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Perini-North River Associates v. Chesapeake & Ohio Railway Co.

filed: September 8, 1977.


Appeal from the United States District Court for the District of New Jersey (D.C. Civil No. 75-1133).

Weis, Staley and Garth, Circuit Judges.

Author: Staley


STALEY, Circuit Judge

This case concerns the circumstances under which a carrier may not avoid liability under the Carmack Amendment, 49 U.S.C. ยง 20(11), despite the consignee's failure to timely file a written claim for damages as required by the bill of lading.

Appellant Perini-North River Associates (Perini) brought an action under a straight bill of lading to recover the repair costs of a crane damaged during shipment by defendant carriers on August 14, 1972.*fn1 The carriers' defense was that Perini had failed to give proper notice of loss or claim within nine months, as specified in the bill of lading:

As a condition precedent to recovery, claims must be filed in writing with the receiving or delivering carrier . . . . within nine months after delivery . . . . Where claims are not filed or suits are not instituted thereon in accordance with the foregoing provisions, no carrier hereunder shall be liable, and such claims will not be paid.

(Appendix to Appellant's Brief at 54a).

Perini's yard superintendent discovered the damage on August 29, 1972, and requested a meeting with a Penn Central representative at which the crane could be examined and repair procedures discussed. (53a) Penn Central sent Luke O'Donnell, an "Over short and damage" clerk who examined damaged cars and sent verification reports to the railroad's claim agents in Buffalo, New York. (23a) Normally, upon receipt of this written report, the Buffalo office would dispatch an investigator. (24a) O'Donnell would also forward two copies of his damage report to the consignee for use in preparing its notice of claim. (33a, 35a) Meanwhile the claimant could proceed with repairs, since O'Donnell's report would confirm the fact and repair cost of the damage. (82a)

On August 30, 1972, O'Donnell met with three Perini superintendents, Perini's master mechanic in charge of equipment maintenance, Perini's executive and safety engineer, and a representative of the manufacturer of the crane. (54a, 81a) The district court found that O'Donnell told them Perini need not file a claim, since one had already been filed when the crane was reloaded after the accident. He was referring to a Freight Inspection Report prepared on August 15, 1972 by Penn Central employee E. R. Monto and mailed to the Freight Claims Office in Buffalo.*fn2 (26a, 57a) A copy of this report had also been sent to O'Donnell's office in Weehawken prior to his inspection of the crane. (39a) When he returned from the Perini meeting, his superior told him he would not have to file his own report, but could verify Monto's report with the Buffalo office by telephone. (28a, 83a)

This was not the only deviation from usual practice. After the various inspection reports were filed, Penn Central would on its own initiative send claim forms to the consignee of damaged goods. No forms were sent to Perini -- nor was any mention made of the claim during subsequent unrelated transactions -- until June 19, 1973, when Perini's marine superintendent contacted the Buffalo office. In a memo accompanying the forms, Penn Central's freight claims supervisor wrote that Perini's case had previously been assigned a file number which should be used when Perini filed its claim. (58a) When Perini returned the completed form on June 27, 1973, slightly more than ten months after the date of delivery, Penn Central disallowed the claim because it had been filed out of time.

Perini concedes that, absent special circumstances, a carrier's liability for freight damage is conditioned on compliance with the filing deadline in the bill of lading. However, Perini argues that Penn Central's actual knowledge of the damage, its departure from normal claims procedure, and O'Donnell's waiver of the filing requirement preclude the defense of untimeliness under the doctrine of estoppel. The trial court found that Perini knew a written claim was necessary, but neglected to file within nine months due to reliance on O'Donnell's dispensation. (83a) The trial court also held that O'Donnell had neither actual nor apparent authority to waive the requirement, and Perini's unquestioning reliance on his word was unjustified. (85a) Accordingly the district court concluded that since defendants were not estopped to raise Perini's untimeliness, it furnished a complete defense. After a bench trial, the district court entered judgment for the defendants. Due to the peculiar facts in this case, we disagree.

The Supreme Court early held that the Carmack Amendment required some written claim, although the particular form was dictated by "practical exigency." St. Louis, Iron Mountain & Southern Railway v. Starbird, 243 U.S. 592, 605, 61 L. Ed. 917, 37 S. Ct. 462 (1917); Georgia, Florida & Alabama Railway v. Blish Milling Co., 241 U.S. 190, 198, 60 L. Ed. 948, 36 S. Ct. 541 (1916). The Court stated that

the parties could not waive the terms of the contract under which the shipment was made pursuant to the Federal Act; nor could the carrier by its conduct give the shipper the right to ignore these terms which were applicable to that conduct and hold the carrier to a different responsibility from that fixed by the agreement made under the published tariffs and regulations. A different view would ...

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