Marx Transport v. Air Express ( 2008 )

FIRST DIVISION
FEBRUARY 25, 2008
No. 1-07-1953
MARX TRANSPORT, INC., ) Appeal from the
) Circuit Court of
Plaintiff-Appellant, ) Cook County.
)
v. )
)
AIR EXPRESS INTERNATIONAL CORPORATION, ) No. 03 M2 2904
d/b/a Danzas AEI, and CORNING, INC., )
)
Defendants-Appellees )
)
(North American Expediting, Inc., ) Honorable
) Mary K. Rochford,
Defendant). ) Judge Presiding.
JUSTICE ROBERT E. GORDON delivered the opinion of the court:
Marx Transport, Inc. (Marx), a motor carrier, brought this action in the circuit
court of Cook County seeking to recover freight charges relating to over-the-road
shipments of goods picked up from a facility owned by Corning, Inc. (Corning), located
in Harrodsburg, Kentucky, and shipped to two airports for overseas delivery between
January 30, 2003, and May 8, 2003. North American Expediting, Inc. (North American),
contacted Marx to transport the goods to the airports, and Air Express International
Corporation, d/b/a Danzas AEI (Danzas), was hired by Corning to coordinate the
movement of the overseas shipments. Danzas contacted North American to handle the
No. 1-07-1953
over-the-road shipments from the Corning facility to two domestic airports. 1 Marx
obtained a $50,070 default judgment against North American, which failed to appear and
was insolvent, and proceeded to trial against Danzas and Corning. After a bench trial, the
trial court found in favor of Corning and Danzas and against Marx. Marx now appeals.
BACKGROUND
On November 13, 2003, Marx filed a verified complaint seeking to recover
damages against North American, Danzas and Corning. Marx alleged that between
January 30, 2003, and May 8, 2003, Corning retained Danzas as its agent to arrange for
the transportation of goods from Corning’s facility and that Danzas, in turn, retained
North American, which arranged for over-the-road transportation by contracting with
Marx for about 60 separate shipments from Corning’s Kentucky facility to O’Hare
International Airport in Chicago, Illinois, and to the Northern Kentucky International
Airport in Erlanger, Kentucky. Marx sought damages in the amount of $47,690, along
with prejudgment interest.
In its verified answer, Corning admitting that it had a written or oral contract with
Danzas for the shipment of its goods, but denied that it had requested or retained Marx to
handle the shipments. Corning also pled as an affirmative defense that it was not in
privity of contract with Marx and that Marx had contracted only with North American.
Marx filed its verified reply denying Corning’s affirmative defense.
1
When applicable, Corning and Danzas will sometimes collectively be referred to
as defendants.
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No. 1-07-1953
Thereafter, Marx filed an amended verified complaint that was not substantially
different from its original verified complaint.
On September 15, 2005, Danzas and Corning filed a combined motion for
summary judgment on the grounds that Marx never had a contract or agreement with
either Corning or Danzas and that Marx understood that it was to look solely to North
American for payment. The trial court denied the defendants’ motion for summary
judgment on March 28, 2006.
Thereafter, the defendants filed a motion to reconsider. Marx filed a response and
a cross-motion for summary judgment. The defendants filed a reply in support of their
motion to reconsider. The trial court denied both motions on November 2, 2006, and the
case proceeded to trial.
Before trial, the defendants filed a trial brief, which included the parties’
stipulations, exhibits and the deposition testimony of Marx’s corporate president.
On June 15, 2007, the trial court conducted a bench trial. The record contains no
transcript of the record of proceedings. The following discussion is based on the
stipulations between the parties.
Prior to January 30, 2002, Corning hired Danzas to coordinate the movement of
certain shipments of Corning’s goods from its facility in Harrodsburg, Kentucky, to
various overseas destinations. These shipments were to be transported by ground from
Harrodsburg, Kentucky, to O’Hare International Airport in Chicago, Illinois, or to the
Northern Kentucky International Airport in Erlanger, Kentucky, for transport by air.
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No. 1-07-1953
At various times between January 30, 2003, and May 8, 2003, Danzas hired North
American to handle the movement of some of these shipments. A letter from the district
manager for Danzas stating that all invoices for shipments moved to North American and
handled by Marx had been paid in full to North American was included in the parties’
stipulation.
As is customary in the shipping industry, North American was allowed to
transport the goods over-the-road on its own or to contract the shipments to other
carriers. Corning and Danzas had knowledge that Marx performed some of the
shipments.
Corning prepared documents entitled “shipper’s letters of instruction” for the
shipments to provide the shipping details to Danzas and to authorize Danzas to execute
the necessary documents for the movement of Corning’s goods. Attached as Exhibit 2 to
the parties’ stipulation was a representative “shipper’s letters of instruction,” which
stated:
“On receipt of the shipment described below, Danzas *** is
requested by and authorized to prepare and issue the necessary air waybill
or bill of lading in the name of the undersigned, consign such shipment for
carriage to destination or for onward carriage and deliver by any other
transportation organization in accordance with the terms and conditions
contained in the air waybill or bill of lading, tariffs, rules and regulations,
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No. 1-07-1953
and to prepare and execute in shipper’s name any documents requested for
export.”
Marx was referenced in the lower right hand corner of a number of the documents
entitled “shipper’s letters of instruction.”
The representative “shipper’s letters of instruction” identified Corning as
exporter, its Kentucky facility as the place of pickup, one of Corning’s overseas affiliates
as the “ultimate consignee,” and the final destination. None of the shipper’s letters of
instruction prepared by Danzas identified O’Hare International Airport or the Northern
Kentucky International Airport as a “stop” or “destination.”
The terms of the agreements between Marx and North American relating to the
shipments performed by Marx were memorialized in documents prepared by Marx on its
letterhead after each shipment. One of these agreements was attached to the stipulations
as Exhibit 3. The agreement stated that “[North American] agrees to pay [Marx] for the
transportation of the following,” followed by a description of the goods shipped.
Neither Corning nor Danzas retained Marx. When Marx completed its shipments,
it submitted invoices for payment to North American. A copy of a Marx invoice was
attached to the stipulation as Exhibit 4. Marx never submitted an invoice to either
Danzas or Corning.
Corning paid Danzas for all transportation services that Danzas provided to it.
Danzas paid North American for its services. Copies of the checks issued to Danzas and
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No. 1-07-1953
made payable to North American in excess of $89,000 were attached as Exhibit 5 to the
parties’ stipulations. North American did not pay Marx for its freight services.
Also attached to the parties’ stipulation was the discovery deposition of Mark
Jakubowski, Marx’s corporate president. Jakubowski testified that he was responsible
for booking freight and dealing with customers and drivers. Carl Sprock of North
American originally contacted Jakubowski in regard to the shipments. Jakubowski
negotiated the rates for the shipments directly with Sprock, and never negotiated with
Corning or Danzas. Jakubowki described North American as a “freight forwarder” in his
deposition testimony. He also stated that Marx never entered into a written contract with
Danzas or Corning.
Jakubowski stated that the “shipper’s letters of instruction” attached to the
parties’ stipulation as Exhibit 2 was not a bill of lading and that there were no bills of
lading for the shipments. The letters of instruction were prepared prior to or at the time
that Marx’s drivers were sent to pick up a shipment at Corning’s facility and were given
to the drivers upon their departure.
The “shipper’s letters of instruction” did not state what Marx was to be paid for
the shipment. The letter did not provide where Marx was to transport the shipment.
The drivers signed the shipper’s letter for each shipment after they arrived at the
Corning facility in Kentucky. These drivers were not Marx employees but independent
contractors. No employees of Marx had personal contact with Danzas; only the contract
drivers had contact with Danzas.
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No. 1-07-1953
Jakubowski stated that he believed North American would have terminated Marx
had Marx contacted anyone from Danzas or Corning without North American’s
permission. Marx’s only contact with Danzas came on two occasions when Marx
delivered shipments to the wrong airline and the respective drivers called Danzas to
inquire as to which airline the shipments should have been delivered to. Marx’s only
contact with Corning came when Marx received an incorrect shipping number from
North American.
Marx never sent an invoice to or sought payment from Danzas or Corning.
Jakubowski stated that the agreement (Exhibit 3) was intended for North American and
had no signature line for Danzas or Corning.
In finding for the defendants and against Marx, the trial court specifically relied
on Jackson Rapid Delivery Service, Inc. v. Thompson Consumer Electronics, Inc., 210 F.
Supp. 2d 949 (N.D. Ill. 2001), and found that “if Exhibit 2 is a Bill of Lading, it did not
set out the terms of the contract between Danzas/Corning and Marx and that the court
must look beyond the document to the parties’ dealings per Jackson.” Finally, the trial
court found that “[w]hen the court looks at the parties’ dealings it is evident that Marx
was to be paid by [North American]” and that Danzas and Corning were therefore not
liable to Marx for the charges.
Marx appeals the judgment of the trial court.
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No. 1-07-1953
ANALYSIS
As noted, this appeal was taken from the final judgment of the trial court after a
bench trial. Before addressing the merits of this appeal, we must discuss Marx’s failure
to file a report of proceedings with this court. The burden rests on the appellant to
provide a sufficient record to support a claim of error, and in the absence of such a
record, the reviewing court will presume that the trial court’s order was in conformity
with established legal principles and had a sufficient factual basis. Foutch v. O’Bryant,
99 Ill. 2d 389, 391-92 (1984). “[I]n the absence of a proper record a reviewing court may
dismiss an appeal or, in the alternative, summarily affirm the judgment of the trial court.”
Landau & Associates, P.C. v. H. Daniel Kennedy, 262 Ill. App. 3d 89, 92 (1987). On the
other hand, “[t]he ‘failure to present a report of proceedings does not require automatic
dismissal or affirmance where issues can be resolved on the record as it stands.’ ”
Laudau, 262 Ill. App. 3d at 92, quoting Frisch Contracting Service Co. V. Personnel
Protection, Inc., 158 Ill. App. 3d 218, 221 (1987). We find that dismissal or summary
affirmance is not necessary in this case, as the issues on appeal can be resolved on the
record as it stands. Included in the record are the parties’ stipulations at trial and the trial
court’s order stating its reasons for finding in favor of defendants and against Marx.
We now proceed to address the issues raised by Marx on appeal. The trial court
found that “if Exhibit 2 is a Bill of Lading, it did not set out the terms of the contract
between Danzas/Corning and Marx and that the court must look beyond the document to
the parties’ dealings” and that “[w]hen the court looks at the parties’ dealings it is evident
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No. 1-07-1953
that Marx was to be paid by [North American]” and that Danzas and Corning were
therefore not liable to Marx for the charges. Although not stated in the trial court’s order,
we assume that the trial court found that the document attached to the parties’ stipulation
as Exhibit 2 was ambiguous before moving on to a consideration of the parties’ dealings
to explain the terms of the document.
The parties agree that the applicable standard of review from the findings and
decisions of the trial judge after a bench trial is whether the findings and decisions of the
trial court were against the manifest weight of the evidence. A decision is against the
manifest weight of the evidence only if the opposite conclusion is clearly evident.
Eychaner v. Gross, 202 Ill. 2d 228, 252 (2002). However, we review de novo that part of
the trial court’s decision that involved contract interpretation; specifically, we review de
novo the trial court’s finding of ambiguity in the document attached to the parties’
stipulation as Exhibit 2. Nicor, Inc. v. Associated Electric & Gas Insurance Services
Ltd., 223 Ill. 2d 407, 416 (2006) (stating that whether a contract is ambiguous is a
question of law, subject to de novo review).
In its complaint, Marx alleged that Corning and Danzas breached a contract when
they did not pay Marx for its carrier services. Defendants assert that the facts
demonstrate that a contract was never formed between themselves and Marx. In their
brief to this court, defendants tread carefully to avoid labeling the document attached as
Exhibit 2 to the parties’ stipulations as a bill of lading. Defendants argue that the
“shipper’s letters of instruction” served only as receipts and do not represent an
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No. 1-07-1953
agreement between themselves and Marx. Marx argues that the representative document
attached as Exhibit 2 is a bill of lading and as such constituted a direct contract between
defendants and Marx.
We find that the representative document attached as Exhibit 2 to the parties’
stipulations is a bill of lading. A “bill of lading” is defined as “a document
acknowledging the receipt of goods by a carrier” and as “a document that indicates the
receipt of goods for shipment and that is issued by a person engaged in the business of
transporting or forwarding goods.” Black’s Law Dictionary 176 (8th ed. 2004). Exhibit
2 was produced by Danzas and was intended to represent a receipt of the goods that
Danzas received from Corning for shipment. The document lists the consigner Corning,
the shipper Danzas, and the ultimate consignee, Corning’s overseas affiliate. The
document describes the goods released into the possession of the shipper, Danzas, and
specifically authorizes Danzas to:
“prepare and issue the necessary air waybill or bill of lading in the name
of the undersigned, consign such shipment for carriage to destination or
for onward carriage and deliver by any other transportation organization in
accordance with the terms and conditions contained in the air waybill or
bill of lading, tariffs, rules and regulations, and to prepare and execute in
shipper’s name any documents requested for export.”
We also find that Marx’s relationship with defendants and North American is
governed by the bills of lading. The drivers that were hired by Marx to deliver Corning’s
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No. 1-07-1953
goods signed some of the bills of lading as evidenced by the representative bill of lading
attached to the parties’ stipulations as Exhibit 2. Furthermore, the name Marx Transport
is handwritten into the space provided on the representative bill of lading for the truck
line that was to convey the goods from Corning’s Kentucky facility to O’Hare
International Airport in Chicago, Illinois.
Our operative concern however, is not whether Exhibit 2 is a bill of lading or if
Marx is a party to it, but rather whether there was a contract between either Corning or
Danzas and Marx that would obligate Corning or Danzas to repay for services for which
they have already paid North American. As the court in Jackson Rapid Delivery Service
(specifically relied upon by the trial court in the case at bar) stated, “[p]ut simply, a
shipper will be liable to a contract carrier if it agreed to pay the carrier.” Jackson Rapid
Delivery Service, Inc. v. Thompson Consumer Electronics Inc., 210 F. Supp. 2d 949, 952
(2001), citing Louisville & Nashville R.R. Co. v. Central Iron & Coal Co., 265 U.S. 59,
66, 68 L. Ed. 900, 902-03, 44 S. Ct. 441, 442 (1924). Exhibit 2 is important, however,
since it operates as our starting point for the determination of whether Corning or Danzas
has an obligation to pay Marx for its freight services. “To determine if there is a
contractual promise to pay [courts] look primarily to the bills of lading; bearing in mind
that the instrument serves both as receipt and as a contract.” Jackson Rapid Delivery
Service, 210 F. Supp. 2d at 952. The consigner, in this case Corning, generally remains
primarily liable unless the bill of lading or a course of dealing provides otherwise.
Jackson Rapid Delivery, 210 F. Supp. 2d at 952, citing Southern Pacific Transportation
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No. 1-07-1953
Co. v. Commercial Metals Co., 456 U.S. 336, 343, 72 L. Ed. 2d 114, 121, 102 S. Ct.
1815, 1820 (1982).
Responsibility for payment can be shifted from the consigner to a third party.
Jackson Rapid Delivery, 210 F. Supp. 2d at 952, citing Missouri Pacific R.R. Co. v.
Center Plains Industries, Inc., 720 F.2d 818 (5th Cir. 1982) (noting that the customary
means for a consigner to avoid responsibility for payment is through a nonrecourse
clause in the bill of lading). The parties to a shipping agreement are free to contract
when and who will pay the freight charges. Jackson Rapid Delivery, 210 F. Supp. 2d at
952, citing C.A.R. Transportation Brokerage Co. v. Darden Restaurants, Inc., 213 F.3d
474, 479 (9th Cir. 2000).
The bills of lading in this case are ambiguous in that nothing in the bills of lading
indicates how much Marx was to be paid for its services or who would pay the charges
for the services. This ambiguity raises questions about the payment arrangement, and as
a result, the trial court correctly found that it must look beyond the bills of lading to
determine whether Corning, Danzas, or North American was responsible for payment to
Marx.
Neither party to the instant suit has done other than what it was expected to do;
Marx transported the goods as arranged by North American, and defendants paid North
American when billed.
As the court in Jackson Rapid Delivery observed, when a shipper or consigner
pays the freight-forwarder, in this case North American, and the payments are not sent on
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No. 1-07-1953
to the carrier, here Marx, one of two innocent parties will be the loser. Jackson Rapid
Delivery, 210 F. Supp. 2d at 953. Courts have taken different views as to whom the loser
should be. National Shipping Co. of Saudi Arabia v. Omni Lines, Inc., 106 F.3d 1544,
1545 (11th Cir. 1997).
Some courts lean toward a “semi-strict” liability for shippers. National Shipping
Co. of Saudi Arabia, 106 F.3d at 1546. These decisions reason that unless the carrier
intends to release the shipper from its duty to pay under the bill of lading, the shipper
remains liable to the carrier, irrespective of the shipper’s payment to a freight forwarder.
National Shipping Co. of Saudi Arabia, 106 F.3d at 1546.
Other courts have reasoned that the carrier should be the party that suffers the
loss. National Shipping Co. of Saudi Arabia, 106 F.3d at 1545-46. One view holds that
the doctrine of equitable estoppel bars carriers from recovering freight charges where the
shippers were justified in believing that the carriers have been paid for their services.
National Shipping Co. of Saudi Arabia, 106 F.3d at 1546, citing Olson Distributing
Systems, Inc. v. Glasurit American, Inc., 850 F.2d 295, 296 (6th Cir. 1988). The other
view holds that the carrier should suffer the loss because the carrier extended credit to the
freight forwarder, in which case the carrier’s only recourse should be against the
forwarder. National Shipping Co. of Saudi Arabia, 106 F.3d at 1545, citing Compania
Sud Americana de Vapores v. Atlantic Caribbean Shipping Co., 587 F. Supp. 410, 413
(S.D. Fla. 1984).
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No. 1-07-1953
Without expressing an opinion as to the best approach to be applied in all
circumstances, we find that the facts of this case warrant application of the last view. We
conclude, based on the evidence in this case, that the trial court’s determination that
defendants have no obligation to pay again was not against the manifest weight of the
evidence.
The parties’ interactions are most informative in determining the parties’
responsibilities to each other. A review of the record, including the parties’ stipulations
and all attached exhibits, makes clear that Danzas expected to be paid by Corning, that
North American expected to be paid by Danzas, and that Marx expected to be paid by
North American. Among other evidence, the deposition of Mark Jakubowski, Marx’s
corporate president, is most helpful.
As noted, Jakubowski testified that he was responsible for booking freight and
dealing with customers and drivers. He stated that Carl Sprock of North American
originally contacted him in regard to the shipments at issue in the case at bar. He
negotiated the rates for the shipments directly with Sprock and never negotiated with
Corning or Danzas. Despite our determination to the contrary, Jakubowski stated that
Exhibit 2 was not a bill of lading and that there was no written contract with Marx and
either defendant.
The terms of the agreements between Marx and North American relating to the
shipments performed by Marx were memorialized in documents prepared by Marx on its
letterhead after each shipment. Those documents stated that “[North American] agrees to
14
No. 1-07-1953
pay [Marx] for the transportation of the following,” followed by a description of the
goods shipped.
Neither Corning nor Danzas retained Marx. When Marx completed its shipments,
it submitted invoices for payment to North American. Marx never submitted an invoice
to either Danzas or Corning, and there was no evidence presented that the defendants
were to be guarantors for payment.
Corning paid Danzas for all transportation services that Danzas provided to it.
Danzas paid North American for its services.
To summarize, Marx dealt with North American as an independent contractor and
permitted balances to build up over approximately 60 deliveries, without any notification
to Corning or Danzas. Marx created the risk of loss by its credit practices and, having
accepted North American as the obligor, cannot now recast the transaction. Jackson
Rapid Delivery Service, 210 F. Supp. 2d at 953.
Marx has made no argument in its brief that North American acted as either
defendant’s agent when contracting with Marx or when receiving money from the
defendants. As a consequence, these arguments are waived. 210 Ill. 2d R. 341(h)(7).
CONCLUSION
For the foregoing reasons, the judgment of the circuit court of Cook County is
affirmed.
Affirmed.
WOLFSON and GARCIA, JJ., concur.
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REPORTER OF DECISIONS - ILLINOIS APPELLATE COURT
(Front Sheet to be attached to each Opinion)
_________________________________________________________________
Please use the ]
following form:]
] M ARX TR ANSPOR T, IN C.,
]
] Plaintiff-Appellant,
] v.
]
] AIR EXPRESS INTERNATIONAL CORPORATION,
] d/b/a D anzas AEI, a nd CO RNING, INC.,
]
] Defendants-Ap pellees
]
] (North Am erica n Expeditin g, In c.,
]
] Defendant).
Complete ]
TITLE ]
of Case. ]
_________________________________________________________________
Docket No. ] No. 1-07-1953
] Appellate Court of Illinois
COURT ] First District, First Division
]
] FEBRUARY 25, 2008
Opinion Filed ] (Month, Day and Year)
_________________________________________________________________
]
JUSTICES ] JUSTICE ROBERT E. GORDON delivered the opinion
] of the court.
]
] WOLFSON and GARCIA, JJ., concur.
_________________________________________________________________
APPEAL from the] Lower Court and Trial Judge(s) in form indicated
Circuit Court ] in margin:
of Cook County;] Appeal from the Circuit Court of Cook County.
the Hon:______ ]
Judge Presiding] Honorable Mary K. Rochford, Judge Presiding.
_________________________________________________________________
For APPELLANTS ]Indicate if attorney represents APPELLANTS or
John Doe of ]APPELLEES and include attorneys of counsel.
Chicago. ]Indicate the word NONE if not represented.
For APPELLEES, ]_________________________________________________
Smith and ] Kurt E. Vragel, Jr., P.C.
Smith, of ] Glenview, Illinois 60025
Chicago. ] Attorney for Appellant
Brown, ] Attn: Kurt E. Vragel, Jr.
of Counsel. ] OF COUNSEL
]
] SmithAmundson, LLC
] Chicago, Illinois 60601
] Attorneys for Appellees
] Attn: Michael Resis and John C. Neel
No. 1-07-1953
] OF COUNSEL
Also add atty. ]
for third party]
appellants ]
or appellees. ]
]
___________________(USE REVERSE SIDE IF NEEDED___________________
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