Court Opinion

ID: 9468395
Source: CourtListenerOpinion
Date Created: 2023-08-05 02:13:51.192022+00
Date Added: 2024-06-11T17:40:51.118133
License: Public Domain

PELL, Circuit Judge,
dissenting.
The majority opinion results, not in upholding reasonable compensation to ConRail for demurrage for the detention of its cars, but instead results in the imposition of a substantial penalty even though unfavorable weather, creating conditions beyond the control of CIPS, prevented the unloading of the cars. I think the result reached is not legally correct on the facts of this case and I therefore respectfully dissent.
Initially, I note that it is virtually horn-book law that the right to a penalty must be clear under the law in order to exact a penalty in a civil case, Anuchick v. Transamerican Freight Lines, Inc., 46 F.Supp. 861, 867 (E.D.Mich.1942). Penalties and forfeiture are considered harsh and should be avoided whenever possible, General Ice Cream Corp. v. Benson, 113 F.Supp. 107, 109 (N.D.N.Y.1953), affirmed, 217 F.2d 646 (2d Cir. 1954). Putting it another way, the law does not lightly impose penalties and the courts look with disfavor on forfeitures, BACA v. Commissioner, 326 F.2d 189, 191 (5th Cir. 1964). Penalties in civil actions are not favored by the courts, and should not be imposed except in cases that are clear and free from doubt, World Insurance Co. v. Pipes, 255 F.2d 464, 472 (5th Cir. 1958).
While there can certainly be no doubt that the substantial amount of the sum claimed in this case by ConRail is a penalty and forfeiture pure and simple, even if the law were not as outlined above in disfavoring the imposition of such penalties in civil cases, it seems palpable on the facts of this case that.there was no basis in law or in fact for the position that CIPS had contracted for an “average agreement.” The Review Board in a maneuver which I regard as violative of elementary principles of due process reopened the case on the basis that CIPS had failed to make a prima facie case at the original hearing. Yet the majority opinion makes it clear that an “average agreement” can only result from an indication on an application to the carrier that the demurrage charges are to be assessed under the “average agreement” method. As there was no proof of this at the original hearing, irrespective of where the burden of proof rested, then a prima facie case had been made for “straight demurrage.”
Demurrage was applicable to the situation and it had to be by one method or the other. Failure to show an application for “average agreement” left the situation as *825being one of straight demurrage. I cannot conceive any reason for the Review Board under these circumstances reopening the case although, of course, the allowance of the penalty no doubt was of substantial help to a faltering railroad system which apparently has not been able to succeed financially on the basis of the ordinary tariff system provided by law.
The majority opinion faults CIPS for not submitting in evidence a copy of its application to the carrier. The plain fact is that in the absence of such an application the straight demurrage plan is triggered (see footnote 7 of the majority opinion). Even after the case was reopened in violation of the requirements of 49 U.S.C. § 10327(g)(1) and 49 C.F.R. § 1100.98(d), (Rule 98(d)), there was no proper evidence showing an opting for an “average agreement.” The majority opinion charitably refers to the additional proof submitted after the case was reopened as “documentation which convinced the Review Board that the parties were operating under an average agreement during January and February 1978.” Conspicuously, the majority opinion does not indicate that any of this evidence had any probative value. Indeed it consisted of nothing more than an application for credit submitted by CIPS to the New York Central Railroad, audit statements, and a copy of a form bill. There is no showing in any of the material that CIPS had “explicitly” stated on any application that it wanted an “average agreement.” The only document involving any kind of an application is a wholly unreadable document on the letterhead of an entirely different railroad, the New York Central, which seems to be dated, as nearly as one can tell, in 1921. While the majority opinion virtually ignores this so-called additional evidence, the Interstate Commerce Commission in its brief relies substantially upon the so-called evidence and in its brief, without any reference to the record, traces the merger of the New York Central into the Penn Central and cites cases to the effect that ConRail was the legal successor-in-interest to the Penn Central railroad whose operations it assumed.
I agree with CIPS that it would require “an incredible leap of faith” to conclude that an agreement with ConRail’s remote predecessor was still valid nor is the situation changed if upon some other occasion CIPS had actually paid on an “average agreement” basis. I find no support in what happened some other time for what the agreement was on the shipments in question and in the absence of probative evidence the straight demurrage, basis should have been applicable.
We are prone to use the characterization of “gross miscarriage of justice” primarily in situations involving an individual who, by unjust incarceration, is deprived of his liberty to be at large. We perhaps find it less applicable when an unjust monetary loss is visited on a public utility engaged in the business of supplying energy, even though operational costs will probably ultimately be passed on to the consuming public. Nevertheless, it appears to me that the characterization has some justification in this case.