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MIDDLE ATL. CONF. v. UNITED STATES

December 21, 1972

Middle Atlantic Conference et al., Plaintiffs,
v.
United States of America and Interstate Commerce Commission, Defendants.



The opinion of the court was delivered by: MACKINNON

This is an action seeking to set aside and enjoin a report and order of the Interstate Commerce Commission (Commission). Our jurisdiction is invoked under 28 U.S.C. §§ 1336, 1398, 2284, 2321 and 2325. Briefly stated, the Commission order prohibits motor common carriers from specifying in their tariffs that certain warehousemen, pier operators, brokers, steamship agencies, and others similarly situated (generally referred to hereinafter as warehousemen), who are neither consignors nor consignees, are to be liable under certain circumstances for charges for the undue detention (demurrage) of trucks being loaded or unloaded at their premises.

Various motor carrier associations *fn1" filed proposed tariffs with the Commission, seeking to establish charges for the detention of a carrier's vehicle beyond the so-called free time for loading and unloading cargo. *fn2" The material provisions of the tariff schedules which the complaint seeks to uphold are substantially as follows:

 
Except as otherwise specifically provided, when due to no disability, fault or negligence on the part of the carrier, the loading or unloading of freight . . . is delayed beyond the free time authorized . . . charges in Sec. 4 will be assessed against the consignor (Notes B and C) if the delay occurs at his premises, and against the consignee (Notes B and D) if the delay occurs at his premises . . .
 
NOTE B: Under this rule, the agent or representative of consignor or consignee, forwarding or receiving a shipment for account of consignor or consignee will be treated as a consignor or consignee.
 
NOTE C: "Consignor" as used in this item means the party from whom the carrier receives the shipment or any part thereof, for transportation at point of origin or any stop-off point, whether he be original consignor, or warehouseman, or connecting air, motor, rail or water carrier with which the carrier does not maintain joint through rates, or other person to whom the bill of lading is issued.
 
NOTE D: "Consignee" as used in this rule means the party to whom the carrier is required by the bill of lading or other instruction, to deliver the shipment, or any part thereof, at destination or any stop-off point, whether he be ultimate consignee, or warehouseman, or connecting air, motor, rail or water carrier with whom the carrier does not maintain joint through rates, or other person designated in the bill of lading.

 In short, the scheme of the tariff proposal is to make warehousemen, agents, etc., liable for detention charges by a unilateral redefinition of consignors and consignees to include persons who are neither consignors nor consignees.

 Under this plan of the motor carriers to use the device of a tariff which has the force of law *fn3" to impose liability for detention charges, the charges would accrue only where the overlong detention was not "due" to any "disability, fault or negligence . . . of the carrier" and if that requirement were satisfied, then under the tariff, with respect to shipments delivered to a warehouseman, agent, etc., the warehouseman would become automatically liable even though the delay was occasioned by factors outside his control. *fn4" There is no present controversy over the actual amounts of the charges. However, the proposed tariffs seek to provide not only for the amounts of the detention charges, but also for the imposition of liability for the charges against particular parties.

 In general, the charges are to be imposed by virtue of the tariff provision directly on the party at whose premises the delay occurs even if that party were an agent of the consignor or consignee, such as a warehouseman, pier operator, or other agent or bailee for hire and not an actual party to the contract of transportation, i.e., a person not named in the bills of lading as consignor or consignee. *fn5" This last feature of the proposed tariffs is the one which creates the present controversy. Hereafter we will refer to warehousemen only, they being representative of the class of third parties, agents and representatives of consignors and consignees upon whom the carriers seek to impress liability for detention charges.

 The Commission has rejected the proposed tariffs as being "unlawful," *fn6" and the motor carrier associations now bring this action to set aside, annul and enjoin the report and order of the Commission. 28 U.S.C. § 1336(a) (1964). *fn7" A three-judge District Court has been convened to hear and decide the case pursuant to 28 U.S.C. § 2325 (1964). *fn8"

 Plaintiffs frame the issue to be:

 
[Only] a question of law, i.e., whether the Interstate Commerce Act and the body of case law developed before and since that Act was passed permit the imposition of liability for detention charges on others than persons named in bills of lading as consignors or consignees of shipments.

 Plaintiffs' br. p. 5. To state the issue completely it is necessary to add that the carrier seeks to create this new rule of liability "by means of a tariff." This formulation of the issue by plaintiffs is a clear admission that the carriers are attempting through the tariff to impose liability upon parties who are not named in the bills of lading as consignors or consignees. In the absence of this tariff provision the warehousemen would not be liable for detention charges under such circumstances and thus what is attempted is in effect a "legislative" change in the current law determining their liability.

 I

 The right to assess detention or demurrage charges against parties to a contract of transportation because of delay in releasing transportation equipment is presently well established. *fn9" Motor carriers term such delay as detention. Railroads refer to it as demurrage. Prior to the coming of the railroad, liability for demurrage of ships was recognized in maritime law as the amount to be paid for delay in loading, unloading or sailing beyond the time specified. *fn10" In maritime transactions the time schedule for such acts was frequently fixed in the charter party *fn11" or bill of lading *fn12" but if not so agreed upon there was an implied promise by the shipper or consignee to perform such activities within a reasonable time, or, in default thereof, to become liable for demurrage. *fn13" If a specific demurrage rate was not fixed in the charter party or bill of lading a reasonable rate would be required *fn14" and the law recognized that the ship owner or master had a lien on the cargo for such demurrage even though the bill of lading did not contain a demurrage clause. *fn15" This is an outgrowth of a legal concept, peculiar to contracts of shipment at maritime law, which has been stated as follows:

 
And as, in the eye of the law, maritime, upon commercial reasons, the master of the ship is deemed to contract, in respect to the freight, rather with the merchandise than with the shipper, and his rights are, therefore, not made to depend upon any doctrine of agency.

 275 Tons of Mineral Phosphates, 9 F. 209, 211 (D.C.E.D.N.Y. 1881). *fn16" While demurrage originated in maritime law, the legal principles applicable to ship demurrage are not completely applicable to demurrage charges by land carriers in this country. *fn17" As Judge Prettyman observed, such charges by railroads "are sui generis," *fn18" and the same is true of detention charges by motor carriers. This makes it necessary, in applying maritime decisions to issues such as we have here, to give full consideration to the different settings in which maritime demurrage cases arise. Where the master of a ship was deemed to contract with the freight, in the transportation contracts of our rail and motor carriers the carrier is considered to contract directly with the shipper. *fn19" Thus, to make shippers and others liable to the carrier in connection with the transportation of goods requires a stronger direct contractual base between the parties than in maritime ...


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