Louis Padnos Iron Co. v. Chesapeake & Ohio Railway Co.
Louis Padnos Iron Co. v. Chesapeake & Ohio Railway Co.
Opinion of the Court
Defendant appeals as of right from a judgment entered in favor of plaintiff in the amount of $7,941.28, following a bench trial.
Plaintiff is in the business of collecting, processing and selling scrap metal. Defendant is a common carrier and is engaged in the business of transporting scrap metal by rail. Defendant routinely transported scrap metal from plaintiffs place of business in Holland to various locations throughout the United States. From 1980 to 1982, plaintiff filed 45 claims with defendant, pursuant to 49 USC 11707, for the loss of scrap metal based upon the difference between the net weight of the metal at the point of origin and the net weight of the metal at the point of destination. Defendant rejected plaintiffs claims in whole or in part, refusing to pay a total of $7,941.18. Plaintiff brought this suit for damages. Defendant counterclaimed, seeking a declaratory judgment that it could unilaterally adopt a 1% tolerance factor on all shipments of scrap metal and reduce all claims of loss by the tolerance factor. The trial court concluded that: (1) defendant had no authority to apply a tolerance factor; (2) assuming arguendo that defendant could apply a "reasonable” tolerance factor, there was no evidence in this case that any tolerance factor was reasonable; and (3) plaintiff was entitled to $7,941.28, plus costs, for actual damages. We affirm.
The Interstate Commerce Act, 49 USC 10101,
Defendant relies primarily on In Re: Net Weights for Determining Losses—Scrap Iron & Steel, 352 ICC 402 (1976), aff'd Ass’n of American Railroads v ICC, 195 US App DC 175; 600 F2d 989 (1979), an Interstate Commerce Commission decision which approved the use of a reasonable tolerance factor when determining the actual loss of scrap metal during shipment. However, as defendant concedes, the commission’s regulation applies only to voluntary settlements of loss and damage claims, it does not apply when loss and damage claims are litigated in court. Ass’n of American Railroads, supra, p 993. The commission does not exercise authority over a civil claim for the recovery of the value of property lost in transit. Joseph Toker Co v Lehigh Valley R Co, 12 NJ 608; 97 A2d
Defendant’s attempt to limit its liability by adopting a 1% tolerance factor is in direct contravention of § 11707(c)(1). We agree with the trial court that it was prohibited from applying a tolerance factor when determining plaintiffs actual loss of scrap metal sustained during transportation.
Because of our resolution of this issue, it is not necessary for this Court to address defendant’s argument that a 1% tolerance factor is reasonable. However, we agree with the trial court that the record lacks sufficient evidence to establish the reasonableness of the percentage.
A shipper establishes a prima facie case against a rail carrier under § 11707(a) when it proves delivery of the goods to the carrier, arrival of the goods in a diminished quantity or quality at the final destination, and the amount of damages. Long Island R Co v US Dep’t of Agriculture, 566 F Supp 1448 (ED NY, 1983); John Morrell & Co v Frozen Food Exp, Inc, 700 F2d 256 (CA 5, 1983); Louis Padnos Iron & Metal Co v Chesapeake & O R Co, 500 F Supp 591 (ND Ill, 1980). A carrier is liable for loss or damage during shipment unless it can demonstrate that it was not negligent and that one of five recognized carrier defenses applies: (1) an act of God; (2) an act of a public enemy; (3) an act of the shipper; (4) an act of a public authority; or (5) the inherent nature or vice of the goods. S C Johnson & Son, Inc v Louisville & N R Co, 695 F2d 253 (CA 7, 1982).
In the instant case, plaintiff produced 45 claims, each of which documented the net weight of the scrap metal shipped, the net weight of the scrap metal received, and the unit price of the scrap
Defendant’s expert testified in general that four factors could affect recorded weights: (1) weather, i.e., snow, ice or rain; (2) debris; (3) scale deviations and human error; and (4) weighing of coupled cars if an incline exists near the scales. Defendant’s expert, however, did not investigate any of plaintiff’s 45 claims and did not testify which, if any, of the four factors could explain the weight variations therein. There was no evidence that the first three factors were applicable to this case. Although there was an incline near plaintiffs scales, plaintiffs weighmaster testified that all loaded cars are uncoupled while being weighed.
Plaintiff unquestionably established a prima facie case against defendant. Defendant failed to establish that it was not negligent and that one of the five defenses applied. The trial court’s award of $7,941.28 in damages to plaintiff is authorized by law and supported by the record. GCR 1963, 517.1, now MCR 2.613(C).
Affirmed.
Formerly 49 USC 1.
Formerly 49 USC 20(11).
The section provides:
"A common carrier providing transportation or service subject to the jurisdiction of the Interstate Commerce Commission under sub-chapter I, II, or IV of chapter 105 of this title shall issue a receipt or bill of lading for property it receives for transportation under this subtitle. That carrier and any other common carrier that delivers the property and is providing transportation or service subject to the jurisdiction of the Commission under subchapter I, II, or IV are liable to the person entitled to recover under the receipt or bill of lading. The liability imposed under this paragraph is for the actual loss or injury to the property caused by (1) the receiving carrier, (2) the delivering carrier, or (3) another carrier over whose line or route the property is transported in the United States or from a place in the United States to a place in an adjacent foreign country when transported under a through bill of lading and applies to property reconsigned or diverted under a tariff filed under subchapter IV of chapter 107 of this title. Failure to issue a receipt or bill of lading does not affect the liability of a carrier. A delivering carrier is deemed to be the carrier performing the line-haul transportation nearest the destination but does not include a carrier providing only a switching service at the destination.” 49 USC 11707(a)(1).
Case-law data current through December 31, 2025. Source: CourtListener bulk data.