Eisenman Seed Co. v. C. M. St. P

No. 12144

I N THE SUPREME C U T O THE STATE O MONTANA OR F F

EISENMAN SEED COMPANY, a Corporation,

P l a i n t i f f and Respondent,

CHICAGO, MILWAUKEE, ST P U AND AL PACIFIC RAILROAD, a Corporation,

Defendant and Appellant.

Appeal from: D i s t r i c t Court of t h e F i r s t J u d i c i a l D i s t r i c t , Honorable Gordon R , Bennett, Judge p r e s i d i n g .

Counsel o f Record :

For Appellant:

G a r l i n g t o n , Lohn and Robinson, Missoula, Montana, Robert E. Sheridan argued, Missoula, Montana,

For Respondent:

B r a z i e r , Dowling and Erickson, Helena, Montana, Geoffrey L, B r a z i e r argued, Helena, Montana,

Submitted: November 29, 1972

Decided : 3 k N 16 1973 J A f j - ;.*: 7 2 : Filed : J

Clerk

Mr. Justice Wesley Castles delivered the Opinion of the Court. This appeal is taken from a judgment for plaintiff entered by the district court of the first judicial district, Lewis and Clark County, and the court's subsequent denial of defendant's exceptions to the find- ings of fact and conclusions of law and its motion to amend such findings of fact and conclusions of law. The principal issue involved is whether defendant is liable to plaintiff for loss of grain occurring after defendant delivered the ship- ment to the consignee. Plaintiff, Eisenman Seed Company (hereinafter referred to as Eisenman), commenced this action in the district court seeking to recover from defendant Chicago, Milwaukee, St. Paul and Pacific Rai 1 road (herein- after referred to as Milwaukee), certain sums of money as the result of an alleged loss of malting barley occurring on shipments from Fairfield, Montana to Duluth, Minnesota. The basis for Eisenman's claim was that the grain was transported in defective equi v e n t belonging to Milwaukee and further, that Milwaukee was negligent in the transportation, handling and delivery of the grain. During the year 1968, Eisenman shipped numerous carloads of malt- ing barley from various points along the Agawam branch line of Milwaukee in Montana for delivery to Capita1 Elevator Co. (hereinafter referred to as Capital ) , the consignee in Dul uth, Minnesota. Prior to loading, the grain was weighed by Eisenman on automatic scales and this weight was used in preparing the bills of lading. The grain was again weighed upon arrival at Capital in Duluth. According to the testimony of Joe Eisenman, president of Eisenman, the grain was not weighed at Capital until after it was unloaded from the railroad cars. The grain was also weighed on track scales of Milwaukee at Great Falls, but these weights are not at issue in this appeal. The loss covering 39 carloads amounted to 19,200 pounds, or 492 pounds per car. The total judgment here was for $499.20.

As a result of discrepancies between Eisenman's weights and those obtained by Capital, thirty-nine claims were filed with Milwaukee, which form the basis of this litigation. All of the claims involved are commonly referred to as "clear record claims". A clear record claim was defined by Harold Whatmore, a freight claim agent of Milwaukee, as "a movement of a car, which from the point of origin to its point of destination, had no de- tectable leaks." Each car upon which a claim was filed was inspected by the Duluth Board of Trade after arrival at Capital, and an official weight inspection certificate issued on the contents after unloading. The following excerpt from Mr. Eisenmenls testimony indicated, as did the individual weight and inspection certificates, that no defects were noted on any of the cars and no leaks were detected. "Q. Well, let me ask you this: For each one of the claims that you have filed, you have received from the railroad a copy of the Duluth Board of Trade official weight certif- icate, is that not correct? A. That's right. "Q. And for each one of the weight certificates, an inspection form must be filled out by the supervising weighmaster, is this not also true? A. That's right. "Q. And on each one of these cars, or these claims that are filed, it's noted that that particular weighmaster checked the box car and noted no leaks detected? A. Yes." The testimony of Mr. Eisenman was corroborated by that of Mr. What- more. Thus, the proof that the 39 cars were delivered intact. Capital, the consignee, had been designated by Eisenman through its broker, Hufford & Hufford. Milwaukee had nothing to do with the designation of the consignee. The grain was unloaded at Duluth by Capital and no em- ployees or agents of the railroad took part in the unloading process. There was also no affiliation or agreement between Milwaukee and Capital b which y the latter could have been construed as the agent of Milwaukee. The unloading of the grain took place at a private siding belonging to Capital in Duluth. Milwaukee was then notified by Capital that each car was released to the railroad after it was unloaded.

The uncontroverted testimony of Mr. Eisenman was t h a t the grain l o s s was occurring because the cars were improperly unloaded a t Capital, with the r e s u l t t h a t grain was being l e f t i n t h e c a r s . Because of the importance of t h i s testimony, we quote verbatim t h e f o l lowing excerpts from the t r a n s c r i p t : "Q. (By Mr. Sheridan, counsel f o r defendant) In the unloading of the grain, the grain i s often l e f t in the car---now, i s t h a t c l e a r enough in t h a t form of question? A. Yes. "Q. The grain simply is not a l l dumped out of the c a r , i s t h a t not r i g h t ? A . Yes. "Q. The grain i s just not a11 dumped out of the car--- A. Right. "Q. ---by the mechanism they use? A. That's r i g h t . "Q. And could you describe f o r m how Capital Elevator e Company, i f you know, unloads the grain out of these cars? A . Well, I c a n ' t give you the exact procedure t h a t they use t o unload them, other than the regular unloading methods t h a t you'd find a t any terminals. "And t h a t i s , t h a t they dump these cars i n t o hoppers and then they a r e automatically weighed a f t e r they a r e dumped i n t o hopper cars and then s e t back on the track, and t h a t i s the actual grain t h a t ' s dumped out of the cars---the actual weight, b u t our point i s t h i s : H w o much was a c t u a l l y l e f t i n the car a f t e r i t was dumped.

"Q. So i t ' s your feeling t h a t these c a r s a r e n ' t being properly unloaded when they a r r i v e a t Duluth, i s t h a t not correct? A . I would have t o say 'Yes' t o t h a t question.

"Q. And t h a t you're not being given c r e d i t f o r the grain which you shipped from Great Falls simply because the grain was not being properly unloaded a t Capital Elevator? A . Yes. "Q. And there was grain being l e f t i n t h e cars t h a t were returned t o you, or t o whoever e l s e t h a t car i s returned to? A. That's r i g h t . "Q. And you feel t h a t t h i s happens on p r a c t i c a l l y every car? A . Well, I would not say every c a r , but i t happens on a good percentage of the c a r s , Mr. Sheridan, yes." Two other f a c t s a r e e s s e n t i a l t o a determination of t h i s case. (1) On October 9, 1970, Eisenman submitted requests f o r admissions t o Milwaukee, one of which was: "15. That sloppy unloading and car cleaning practices a t t h e point of destination may cause losses in the

del iveries of grains by interstate common carriers for hire, including railroads." On October 23, 1970, Milwaukee admitted the above request but em- phasized that in this instance the unloading and car cleaning was not performed by, nor was it the responsibility of Milwaukee. (2) The freight tariff, which controlled this shipment and which was admitted in evidence by the trial court, specifically stated that the duty to unload rested upon the shipper. Throughout the trial, the trial judge expressed concern over the question of when the railroad lost control of the shipment and who was responsible for losses occurring due to the failure of the consignee to properly and completely unload. At the conclusion of the trial, the trial judge stated he wanted to know just when the responsibility of the railroad ended. Milwaukee contends that this is indeed the crucial question in this case and appeals from the trial court ruling that the railroad's responsibil- ity for the grain and liability for its loss continued beyond the time the grain was delivered to the siding of the consignee. Two issues are presented on appeal: 1. Whether the trial court erred in applying state rather than federal law. 2. Whether the trial court erred in holding Milwaukee liable for the loss of grain where the evidence clearly showed the railroad cars were not defective, and that the loss occurred after the grain was in the posses- sion of the consignee. Counsel for both parties admitted in their respective trial briefs that the controlling law was 49 U.S.C. § 20(11). However, the trial court, in its findings and conclusions of law referred to section 8-812, R.C.M. 1947, as controlling. Specifically, in finding of fact VII and conclusion of law 111, the court stated that the railroad was not entitled to relief from 1 iabil i ty under the exceptions provided in section 8-812.

The shipment of ma1 ting barley originated in Montana and terminated in Duluth, Minnesota. That such a shipment was i n i n t e r s t a t e commerce i s so obvious as t o not require discussion or elaboration. Suffice i t t o say t h a t the shipment involved crossed several s t a t e lines and involved persons and businesses of several different s t a t e s . The Constitution of the United States has reserved and granted t o Congress the power t o regulate commerce among the several s t a t e s . Art. I , Section 8 , United States Constitution. While there is authority t o the e f f e c t t h a t s t a t e s may l e g i s l a t e on certain matters affecting i n t e r s t a t e commerce, unless and until Congress l e g i s l a t e s , there i s no question that once Congress regulates i n t e r s t a t e commerce by enacting a s t a t u t e , i t preempts the f i e l d and supersedes a l l s t a t e legislation affecting the same subject. In referring specifically t o 49 U.S.C. 5 20(11), known as the Carmack Amendment, in Adams Express Co. v . Croninger, 226 U.S. 491, 33 S.Ct. 148, 57 L.ed. 314, 320, the United States Supreme Court said: "That the 1egislation supersedes a1 1 the regulations and policies of a particular s t a t e upon the same sub- j e c t r e s u l t s from i t s general character. I t embraces the subject of the l i a b i l i t y of the c a r r i e r under a b i l l of lading which he must issue, and limits his power t o exempt himself by rule, regulation, or contract. Almost every detail of the subject i s covered so completely t h a t there can be no rational doubt but that Congress intended t o take possession of the subject, and supersede a l l s t a t e regulation with reference t o i t . Only the silence of Congress authorized the exercise of the police power of the s t a t e upon the subject of such contracts. B u t when Congress acted in such a way as t o manifest a purpose t o exercise i t s conceded authority, the regulat- ing power of the s t a t e ceased t o e x i s t . " See also: Nw York, Nw Haven & Hartford Railroad Co. v . Nothnagle, 346 U.S. e e

The l i a b i l i t y of Milwaukee should have been determined with refer- ence t o the provisions of the Carmack Amendment and related case decisions, and not with regard t o Montana law. A t best, the Montana s t a t u t e upon which the t r i a l court relied could have only been controlling with respect t o shipments purely i n t r a s t a t e in character. Where, as here, the shipment was i n i n t e r s t a t e commerce, the t r i a l court erred in applying s t a t e rather than

federal law. The wording of the Carmack Amendment is important in determining the liability of the comon carrier, specifically, in this instance, the Milwaukee Railroad. 49 U.S.C. 9 20(11), states, in part, that the carrier: " * * * shall be liable to the lawful holder of said -. .

receipt or bill of lading * * * for the full actual loss, damage, or injury to such property caused by it". ]Emphasis added.) The emphasized portions are important because they indicate that liability shall be placed upon the carrier only when it causes the loss. Here, the record is entirely devoid of any testimony which would indicate that any 1 oss of grain occurred while the grain was in the possession of Milwaukee. To the contrary, the record indicated that each car upon which a claim was filed was inspected on arrival at Capital in Duluth, by a disinterested third party, namely, the Duluth Board of Trade, and no leaks of any nature were detected. On the other hand, the record is replete with testimony, including that of Mr. Eisenman, president of Eisenman Seed Co., that the grain loss was occurring because that grain was being improperly and incompletely un- loaded at Capital. The principal issue then becomes---who had the respon- sibility for unloading the grain? By virtue of the inspection reports issued by the Duluth Board of Trade, it is apparent the shipments arrived in good order at the place designated by the bills of lading, the siding at Capital. While there are no Montana cases directly in point, there are numerous decisions from other jurisdictions holding that the carrier is absolved from responsibility for unloading bulk commodities in carload lots when the car or cars are del ivered to the consignee. In Republic Carloading & Distributing Co. v. Missouri Pacific R. Co., 302 F.2d 381, 386, the court said: "Common carrier 1 iabil i ty ceases upon del ivery of the shipment to the consignee. Delivery of a carload shipment, such as is involved in this category, is normally effected - - when the car is placed on a team track or ~potted.'~ . (Emphasis suppl i ed ) In Jones v. Thompson, 360 Mo. 285, 228 S.W.2d 673, 676, the court said:

"The general rule, a t l e a s t a s t o dead f r e i g h t , is t h a t t h e c a r r i e r i s p r i m a r i l y bound both t o load and unload i n a proper manner f r e i g h t d e l i v e r e d t o i t f o r t r a n s - p o r t a t i o n . And f o r breach of t h a t duty r e s u l t i n g i n damage i t will g e n e r a l l y be l i a b l e . But by custom o r usage an exception g e n e r a l l y o b t a i n s i n t h e c a s e of bulky f r e i g h t i n c a r l o a d l o t s . * * * Thereunder t h e c a r r i e r i s n o t r e q u i r e d t o unload such f r e i g h t from t h e c a r . " (Emphasis added. ) Respondent Eisenman urges t h a t Milwaukee has n o t c a r r i e d i t s burden o f proof c i t i n g Joseph Toker Co. v. Lehigh Valley R . Co., 12 N.J. 608, 97 A.2d 598, 599. Here, t h e documentary evidence, uncontradicted, was t h a t t h e shipments a r r i v e d i n good o r d e r . Thus, Milwaukee d i d c a r r y i t s burden of proof. C l e a r l y , on t h e b a s i s of t h e shipments involved being bulk s h i p - ments i n c a r l o a d l o t s , i t is apparent t h e duty t o unload was n o t t h a t of t h e r a i l r o a d , but r a t h e r t h a t of C a p i t a l . However, there i s a second b a s i s upon which t h e burden t o unload is placed upon t h e consignee. The c a r s were placed upon a p r i v a t e s i d i n g a t C a p i t a l . 13 C.J.S. C a r r i e r s s 67, p. 124, states : "The general r u l e r e q u i r i n g t h e c a r r i e r t o load and unload shipments i s a l s o n o t a p p l i c a b l e t o a c a s e where t h e c a r s a r e n o t t o be loaded o r unloaded a t t h e s t a t i o n o r on t h e lands and t r a c k s of t h e c a r r i e r . Where c a r s a r e d e l i v e r e d on a p r i v a t e s i d i n g o f f t h e land of t h e c a r r i e r , i t i s under no obl i g a t i o n t o unload them. I' (Emphasis added. ) In S e c r e t a r y of A g r i c u l t u r e v. United S t a t e s , 347 U.S. 645, 74 S.Ct. 826, 98 L.ed 1015, 1020, t h e Court s a i d : " I n t h e c a s e of p r i v a t e s i d i n g s , t h e r a i l r o a d ' s job ends when i t has placed t h e c a r on t h e c o n s i g n e e ' s s i d i n g . " (Emphasis added.) Milwaukee had n e i t h e r t h e equipment nor t h e f a c i l i t i e s a t Duluth t o unload g r a i n . The c a r s were s p o t t e d a t C a p i t a l ' s s i d i n g f o r t h e consignee t o handle from then on. The r a i l r o a d ' s duty ended t h e r e . Thereafter, the employees o r agents of Capital unloaded t h e g r a i n and, i n s o doing, l e f t a c o n s i d e r a b l e amount of g r a i n i n t h e c a r s . According t o t h e testimony of Mr. Eisenman, n o t a l l of h i s g r a i n was unloaded and he s u f f e r e d a l o s s a s a result. That l o s s was d i r e c t l y and proximately caused by t h e a c t i o n s

and derelictions of Capital, and not by any act or omission on the part of Milwaukee. The evidence presented did not support the trial court's finding that the loss of grain was caused by Milwaukee. Therefore, the judgment of the district court is reversed and this cause is remanded with instructions to enter judgment in favor of de- fendant.

Mr. Justice John Conway Harrison dissenting: 0

I dissent.