Pennsylvania Rd. Co. v. United Collieries, Inc. , 59 Ohio App. 540 ( 1938 )

From the allegations in the petition, all of which were admitted by the defendant, and from the stipulation of the parties it appeared that the plaintiff, a common carrier of freight by railroad, accepted two shipments of coal at Weirton, West Virginia, to be transported to Detroit, Michigan. The Hanna Coal Company was the consignor or shipper in each instance. It was also the consignee in one instance. In the other, the consignee was United Collieries, Inc., the defendant. In the one instance in which The Hanna Coal Company was the consignee, it ordered delivery to be made to United Collieries, Inc., while the coal was in transit, and thereupon, likewise while the coal was in transit, United Collieries, Inc., ordered delivery to be made to Crescent Coal Company of this coal as well as the coal that had been consigned to it originally.

These shipments were evidenced by straight bills of lading, upon the face of which were printed the following, with the exception of the signature "Hanna Coal Co., Cleveland, Ohio," which was a stamp impression: "Subject to Section 7 of conditions, if this shipment is to be delivered to the consignee without recourse on the consignor, the consignor shall sign the following statement: The carrier shall not make delivery of this shipment without payment of freight and all other lawful charges. Hanna Coal Co., Cleveland, Ohio."

The signature is that of Hanna Coal Company, placed thereon at the time of the issuance of the bills of lading.

The notice to deliver to Crescent Coal Company was in writing as follows:

"Cincinnati, Ohio, Feb. 16, 1933. "Pennsylvania Ry., "3rd Larned, "Detroit, Michigan.

"Attention: Inbound Car Desk. "Gentlemen:

"Please reconsign the following cars, protecting the lowest through rate:

"Initial No. Now Consigned Reconsign to "P.R.R. U.S. Crescent Fuel Co. "165818 DET. Detroit "via P.R.R. via U.B.

"Advance Order (Yes) Freight charges to follow car (Yes)

"Confirming telephone conversation with mail "Time 9:30 A.M.

"When these reconsignments have been effected, please advise R.H. Schulze, Traffic Manager, 829 Dixie Terminal Bldg., Cincinnati, Ohio.

"Yours very truly,

"United Collieries, Incorporated,

"By Kyle."

The plaintiff delivered the coal to Crescent Coal Company without requiring prepayment in cash of the freight. That company did deliver its check to the plaintiff in payment of the freight, but this check was not honored by the bank. During the period between May 10 and November 27, 1933, payments totaling $81.75 were made by Crescent Coal Company, and these payments were applied by the plaintiff upon the freight on the coal consigned to itself originally. Later a receiver was appointed for the assets of Crescent Coal Company.

On September 12, 1934, the plaintiff demanded payment of the balance ($143.39) from the defendant, and upon its refusal this action was instituted in the Court of Common Pleas of Hamilton county. That court, on the authority of New York Central Rd. Co. v. WarrenRoss Lumber Co., 234 N.Y. 261, 137 N.E. 324, 24 A.L.R., 1160, rendered judgment for the plaintiff, and this appeal on questions of law is prosecuted from that judgment.

We are of the opinion that the case relied upon by the trial court sustains its conclusion. It is true that there was no provision exempting the original consignor from liability for freight in that case as there is in this case, but it seems clear to us that that provision is not available to this appellant. It was not the original consignor. It did not sign the provision. That provision operated to prevent recourse upon Hanna Coal Company, as consignor for the freight. While the statutes make bills of lading negotiable in a sense, they certainly do not give to them greater negotiability than that possessed by bills and notes. An endorsement without recourse by the payee of a negotiable instrument does not impart that same quality to all subsequent endorsements. The liability of subsequent endorsers depends upon their own contracts and if they desire to restrict their liability, their respective endorsements must be couched in appropriate language to that end. So it is with transferees of bills of lading. If a transferee desires to restrict his liability for freight and confine the recourse of the carrier to the ultimate receiver of the shipment, it must be accomplished by his contract with the carrier at the time of the transfer of the bill of lading.

In 9 American Jurisprudence, 797, Section 629, it is said:

"Undoubtedly, the decisions are agreed that one who receives or exercises dominion over goods by ordering a reconsignment, in the absence of some further element of fact which clearly destroys the presumption of ownership or contract thereby established, is responsible for freight charges accruing up to the time of such receipt or reconsignment order."

This statement is supported by the citation of Pennsylvania Rd.Co. v. Lord Spencer, ___ Mass., ___, 3 N.E.2d 231, 105 A.L.R., 1211; and New York Central Rd. Co. v. Warren Ross LumberCo., supra. In the annotations to these cases are found substantially all of the cases on this subject. In the annotation in 105 A.L.R., 1216, is found the origin of the statement in the text with the supporting authorities:

"Undoubtedly the decisions are agreed that one who receives or exercises dominion over goods by ordering a reconsignment, in the absence of some further element of fact which clearly destroys the presumption of ownership or contract thereby established, is responsible for freight charges accruing up to the time of such receipt or reconsignment order. Chicago, I. L.R. Co. v. MonarchLumber Co. (1916), 202 Ill. App. 20; New York C.R. Co. v. Platt B. Coal Co. (1925), 236 Ill. App. 150; Pere Marquette R. Co. v. American Coal Supply Co. (1925), 239 Ill. App. 139; IndianaHarbor Belt R. Co. v. Lieberman (1927), 245 Ill. App. 503 infra;Pennsylvania R. Co. v. Lord Spencer (Mass.), (reported herewith) ante, 1211; New York C.R. Co. v. Warren Ross Lumber Co. (1922), 234 N.Y. 261, 137 N.E. 324, 24 A.L.R., 1160; New YorkC.R. Co. v. Satuloff (1923), 122 Misc. 119, 202 N.Y. Supp., 297;New York C.R. Co. v. Maloney (1930), 137 Misc. 751, 244 N.Y. Supp., 394; West Jersey S.R. Co. v. Whiting Lumber Co. (1919),71 Pa. Super., 161; Delaware, L. W.R. Co. v. Andrews Bros.Co. (1927), 90 Pa. Super., 574; Pennsylvania R. Co. v.Rothstein (1933), 109 Pa. Super., 96, 165 A. 752;Pennsylvania Rd. Co. v. Rothstein (1935), 116 Pa. Super. 156, 176 A. 861."

Now does the evidence show that the defendant exercised dominion over these shipments? An examination of the written notice to reconsign, quoted herein, is sufficient to answer this question in the affirmative. A reconsignment is presumptively an exercise of dominion.

Then did the defendant use appropriate language to avoid the liability which would otherwise attach because of the exercise of dominion? The only language in the notice to divert, pertinent to this subject, is: "Freight charges to follow car (Yes)." It is not sufficient under the authorities. The language of the notice to divert the shipment is not inconsistent with the thought of the continued liability of the original consignee. The cases hold that similar language is not sufficient to prevent liability attaching to the original consignor. The same reasoning demonstrates its inadequacy to prevent liability attaching to a consignee who reconsigns the shipment or assigns the bill of lading. The cases cited in the annotations in the American Lawyers' Reports herein referred to, with only two exceptions noted, support this conclusion. These exceptions are Chesapeake Ohio Ry. Co. v. Southern Coal, Coke Mining Co., 254 Ill. App. 238, and Cleveland, C., C. St. L. Rd. Co. v. SouthernCoal Coke Co., 147 Tenn. 433, 248 S.W. 297. Those cases involved shipments prior to 1927, and, therefore, they were not influenced by the amendment of March 4, 1927, to C. 510, Section 1 (44 Stat. at L., 447), Title 49, Section 3 (2), U.S. Code, as later cases were. Furthermore, the former case is distinguishable on the facts, and the latter case was an action against the consignor and the statement as to the liability of a consignee was pure obiter.

The most recent case on this subject coming under our observation is that of New York Central Rd. Co. v. Brown,281 Mich. 74, 274 N.W. 715. In it the court referred to most of the existing decisions on the subject, and among others, Chesapeake Ohio Ry. Co. v. Southern Coal, Coke Mining Co., supra, and New York Central Rd. Co. v. Warren Ross Lumber Co., supra. The sole question was whether a reconsignment by a consignee, in the absence of rebutting evidence, was such an exercise of ownership as to make the consignee liable for the freight, notwithstanding the delivery of the goods to the reconsignee and notwithstanding reconsignor's instruction that freight was to follow the goods. The court refused to follow Chesapeake OhioRy. Co. v. Southern Coal Co., supra, and held the reconsignor liable for the freight on the authority of New York Central Rd.Co. v. Warren Ross Lumber Co., supra, and the other cases referred to in this opinion. The court referred to New YorkCentral Rd. Co. v. Warren Ross Lumber Co., supra, as the leading case on the subject and quoted from the opinion in the case to support its own conclusion as follows:

"``When it wrote the letter directing the delivery without notifying the plaintiff that it was not the owner of the goods, it acted either as consignee or volunteer. We may not assume that its letter was the act of a meddler. We must therefore presume that it wrote as consignee. It follows that it accepted the goods by an act of ownership when it exercised dominion over them by giving directions for their delivery, and the plaintiff was justified in treating it as owner of the goods. Penn. Rd. Co. v.Titus, 216 N.Y. 17, 109 N.E. 857, L.R.A. 1916 E, 1127, Ann. Cas. 1917E, 862. It thereby entered into the contract expressed in the bill of lading to pay the charges and became liable to pay such charges unless the words "deliver * * * upon payment of freight charges" discharged its liability when the carrier neglected to collect on delivery to the Schieck-Johnson Company.

"``The liability of the consignee under these conditions is analogous to the liability of the consignor under the terms of the bill of lading that the consignee shall pay the freight. Such a direction does not exonerate the consignor from liability. The directions given by defendant neither modified the implied contract between carrier and consignee whereby the consignee assumed liability for freight charges, nor amounted to an offer to accept the goods only on condition that freight charges should be collected of the Schieck-Johnson Company. Doubtless, plaintiff might have refused to deliver to the Schieck-Johnson Company, and retained the goods until its lien was satisfied by the payment of the freight. Doubtless, defendant by its instructions recognized such right when it qualified its directions as to delivery. But the directions were for the benefit of the carrier, not for the benefit of the defendant. The carrier was not bound at its peril to enforce payment of freight from the Schieck-Johnson Company, and its right to resort to the defendant under the contract was not impaired by delivery of the freight under its direction. The language used in defendant's letter was not contractual. Its effect was merely to give plaintiff an option to demand payment from the person to whom it delivered the goods.'"

While not directly in point, the cases of C.L. Hils Co. v.Louisville Nashville Rd. Co., 28 Ohio App. 459,162 N.E., 761, and S.A. Gerrard Co. v. New York, New Haven Hartford Ry. Co.,39 Ohio App. 84, 176 N.E. 126, support the proposition that any exercise of dominion by the consignee imposes a liability upon him for the freight, the court in the latter case citing New YorkCentral Rd. Co. v. Warren Ross Lumber Co., supra, with approval.

It is urged that the appellee should be estopped from asserting this claim against the appellant. In a somewhat similar case(Pittsburg, C., C. St. L. Ry. Co. v. Fink, 250 U.S. 577,63 L. Ed., 1151, 40 S. Ct., 27) against a consignee, the court said, at pages 582 and 583:

"Nor can the defendant in error successfully invoke the principle of estoppel against the right to collect the legal rate. Estoppel could not become the means of successfully avoiding the requirement of the act as to equal rates, in violation of the provisions of the statute. New York, New Haven Hartford Rd. Co. v. York Whitney Co., 215 Mass. 36, 40."

See also: New York Central Rd. Co. v. Frank H. Buck Co., 2 Cal.2d 384, 41 P.2d 547.

We are also of the opinion that the facts in this record fail to show the necessary elements of estoppel, were that defense available to the defendant.

For these reasons, the judgment is affirmed.

Judgment affirmed.

ROSS, P.J., and HAMILTON, J., concur.