Pennsylvania Railroad v. Titus

Laughlin, J.:

This case was submitted to the trial court on an agreed statement of facts, which relate to interstate commerce and present the question as to whether, where through inadvertence or mistake the carrier fails to charge the full amount of the freight required by the Interstate Commerce Act, so called, and its filed tariff schedules, the consignee of the goods for sale who accepts delivery and pays the stated charges, and thereafter sells the goods and accounts to his principal, the shipper in another State, therefor, deducting the freight charges paid and his commissions and other expenses, and transmitting to his principal the balance, is liable to the carrier for the balance of the freight charges which should have been imposed.

In the month of June, 1907, one Franklin of Adairsville, Gfa., who was the owner of two carloads of peaches, shipped them from there by the Nashville, Chattanooga and St. Louis Railway,. consigned to the defendant, routed over the plaintiff’s line, as the final carrier, from Philadelphia, and the initial carrier issued therefor non-negotiable bills of lading. The peaches were delivered to the defendant at the city of New York, and *832 he paid to the plaintiff the sum of $488 for freight and refrigerating charges, according to its statement thereof. The plaintiff’s agent made a mistake in computing the charges, which, according to the printed schedule of rates and transportation charges filed and posted .by it and the connecting carriers in accordance with the provisions of section 6 of the act of Congress of February 4, 1887 (24 U. S. Stat. .at Large, 380), as amended by section 2 of the act of Congress of June 29, 1906 • (34 U. S. Stat. at .Large, 586), which took effect sixty days thereafter (34 IT, S. Stat. at Large, 838, Res. No. 47), should have been eighty-one cents per 100 pounds, instead of which plaintiff charged and received eighty and two-tenths cents per 100 pounds. This error was not discovered by the plaintiff until fifteen months later, and it then demanded of defendant paymefit of three dollars and forty-five, cents, being the balance of the legal freight and refrigerating charges not paid. The defendant, declined to pay the same on the ground .that he had received the peaches as a commission agent for the consignor and had sold them and remitted to his principal the proceeds of the sale less his commissions and expenses. The plaintiff then wrote to the consignor, demanding payment, and, on receiving no reply to its letter, brought this action.

It is contended in behalf of the plaintiff that the provisions of the Interstate Commerce Act, designed to secure equality in shipping rates (32 IT. S. Stat. at Large, 847, chap. 708), and the public policy of the Congress manifested thereby,. imperatively require that the consignee shall be held liable where the carrier has, through mistake or inadvertence, thus delivered goods without requiring payment of the full lawful rate of freight. It is well settled that it is unlawful for a carrier to contract to carry interstate freight at a lower rate than its duly scheduled tariff rates, and that, neither by contract nor through mistake or inadvertence, can it estop itself from demanding and collecting the balance of the lawful rate, where it has delivered goods without charging the same in full. (Illinois Central R. R. v. Henderson Elevator Co., 226 U. S. 441; Union Pac. R. Co. v. American Smelting & Refining Co., 202 Fed. Rep. 720; Baltimore & Ohio R. R. Co. v. La Due, 128 App. Div. 594.) It does not follow, however, *833 that the consignee is Hable. It is not claimed, and I do not understand, that the Interstate Commerce Act has made any change in the law with respect to the Hability of a consignee for freight charges. The consignor or shipper, of course, is-liable for such charges, for the contract is made with him, and he induces the carrier to transport the freight (2 Hutch. Carriers [3d ed.], § 810; Central R. R. Co. v. McCartney, 68 N. J. L. 165); but there is no contractual relation between the carrier and the consignee by the mere designation of the latter as consignee which obligates him . to receive the goods,- or to pay the freight. (Merrick v. Gordon, 20 N. Y. 93.) Of course, if the consignee accepts the goods, with notice that the carrier has a Hen for a specified amount, thereby depriving the carrier of its lien, he becomes obligated by an impfied contract to pay the charges (Union Pac. R. Co. v. American Smelting & Refining Co., supra; Davison v. City Bank, 57 N. Y. 81; Sheets v. Wilgus, 56 Barb. 662), but if the carrier induces him to accept the goods on the theory that the freight charges are as stated, there is no principle upon which he thereby becomes Hable to the carrier for the difference between the freight charges thus paid and those which the carrier by law was required to charge. (Central R. R. Co. v. McCartney, supra; Hutch. Carriers [3d ed.], § 807.). Presumptively the consignee of goods is the owner thereof, and very often he .is so in fact, but that is not conclusive. . (Hutch. Carriers [3d ed.], § 807.)

It is conceded by the learned counsel for the respondent that the defendant would not be liable for the balance of the freight charges, if he had notified the plaintiff,, or the plaintiff had known when it delivered the goods to him that he was acting as a commission agent, and the authorities so hold. (Elwell v. Skiddy, 77 N. Y. 282.) I fail to see any distinction in principle, depending on the question of knowledge on the part of the carrier with respect to whether the consignee was acting as agent. There was no deception by the consignee as agent of the consignor; he was ready to pay the amount of the charges for which the carrier claimed a Hen, and he did so. The Interstate Commerce Act does not prohibit a carrier from giving credit *834 to a consignor in whole or in part for the carrying charges; and although the consignee may be chargeable with notice of the scheduled rate of charges, when acting as agent for the •consignor, he was neither, so far as the carrier is concerned, obliged to compare the rate demanded, by the carrier with the lawful rate nor to inquire what arrangement, if any, the carrier had with the consignor for any additional charges required by law. The consignee was innocent of any intent . to participate in an evasion of the law; and in fact there is no evidence that either the consignor or carrier intended to violate the law. It may be that the presumption that a consignee is the owner- would enable the plaintiff to make out a prima facie case, but on its appearing, as *it does by the agreed statement of facts, that such was not the case — then it seems to me the defendant is no more liable to the plaintiff than if the plaintiff knew that he was acting as agent before deliver- • ing the peaches to him. Of course, if there was any contract obligation on the part of the defendant, by which he became liable to the plaintiff for all freight charges required to be imposed by law; then the carrier could not estop itself, or be estopped, from maintaining an action against him any more than it could on the original contract by which the owner and consignor ■ became liable for the lawful carrying charges, but here there was no such contractual liability on the part of the defendant to the carrier.

We are not now required to decide whether, if this error had been discovered, and the claim had been made, while the defendant had the peaches or the proceeds thereof on hand, and before accounting to his principal, he would be liable, or the. property or the proceeds thereof could be reached to the extent required to satisfy the plaintiff’s claim. The only theory on which he could possibly be liable for the balance of the freight charges would be that he held the property or the proceeds thereof, and had received or was in a position to receive the benefit resulting from the delivery of the goods without payment of the lawful freight charges in full for which the carrier had a lien. Since before the. claim was made the consignee had remitted the surplus proceeds.of the sale to his principal, it is manifest that the carrier .would be estopped from *835 enforcing a claim against him on that theory, even if it otherwise might do so. (Central R. R. Co. v. McCartney, supra.) The case of Union Pac. R. Co, v. American Smelting & Refining Co. (supra), on which plaintiff relies, is readily distinguishable from the case at bar, for there the bill of lading provided for the payment of the freight by the consignee only and it does not appear but that the consignee was the owner. The bills of lading under which the peaches in question were shipped contained a provision to the effect that the “ owner or consignee ” should pay the freight, and it does not appear that the consignee ever received the bills of lading which being nonnegotiable were not required to be presented before delivery of the peaches.

I am of opinion, therefore, that the determination of the Appellate Term and the judgment of the Municipal Court should be reversed, with costs, and that the defendant should have judgment on the submission for the dismissal of the complaint, with costs.

Ingraham, P. J., Dowling and Hotchkiss, JJ., concurred; McLaughlin, J., dissented.