MERCHANT SHIPPERS ASS v. KELLOGG EXPRESS DRAYING CO (1946)

This is an appeal by defendant from a judgment in an action for damages to a wood working machine wherein the complaint alleged that plaintiff corporation ‘was a forwarder of goods for hire in interstate commerce’; that defendant corporation ‘was a common carrier of goods for hire in interstate commerce’ and ‘That on or about the 1st day of August, 1942, at the City and County of San Francisco, State of California, plaintiff caused defendant to take delivery of certain goods, towit: One (1) crate woodworking Machinery, consisting of a Heath 2 Drive Sander Machine, at the freight shed of the Associated Forwarders in San Francisco, California, which machine had been shipped by Beach Manufacturing Co. from Montrose, Pennsylvania, as consignor, to Defense Plant Corporation, c/o Moore Dry Dock Company, Oakland, California, as consignee, through plaintiff as the freight forwarder; thatsaid machine was then in good order and condition and defendant agreed to safely deliver the same to said consignee at Oakland, California, and then and there received said machine for that purpose.’ It is then alleged that defendant negligently carried the machine and caused it to be tipped over and dropped from a loading platform of a freight shed to the street, resulting in the loss of ‘skids,’ which were affixed to the machine, the machine sustaining damages consisting of numerous breaks and cracks. The amount of damages was alleged to be $2,951.58, the cost of the machine, plus necessary repairs. It was also alleged that plaintiff had paid the consignee for the cost of the machine, had caused it to be repaired and had paid for such repairs, and the plaintiff had possession of the machine.

A special and general demurrer was interposed and was overruled, wherein it was claimed that plaintiff had not stated facts sufficient to constitute a cause of action and sufficient to constitute a cause of action and that the complaint was uncertain and ambiguous in that ‘the nature of the relationship, if any, between plaintiff and Defense Plant corporation’ and ‘what, if any, right, title or interest plaintiff has or claims to have in or to the property referred to in the complaint’ can not be ascertained therefrom. These same objections which are raised by demurrer are raised by the answer which affirmatively alleged as a separate defense that at the time of shipment plaintiff ‘was neither the owner, bailee, person in possession, nor person entitled to possession of said shipment.’

The assistant vice-president of plaintiff corporation testified that his company had taken possession of the crate of machinery at Montrose, Pennsylvania, and agreed to transport it to Defense Plant Corporation, c/o Moore Dry Dock Company at Oakland, California; that at that time plaintiff had an agreement with defendant to pick up at a designated point in San Francisco all plaintiff's shipments destined for Oakland at a flat rate, irrespective of compensation collected by plaintiff. Further, he testified that the Merchant Shippers Association was engaged in the consolidation of les than carload shipments of freight into full cars and forwarding them to strategic points on the Pacific coast for distribution to the ultimate consignees, and that the damaged machinery was shipped in a car which the Merchant Shippers Association supervised and consolidated and paid the freight on. He also testified that plaintiff was a freight forwarding company possessing a certificate from the Interstate Commerce Commission. The ‘concurrence’ agreement between plaintiff and defendant as to freight tariffs was on file with the Interstate Commerce Commission. The findings follow substantially the allegations of the complaint. It was also found that the denials of the answer and the separate and further defense were not sustained by the evidence presented.

In respect to appellant's first contention that the complaint failed to state a cause of action and the evidence fails to prove a cause of action, appellant argues that the consignee, Defense Plant Corporation, which had the beneficial ownership of the goods, is the only party entitled to bring the action. Defendant argues that ‘the complaint shows affirmatively that plaintiff was a mere forwarder and that other parties were the shipper, consignee and bailee in possession of the machine at the time of the alleged damage.’ Defendant cites authorities, including Lawrence v. Minturn, 58 U.S. 100, 17 How. 100, 15 L.Ed. 58, 61, and Bruner v. Chicago & E. I. R. Co., 87 Ind.App. 374, 161 N.E. 680, 682. The latter case is authority for the well-recognized rule that ordinarily when title has passed to the buyer on delivery to the carrier, and when the lawful possession of the bill of lading is in the consignee, the consignor may not bring an action for damages to the goods occurring while in transit. It is defendant's theory that, as a forwarder, plaintiff was merely a shipper, and that title to the machine rested with the consignee who is the proper party to maintain this action. When the forwarding shipper has no interest in the goods the above contention is correct, but it appears from the above noted testimony of the vice-president of plaintiff that plaintiff had an interest in the shipped goods. When the forwarder is one who assembles various lots of goods for shipment in carload lots, and by contract, through bills of lading, assumes the responsibility for the safe transportation of the article from point of receipt to point of destination, the forwarder becomes, so to speak, a freight forwarder, or forwarder with common carrier liability as well as a forwarder shipper. Heath v. Judson F. Forwarding Co., 47 Cal.App. 426, 190 P. 839; United States v. Chicago Heights Trucking Co., 310 U.S. 344, 60 S.Ct. 931, 84 L.Ed. 1243. A forwarder who merely accumulates goods for shipment, for a fee which is paid by the shipper, and who has no interest in the freight and who assumes no responsibility beyond shipping the goods by a reliable common carrier has no actionable interest. The allegation that plaintiff was a forwarder would be sufficient as against a general demurrer inasmuch as, though it is an allegation of a mixed question of law and fact, it sufficiently alleges the basis upon which an interest in the plaintiff is to be shown. However, as a matter of defense, the defendant could prove that plaintiff was the type of forwarder who has assumed no liability to the consignee. Interstate Commerce Act, 49 U.S.C.A. § 1002(5), provides: ‘The term ‘freight forwarder’ means any person which (otherwise than as a carrier subject to chapter 1, 8, or 12 of this title) holds itself out to the general public to transport or provide transportation of property, or any class or classes of property, for compensation, in interestate commerce, and which, in the ordinary and usual course of its undertaking, (A) assembles and consolidates or provides for assembling and consolidating shipments of such property, and performs or provides for the performance of break-bulk and distributing operations with respect to such consolidated shipments, and (B) assumes responsibility for the transportation of such property from point of receipt to point of destination, and (C) utilizes, for the whole or any part of the transportation of such shipments, the services of a carrier or carriers subject to chapter 1, 8, or 12 of this title.' A freight forwarder is entitled to recover against a carrier to whom it has entrusted goods to deliver. Elliott on Railroads, Vol. 4, p. 599; Michie, Carriers, Vol. 1, p. 484. When a forwarder entrusts goods to another carrier which are damaged in transit, and the forwarder pays the consignee upon a legitimate claim, the forwarder should be permitted to recover against the negligent carrier. Bunge, Law of Draymen, Freight Forwarders and Warehousemen, p. 117.

In the present action there is no contention that the consignee is not the lawful holder of the bill of lading. There is evidence that plaintiff is a freight forwarder and that it paid the consignee's claim though it was not in the actual possession of the goods. There is also evidence from which an inference may be drawn that plaintiff was a freight forwarder who assumed responsibility for the goods from point of receipt to destination. In Schuette v. Larson, 44 Cal.App.2d 296, 112 P.2d 275, the only point raised was that the bailee of personal property who is not in actual possession cannot maintain an action against a tort feasor for damages for the loss of the property. There was no evidence there that the merchandise was the property of a third party and the court did not decide what the result would have been had the merchandise belonged to a third party. An allegation in one of the causes of action in reference to a bailee was ‘somewhat ambiguous,’ and the theory upon which the case was tried was questionable. The premise issue in this case was not determined in the Schuette case. There the court held that the particular question was raised by appellant for the first time on appeal when it should have been presented to the trial court.

In the present case, in the absence of a counter order by the owner, plaintiff under the testimony of its vice-president had the right to control the shipment and therefore had the responsibility of the safe carriage of the goods to the point of destination. The forwarder stands in the position of a bailee. Heath v. Judson F. Forwarding Co., supra. A contract of bailment covering such period may be made, and the forwarder carrier, though not having actual, has the right of, possession and control over any sub-carrier until the goods reach the point of destination. Where the bailee's responsibility has not ended, the right of action exists though he may not have actual physical possession. Marietta Ice & Coal Co. v. Western & A. R. Co., 24 Ga.App. 725, 102 S.E. 182. In Whitworth v. Jones, 58 Cal.App. 492, 497, 209 P. 60, 62, the court said: ‘Conceding that the plaintiff did not become the legal owner of the automobile, he did nevertheless, by reason of his having been given possession of the machine and having at all times exercised control over it, acquire the rights of a bailee. Among those rights is that to sue for damages for injuries caused to the property by third persons. ‘The bailee is entitled to the possession of the property, * * * therefore has a special right or property in the chattel to the extent of his bailment contract, and can protect it against wrongdoers who occasion loss or injury. * * * In such cases the damages are not confined to the mere interest of the bailee, but in case of injury or loss of the property he may recover its full value, together with any special damage to him, and for all beyond his own interest he would be a trustee for the bailor or owner.’ Van Zile on Bailments and Carriers, 2d Ed., par 57. * * *' The evidence as it was presented is sufficient to sustain plaintiff's position, but on remanding and new trial the specific contract between plaintiff and the consignee might be produced or defendant might rebut the inference of assumption of liability by other proof that plaintiff was a mere accumulator of freight who did not assume responsibility.

However, the judgment must be reversed because of a deficiency in proof concerning the time of damage to the machine. The complaint alleged that defendant was negligent in dropping machine from a loading platform of a freight shed to the street, as a result of which the skids affixed to the machine were torn off ‘and said machine was damaged in that it sustained numerous breaks and cracks.’ The complaint also alleged that at the time of the delivery of the goods to defendant ‘said machine was then in good order and condition.’ The answer admitted the receipt of the goods and that in the course of loading the skids came off but denied generally all and singular each and every allegation contained in the complaint, including the allegation of delivery of the machine in good condition to defendant. This allegation is essential to plaintiff's action against defendant. To sustain the judgment evidence that the damage took place while in defendant's hands is necessary and consequently that the machine was in good condition when received by defendant. This issue was not raised for the first time on appeal but was raised by the pleadings. If the evidence showed that the cracks and breaks occurred when the machine was dropped, and that the skids, which are not part of the machine, came off, it might be inferred that the machine was in good order when delivered to defendant, but there is no substantial evidence that any breaks or cracks were observed or occurred prior to the time the consignee acknowledge receipt of the goods. An affidavit by one of the truck helpers or drivers in the employ of defendant who participated in loading the machine at the time of ‘dropping’ states that at that time the skids fell off, but there is not one word about breaks or cracks in the machine. There is some hearsay evidence that an agent for the Defense Plant Corporation advised plaintiff that the machine had been injured by defendant, but further testimony along this line was not permitted. There is a statement in the form of a question in the record made by the attorney for plaintiff as to the pleadings admitting that the machine was dropped ‘and sustained damages.’ Defendant's attorney remained silent. The pleadings show that the statement of the attorney for plaintiff was incorrect. The court found that at the time the machine was delivered to defendant it ‘was then in good order and condition.’ There is no evidence to sustain such finding.

Goods are presumed to arrive in the condition in which they were shipped. Plaintiff must prove that the damage occurred while the goods were in the possession of the particular carrier (13 C.J.S., Carriers, § 254, p. 538), ‘and proof of the delivery of the goods to the carrier in sound condition and of their redelivery at the end of the route in damaged condition makes a sufficient case to sustain a recovery of damages by the shipper.’ Swiney v. American Express Co., 144 Iowa 342, 115 N.W. 212, 213, 122 N.W. 957. ‘It is elementary that in order to establish liability on the part of a carrier for injuries sustained by merchandise while in its possession it is necessary to show, at least, that such merchandise was, when delivered to such carrier, in better condition than it was after receipt at destination. The burden was upon the plaintiff, claiming damages alleged to have resulted from such injuries, to prove, by a preponderance of the evidence, the extent to which the condition of such merchandise was better when it was delivered by the defendant than when it was delivered to the consignee.’ Ohio Galvanizing & Mfg. Co. v. Southern Pac. Co., 6 Cir., 39 F.2d 840, 841. Plaintiff failed to prove an essential allegation of the complaint. Upon retrial, this defect in proof must be remedied by some evidence from which a reasonable inference can be drawn that the machine was damaged when received by defendant.

It is advisable in view of a new trial to consider that claim of defendant that the wrong measure of damages was applied. The general rule is that where the damage to personal property is caused by the partial destruction of the property the damages may be measured by the difference in value immediately before and after the injury, provided that if repairs may be effected, the lesser sum of the two measures is the limit of recovery. The rule is expressed in Rhodes v. Firestone Tire, etc., Co., 51 Cal.App. 569, 573, 197 P. 392, 394, as follows: ‘According to some authorities the measure of damages in such instances is the cost of repairing the injured personal property, together with the value of the use of the property while undergoing repair. * * * The usual measure, however, to apply in the ascertainment of damages in cases where personal property has been negligently injured but is susceptible of repair, and the one we prefer to follow, is that which makes the measure of damages the difference in value immediately before and immediately after the injury, subject, however, to he proviso that if it can be entirely repaired at a less expense than the diminution in value because of the injury, the measure of damages is the reasonable cost of repairs.’ (Emphasis added) When the evidence shows that the repair bill is reasonable, the duty of showing diminution in the amount rests with the defenant. City of Oakland v. Pacific Gas & E. Co., 47 Cal.App.2d 444, 118 P.2d 328. In Konda v. Frumpkin, 90 Cal.App. 384, 286, 265 P. 955, the diminution rule is expressed as follows: ‘If the diminution in value of the vehicle occasioned by the collision is less than the cost of repair, the defendant is privileged to make such showing; and, if he successfully carries this burden, the judgment will then be for the amount that the vehicle has been lessened in value by reason of the injury.’

One factor to consider is whether the article is susceptible of repair and if it can be entirely repaired. If, in the present case the repairs have not resulted in making the machine workable, then the repair effort has been in vain and the measure of damages ‘is the difference in value immediately before and after the injury.’ 8 Cal.Jur., p. 815, sec. 72. Under the circumstances, the amount of damages awarded is not to be construed as the law of this case. There is no testimony in the record as to the value of the machine immediately upon the discovery of the damages and prior to the time of trial. It is not necessary to consider the method of ascertaining the amount of damages in this case further except to state that it is not ‘the present value’ at the time of trial that may be an item of consideration but rather the value immediately after the injury. Compensation awarded as damages should at least be ‘an approximation to accuracy.’ Slater v. Pacific American Oil Co., 212 Cal. 648, 654, 300 P. 31, 34.

The judgment is reversed.

WARD, Justice.

PETERS, P. J., and ATTERIDGE, Justice pro tem., concur.