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Atchison, Topeka and Santa Fe Railway Co. v. Blanchette

decided: August 18, 1980.

THE ATCHISON, TOPEKA AND SANTA FE RAILWAY COMPANY, APPELLANT,
v.
ROBERT W. BLANCHETTE, RICHARD C. BOND AND JOHN H. MCARTHUR, IN THEIR CAPACITY AS TRUSTEES OF THE PROPERTY OF PENN CENTRAL TRANSPORTATION COMPANY, DEBTOR, CONSOLIDATED RAIL CORPORATION, A CORPORATION, AND NORFOLK & WESTERN RAILWAY COMPANY, A CORPORATION, APPELLEES



Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 77-C-4121 -- J. Sam Perry, Judge.

Before Fairchild, Chief Judge, Bauer, Circuit Judge, and Grant, Senior District Judge.*fn*

Author: Fairchild

The single issue of statutory construction presented by this appeal is what limitations period applies to a suit brought under section 15(11) of the Interstate Commerce Act.*fn1 We conclude that the two-year period of section 16(3)(b) applies and thus affirm the judgment of the district court dismissing the complaint as untimely.

Santa Fe's complaint was filed on November 4, 1977. It alleged that on or about November 7, 1974 seven carloads of steel were tendered to the Penn Central for shipment from Cleveland, Ohio to Portland, Oregon under bills of lading designating the Santa Fe as one of the intermediate carriers, and that contrary to those instructions, the steel was routed to the Norfolk and Western Railway instead of to the Santa Fe. The defendants moved to dismiss the suit as untimely and those motions were granted in October, 1979. This appeal followed.

Santa Fe's suit was brought under 49 U.S.C. § 15(11), which provides in part as follows:

"Liability of carriers where property is delivered contrary to routing instructions. Whenever property is diverted or delivered by one carrier to another carrier contrary to routing instructions in the bill of lading, unless such diversion or delivery is in compliance with a lawful order, rule, or regulation of the Commission, such carriers shall, in a suit or action in any court of competent jurisdiction, be jointly and severally liable to the carrier thus deprived of its right to participate in the haul of the property, for the total amount of the rate or charge it would have received had it participated in the haul of the property."

Although the possibility that a state statute of limitations might apply was extensively briefed in the district court, our recent decision in Chicago and North Western Transportation Company v. The Atchison, Topeka, and Santa Fe Railway Company, 609 F.2d 1221 (1979) effectively forecloses that possibility. The question remains, however, which federal statute should apply. We are presented with two alternatives, both found in section 16(3) of the Act.

The Santa Fe argues that the limitations period of section 16(3)(a) is the one correctly applied to its suit. That section provides:

"(3)(a) All actions at law by carriers subject to this chapter for recovery of their charges, or any part thereof, shall be begun within (three) years from the time the cause of action accrues, and not after."

Since the statutory remedy for freight diversion is the recovery by the deprived carrier of the rate it would otherwise have received, the Santa Fe argues that an action under 15(11) is essentially one for the "recovery of charges." Thus the three-year period of 16(3)(a) would apply by its own terms.

The defendant railroads, however, assert that the remedy provided by 15(11) is more in the nature of damages and that the two-year limitations period of § 16(3)(b) therefore applies. That section states:

"All complaints against carriers subject to this chapter for the recovery of damages not based on overcharges shall be filed with the commission within two years from the time the cause of action accrues, and not after, subject to subdivision (d) of this paragraph."*fn2

We do not think that either interpretation is so clear as to foreclose a search for further indications of congressional intent. The parties have suggested two places in which that intent might be found. The first, of course, is in the original legislative history of section 15(11). The second is in the very recent revisions of the Interstate Commerce Commission Act. We have examined both and conclude that both lend more support to the defendant railroads' position than they do to the Santa Fe's.

The prohibition against freight diversion and the right of the deprived railroad to sue the offending carriers for the full rate it would have received but for the diversion were enacted as part of the Transportation Act of 1920. The contemporaneous legislative materials include only four references to this section of the Act.*fn3 The first is the report ...


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