baggage, and all other matters relating to or connected with the receiving, handling, transporting, storing, and delivery of property subject to the provisions of this chapter which may be necessary or proper to secure the safe and prompt receipt, handling, transportation, and delivery of property subject to the provisions of this chapter upon just and reasonable terms, and every unjust and unreasonable classification, regulation, and practice is prohibited and declared to be unlawful.”

. Bronstein v. Baltimore & O. R. Co., D.C.E.D.Pa., 29 F.Supp. 837; Meltzer v. Pennsylvania R. Co., D.C.E.D.Pa., 29 F.Supp. 840; Meltzer v. Baltimore & O. R. Co., D.C.E.D.Pa., 38 F.Supp. 391.

. The concept of negligence has entered into the liability of carriers after the passage of the Cummins Amendment to the Interstate Commerce Act. The last two provisos of the amendment read:
“Provided further, That it shall be unlawful for any such common carrier to provide by rule, contract, regulation, or otherwise a shorter period for giving notice of claims than ninety days and for the filing of claims for a shorter period than four months, and for the institution of suits than two years: Provided, however, That if file loss, damage, or injury complained of was due to delay or damage while being loaded or unloaded, or damage in transit by carelessness or negligence, then no notice of claim nor filing of claim shall be required as a-condition precedent to recovery.” Act of March 4, 1915, 38 Stat. 1196, 1197, c. 176 amending the Interstate Commerce Act of February 4, 1887, c. 104, 24 Stat. 379, as amended by Sec. 7 of the Act of June 29, 1906, c. 3591, 34 Stat. 584, 593.
In Chesapeake & O. R. Co. v. Thompson Mfg. Co., 270 U.S. 416, 46 S.Ct. 318, 70 L.Ed. 654, the Supreme Court held that a shipper’s failure to give written notice of a claim to the carrier would bar the shipper from recovery for damage to its goods unless it could bring its case within the terms of the final proviso. The Court also held that the negligence referred to in the Cummins Amendment did not mean liability 'without fault, but negligence in fact, and that an instruction to the jury that if the damage to the shipment was not due to an act of God or the public enemy or to the inherent condition of the goods, .they might return a verdict for the shipper, was erroneous because it resolved the issue of negligence in the shipper’s favor.
The second proviso to the effect that no notice is required if damage is caused in transit by carelessness or negligence was omitted in the 1930 Amendment. Act, April 23, 1930, 49 U.S.C.A. § 20 (11). See Historical Note to 49 U.S, C.A. § 20(11).