Court Opinion

ID: 9466622
Source: CourtListenerOpinion
Date Created: 2023-08-05 01:21:13.976599+00
Date Added: 2024-06-11T17:39:50.165070
License: Public Domain

SPRECHER, Circuit Judge,
with whom PELL, Circuit Judge, joins, dissenting.
I respectfully dissent and I would overrule the Hopper Paper Co. case.
I
At one time, common carriers reduced their exposure to liability in various ways, including a contractual requirement that claims for loss or damage be made in writing within an exceedingly short time, such as 36 hours or a few days. The Supreme Court upheld the validity of such contractual stipulations “where reasonable in their terms.” See St. Louis, Iron Mountain & Southern Ry. Co. v. Starbird, 243 U.S. 592, 606, 37 S.Ct. 462, 468, 61 L.Ed. 917 (1917), holding 36 hours to be reasonable. See also, Erie R. R. Co. v. Stone, 244 U.S. 332, 334, 37 S.Ct. 633, 634, 61 L.Ed. 1173 (1917), holding five days to be reasonable and listing at page 336, 37 S.Ct. at page 635 numerous prior Supreme Court cases validating the “binding force of these contracts.”
The third proviso of the second sentence of the Carmack Amendment to the Inter*449state Commerce Act, amended on March 4, 1915, 38 Stat. 1196, 49 U.S.C. § 20(11), (known as the Cummins Amendment), made it unlawful for a contractual stipulation to provide a shorter period than four months for the filing of claims. In 1930, this proviso was amended in order to extend the time for filing claims from at least four months to at least nine months. 46 Stat. 251. The third proviso at the time of the occurrences in this case read as follows:
Provided further, That it shall be unlawful for any such receiving or delivering common carrier to provide by rule, contract, regulation, or otherwise a shorter period for the filing of claims than nine months, and for the institution of suits than two years, such period for institution of suits to be computed from the day when notice in writing is given by the carrier to the claimant that the carrier has disallowed the claim or any part or parts thereof specified in the notice .
49 U.S.C. § 20(11).
The Interstate Commerce Act was revised, codified, and enacted, without substantive change, as subtitle IV of title 49 of the United States Code on October 17,1978, after the present occurrences. The new codification provides that an action taken under a law replaced by it shall be deemed to have been taken under the new codification. The new codification of the third proviso of the second sentence of the Car-' mack Amendment appears as 49 U.S.C. § 11707(e) and now reads as follows:
A carrier may not provide by rule, contract, or otherwise, a period of less than 9 months for filing a claim against it under this section and a period of less than 2 years for bringing a civil action against it under this section. The period for bringing a civil action is computed from the date that person receives written notice from the carrier that it has disallowed any part of the claim specified in the notice.
The statute does not require that a claim be in writing or that it be filed in at least nine months, but it permits the contracting parties, the shipper and carrier, to enter into a contract with such requirements. The shipment involved in the present case was delivered pursuant to a Uniform Bill of Lading, section 2(b) of which specifies:
As a condition precedent to recovery, claims must be filed in writing with the receiving or delivering carrier within nine months after delivery . . . Where claims are not filed or suits are not instituted thereon in accordance with the foregoing provisions, no carrier hereunder shall be liable, and such claims will not be paid.
In interpreting bills of lading pursuant to the Carmack Amendment, the Supreme Court merely has continued its former established practice of upholding the validity of contractual stipulations in bills of lading, except that instead of requiring reasonableness it now simply requires compliance with the minimum time limits of the Carmack Amendment. In Chesapeake & Ohio Ry. Co. v. Martin, 283 U.S. 209, 222, 51 S.Ct. 453, 458, 75 L.Ed. 983 (1931), the Court said:
But the Blish Company case [Georgia, Florida & Alabama Ry. Co. v. Blish Milling Co., 241 U.S. 190, 36 S.Ct. 541, 60 L.Ed. 948 (1916)] makes clear that the fact that delivery was made contrary to instructions, due to the misunderstanding or negligence of the carrier, cannot successfully be set up as an estoppel against the claim of a failure to comply with the requirement of the bill of lading here involved. To allow it would be to alter the terms of a contract, made in pursuance of the Interstate Commerce Act and having, in effect, the quality of a statute of limitation, and thus to open the door for evasions of the spirit and purpose of the act to prevent preferences and discrimination in respect of rates and service. Compare A. J. Phillips Co. v. Grand Trunk Western Ry. Co., 236 U.S. 662, 667, 35 S.Ct. 444, 445, 59 L.Ed. 774.
II
On July 29, 1974, the plaintiff shipped 582 boxes of frozen ground meat weighing 32,-010 pounds by means of defendant’s trailer-*450tractor truck, for delivery to the United States Naval Supply Center at Norfolk, Virginia. The plaintiff loaded the truck itself, closed the truck door and affixed the required seals. The defendant provided the driver. The shipment was rejected by the consignee on arrival in Virginia on July 31, for the reason that the meat was found to be 1.2 degrees Fahrenheit over the acceptable tolerances set forth in the handbook of military regulations — namely 16.2 degrees.
The truck returned to plaintiff’s facilities in Milwaukee on August 2, 1974, where representatives of both plaintiff and defendant inspected the contents. The plaintiff then delivered to the defendant the following letter:
Wisconsin Packing Company refuses to accept meat on trailer no. 4013 because of Army rejection of temperatures averaging 1.2 degrees over acceptable allowance temperatures. Return temperatures checked out and ranged from nine to twenty-five degrees.
However, that night the trailer remained at plaintiff’s facilities and the next day plaintiff instructed the defendant to deliver the trailer to a cold-storage facility, where it was unloaded by plaintiff’s representatives. The plaintiff sold the meat thereafter in two separate sales, the last occurring on April 3, 1975, within the nine month period, but did not advise the defendant. A written claim specifying the amount of the salvage and the net loss was received by the defendant in June, 1975, after the nine-month limitation. At no time within the nine-month period was the defendant advised at what price or for what amount the obviously saleable meat was sold.
On July 20, 1976, the plaintiff sued the defendant in the Circuit Court of Milwaukee County, Wisconsin, from where it was removed to the federal district court on August 23, 1976. The defendant moved for summary judgment and by agreement of counsel, the following stipulation of facts was presented to the district court:
(1) The shipment involved in the instant proceeding was governed by the terms and conditions of the Uniform Domestic Straight Bill of Lading
(2) That the only written document relative to the shipment in question submitted by Plaintiff, Wisconsin Packing to Defendant, Indiana Refrigerator Lines within the required nine month time period was a letter dated August 2, 1974, addressed to Mr. James Stevenson and signed by Mr. Karl Brown . . . [which is quoted in full above].
(3) That relative to the shipment in question, Defendant had in its possession I.R.L. invoice No. 01647; I.R.L. memo No. 59557; I.R.L. delivery receipt No. 59515 ....
The district court entered summary judgment for the defendant for failure of the plaintiff to file a written claim within nine months, noting that:
Absent some further confirmation in writing from the plaintiff that it intended to file a claim or, at a minimum, an itemization of loss from plaintiff, the defendant was not chargeable with knowing that the plaintiff had in fact suffered any loss for which it sought reimbursement.
The panel of this court affirmed the district court judgment, distinguishing this court’s decision in Hopper Paper Co. v. Baltimore & O. R. Co., 178 F.2d 179 (7th Cir. 1949), cert. denied, 339 U.S. 943, 70 S.Ct. 797, 94 L.Ed. 1359 (1950). A dissent by Judge Cummings took a different view. See Wisconsin Packing Co., Inc. v. Indiana Refrigerator Lines, Inc., 604 F.2d 1022, 1024 (7th Cir. 1979) (Cummings, J., dissenting). Insofar as the opinion may have disagreed with Hopper, it was circulated among all judges of the court in regular active service and a majority did not favor a rehearing in banc on that question. Id. at 1024 n.1.
Subsequently, when a petition for rehearing with a suggestion for rehearing in banc was filed by the plaintiff, a majority of judges in regular active service voted for a rehearing in banc.
*451III
In the Hopper Paper Co. case, the plaintiff’s property was negligently destroyed in a train wreck between two of the defendant’s trains, the carrier notified plaintiff of the disaster and then sold the salvage without the plaintiff’s knowledge and pocketed the proceeds. As one of our sister circuits observed, “[t]he court was obviously concerned with the equities of the situation . .” Perini-North River Associates v. Chesapeake & Ohio Ry. Co., 562 F.2d 269, 273 (3d Cir. 1977).
In the present case, the truck was loaded, closed and sealed by the plaintiff; the contents were not destroyed nor even shown to have immediately been damaged, inasmuch as the Navy rejected them because of the temperature rather than the condition of the meat; although the plaintiff wrote a letter refusing to accept the meat, it was at all times in the control of the plaintiff; the next day plaintiff instructed the defendant to move the truck to cold-storage facilities where plaintiff unloaded the meat; and plaintiff eventually sold the meat and did not timely advise the defendant of the fact or amount of the sale. At no time within nine months did the defendant know or was it advised by the plaintiff as to the value of the meat, the saleability of it or the fact of a loss. In fact, in inflationary times there is no logical reason to assume that a later sale of the meat might not bring a greater amount than the original attempted sale to the Navy. Thus, within nine months the defendant was not given notice of, nor did it have actual knowledge of, any fact whatsoever which would lead it to believe that the defendant had indeed suffered a loss, or if so, the amount of that loss.
The Hopper Paper Co. case held that “failure to give notice of a claim for damages or loss in accordance with a stipulation in a contract for the shipment of goods is excused, or is inapplicable, where the carrier has or is chargeable with actual knowledge of all the conditions as to the damages that a written notice could give.” 178 F.2d at 181. The present case is distinguishable from Hopper in that “all the conditions as to the damages” were not within the carrier’s actual knowledge. Beyond that, however, the Hopper statement, which is described as a “general rule,” is clearly erroneous on its face and contrary to all relevant Supreme Court authority.
In the first place, Hopper relies principally upon Georgia, Florida & Alabama Ry. Co. v. Blish Milling Co., 241 U.S. 190, 36 S.Ct. 541, 60 L.Ed. 948 (1916), for its substituting of actual knowledge for written notice. Blish did not deal at all with actual knowledge but instead held for the plaintiff on the clearly expressed ground that “it appears that notice of the claim was in fact given.” Id. at 197-98, 36 S.Ct. at 544. The crucial writing was a telegram which said, “We will make claim against railroad for entire contents of car at invoice price.” Id. at 193, 36 S.Ct. at 543. The invoice price of $1,109.89 was attached to the bill of lading and the ultimate verdict in favor of the shipper was for $1,084.50. The Supreme Court said:
[The stipulation for a timely written notice] is a precaution of obvious wisdom, and in no respect repugnant to public policy, that the carrier by its contracts should require reasonable notice of all claims against it even with respect to its own operations. .
Id. at 196, 36 S.Ct. at 544 (emphasis added).
This is the very antithesis of actual knowledge. The Court is saying that even if the carrier had actual knowledge of “its own operations,” which is true in most loss claims against carriers, such actual knowledge could not be substituted for “reasonable notice.” The Blish Court emphasized that “[t]he stipulation required that the claim should be made in writing . . . .” Id. at 198, 36 S.Ct. at 545. Finally, in order to leave no doubt as to the validity and mandatory effect of the bill of lading contractual stipulation, the Court said:
But the parties could not waive the terms of the contract under which the shipment was made pursuant to the Federal act; nor could the carrier by its conduct give the shipper the right to ignore these terms which were applicable to that con*452duct, and hold the carrier to a different responsibility from that fixed by the agreement made under the published tariffs and regulations. A different view would antagonize the plain policy of the act and open the door to the very abuses at which the act was aimed. We are not concerned in the present case with any question save as to the applicability of the provision, and its validity, and as we find it to be both applicable and valid, effect must be given to it.
Id. at 197, 36 S.Ct. at 544 [citations omitted].
The Supreme Court has found non-compliance with the written notice requirement where the actual knowledge of the carrier has been accomplished through the oral or verbal communications of the shipper. St. Louis, Iron Mountain & Southern Ry. Co. v. Starbird, 243 U.S. 592, 606, 37 S.Ct. 462, 468, 61 L.Ed. 917 (1917); Baltimore & Ohio R. R. Co. v. Leach, 249 U.S. 217, 218, 39 S. Ct. 254, 63 L.Ed. 570 (1919).
In Southern Pacific Co. v. Stewart, 248 U.S. 446, 450, 39 S.Ct. 139, 140, 63 L.Ed. 350 (1919), the Court found that “the circumstances relied upon by the shipper [that the carrier had full knowledge of the damage] are inadequate to show a waiver by the carrier of written notice as required by the contract.” In Gooch v. Oregon Short Line Railroad Co., 258 U.S. 22, 24, 42 S.Ct. 192, 193, 66 L.Ed. 443 (1922), the Court said:
Of course too, actual knowledge on the part of employees of the [railroad] company was not an excuse for omitting the notice in writing.
Recently both the Third and Tenth Circuits have reconfirmed this rule. In Perini-North River Associates v. Chesapeake & Ohio Ry. Co., 562 F.2d 269, 273 (3d Cir. 1977), the Court said:
We do not question the accepted rule that actual knowledge on the part of the carrier cannot substitute for the written notice required by a bill of lading.
In Atchison, Topeka & Santa Fe Ry. Co. v. Littleton Leasing Co., 582 F.2d 1237, 1240 (10th Cir. 1978), the Court said:
Even actual knowledge on the part of the carrier’s employees would not dispense with the requirement of notice of claim in writing.
Thus, the “general rule” of Hopper is no rule at all and never has been. In fact, the determining factors for the result in Hopper were, as the Perini court indicated, “the equities of the situation” which caused this court to blur the distinction between estoppel and actual knowledge. Perini, 562 F.2d at 273. And, as the Atchison court observed, the Hopper court was influenced by the fact that “the carrier . . had acknowledged in writing that damages were sustained by carelessness in transit,” 582 F.2d at 1240, that is, the carrier’s telegram in that case to the consignor that the damage had occurred due to a collision of two of its own trains.
In the second place, Hopper emphasized that “the statute . . . was not intended to operate as a statute of limitation.” 178 F.2d at 181. Of course the statute was not, but the significant fact is that it permitted carriers to impose a statute of limitations. As noted above, the Supreme Court in the Chesapeake & Ohio Ry. Co. v. Martin, case stated that the bill of lading contract was “made in pursuance of the Interstate Commerce Act and [had], in effect, the quality of a statute of limitation . . . 283 U.S. at 222, 51 S.Ct. at 458.
In the third place, the Hopper case has not been accorded much respect by other federal courts. Virtually every citation of Hopper by other courts either criticizes it or holds it narrowly to its facts.1
*453Hopper could be held narrowly to its facts and distinguished here but I would prefer to overrule it completely inasmuch as it is so directly contrary to all Supreme Court teaching.
I would affirm the lower court’s judgment.

. Insurance Co. of North America v. Newtowne Mfg. Co., 187 F.2d 675, 681 (1st Cir. 1951) (“Hopper . . . seems perhaps out of line with the other cases . . .”); Perini-North River Associates v. Chesapeake & O. R. Co., 562 F.2d 269, 273 (3d Cir. 1977) (“Hopper . . was considered a maverick decision . Most courts criticized Hopper . and demoted it to the ranks of cases distinguishable on their facts."); Delphi Frosted Foods Corp. v. Ill. Cen. R. Co., 188 F.2d 343, 345 (6th Cir. 1951) (“Hopper ... is based upon the peculiar facts of the case.”); East Texas Motor Freight Lines v. U. S., 239 F.2d 417, 420 n.10 *453(5th Cir. 1956) (“The holding of Hopper has been questioned in several cases.”); Northern Pac. Ry. Co. v. Mackie, 195 F.2d 641, 643 (9th Cir. 1952) (There were “unusual circumstances [in] that [Hopper] case . . . .”); Atchison, T. & S. F. R. Co. v. Littleton, 582 F.2d 1237, 1240 (10th Cir. 1978) (cites Hopper but does not follow it: “compliance with the written notice requirement of the bill of lading is mandatory.”); Henry Pratt Co. v. Stor Dor Freight Systems, 416 F.Supp. 714, 715 (N.D.Ill.1975) (“We do not believe that Hopper . should be extended beyond its own particular facts . .”); Conagra, Inc. v. Burlington Northern, Inc., 438 F.Supp. 1266, 1270 (D.Neb.1977) (“The Hopper case has been widely criticized . . . . [A]n extension of Hopper would result in a dubious precedent.”).