United States District Court, Northern District of Illinois, E.D
March 27, 1985
HERMAN NEAL, ET AL., PLAINTIFFS,
REPUBLIC AIRLINES, INC., DEFENDANT.
The opinion of the court was delivered by: Shadur, District Judge.
MEMORANDUM OPINION AND ORDER
All the children and heirs at law of Rozena Neal ("Mrs.
Neal") filed this diversity action against Republic Airlines
("Republic") for damages arising from Republic's failure to
deliver Mrs. Neal's remains to Columbus, Mississippi on
November 24, 1982 as promised. Plaintiffs' six-count
Complaint purports to state causes of action against Republic
based on allegations of breach of contract, negligence,
bailment, res ipsa loquitur, negligent infliction of emotional
distress and gross negligence. Republic has now moved under
Fed.R.Civ.P. ("Rule") 56 for summary judgment on all six
counts. For the reasons stated in this memorandum opinion and
order, Republic's motion is granted.
Mrs. Neal died in Chicago November 23, 1982, having
previously expressed the wish to be buried in her birthplace,
Sullijent, Alabama. Arrangements were immediately made with
Inman Nationwide Shipping ("Inman") to ship Mrs. Neal's
remains from Chicago to Alabama. Inman in turn contracted with
Republic to transport Mrs. Neal's remains by air from Chicago
to Columbus, Mississippi (the airport nearest to Sullijent).
There Mrs. Neal's remains were to be delivered to Norwood
Funeral Home ("Norwood"), which had agreed to carry them to
Upon receipt of Mrs. Neal's remains at O'Hare International
Airport, Republic issued an airbill to Inman providing for
shipment on November 24 via Republic's flight 480. Through
some error, Mrs. Neal's remains were not transported on flight
480 but were instead shipped on other flights from Chicago to
Memphis to Atlanta to Greenville, Mississippi and then back to
Memphis again. They did not arrive in Columbus until the
afternoon of November 25, approximately 24 hours later than
expected. That delay, according to Complaint ¶ 31, "interfered
with the timely and proper burial of their mother by
Republic contends Counts II-VI (sounding in negligence,
bailment, res ipsa loquitur, negligent infliction of emotional
distress and gross negligence) fail to state claims upon which
relief can be granted. That contention is grounded in doctrine
well-settled in the case law well before 1979 (which, as will
later be seen, plaintiffs urge is a watershed year). As
Blair v. Delta Air Lines, Inc., 344 F. Supp. 360, 365 (S.D.Fla.
1972) (citations omitted) said:
It is also clear that tariffs, if valid and
accepted by the C.A.B. [the Civil Aeronautics
Board, "CAB"], may contain exculpatory clauses
for certain classes of freight and limitations of
liability for loss or damage to specified
property, regardless of fault. . . . The
established rule is that the tariffs, if valid,
constitute the contract of carriage between the
parties and "conclusively and exclusively govern
the rights and liabilities between the parties."
Mao v. Eastern Air Lines, Inc., 310 F. Supp. 844,
846 (S.D.N.Y. 1970).
That statement of the law reflects principles derived from
the common law of common carriers. While the common law
generally held a carrier should not be able to avoid liability
for its own negligence, it distinguished the case where a
carrier calculated the carriage rate on the declared value of
the property shipped. In that instance (First Pennsylvania Bank
v. Eastern Air Lines, Inc., 731 F.2d 1113, 1116 (3d Cir.
In a suit against the carrier in such a case, the
carrier's negligence was assumed to exist, rather
than avoided; the limitation of the shipper's
damages to the agreed value was merely a
consequence of the assumption that the agreed
upon value was the true value of the property
transported. . . . The agreed upon value merely
constituted an estoppel against the unfairness of
asserting a larger amount as the true value when
was sued for damages in spite of the fact that a
smaller value had been used to calculate the
That rationale stands up, of course, only on the assumption
that a shipper has had a fair opportunity to declare a value
for the property shipped and to pay the corresponding rate.
See Fireman's Fund Insurance Cos. v. Barnes Electric, Inc.,
540 F. Supp. 640
, 645 (N.D.Ind. 1982). Once air carriers were
required to file tariffs with the CAB, which in turn reviewed
them and required publication of those it approved (see
49 U.S.C. § 1373 (1976)), shippers were presumed to have knowledge
of the liability limits corresponding to the carriage rates
they agreed to pay. Thus the federal law regulating air carrier
tariffs arose in the context of and operated in conjunction
with the existing common-law doctrine of declared or released
value rates. See First Pennsylvania Bank, 731 F.2d at
Under the regime just outlined, then, a shipper seeking
damages from a carrier for delay in delivery or loss of
property is bound by the terms of the carriage contract.
Consequently the shipper may not, by recasting the form of
action, escape the effect of a valid stipulation restricting
liability to the declared valuation. See Young v. Delta Air
Lines, Inc., 78 A.D.2d 616, 432 N.Y.S.2d 390 (1980) and cases
there cited. Where (as here) it is clear plaintiffs seek
damages for breach of the carriage contract with Republic, they
may not avoid that contract's liability limits by framing their
complaint in terms of bailment and tort. They must proceed, if
at all, on a breach of contract theory.
In a misguided effort to avoid dismissal of Counts II-VI,
plaintiffs argue the reasoning of the pre-1979 cases no longer
represents good law because in late 1978 the CAB, acting under
the authority of the Airline Deregulation Act of 1978,
49 U.S.C. § 1551, issued regulations exempting air carriers from
tariff filing requirements. See Regulation ER-1080, Operating
Rules for All-Cargo Carriers and Domestic Cargo Transportation
by Section 401 and 418 Carriers, reissuing part 291 of General
Rules for All Cargo Carriers, 14 C.F.R. Part 291 (1979).
Plaintiffs' Mem. 1 contends the lifting of the filing
requirements for air carriers "voided their ability to hide
behind limitations of liability in the tariffs that they had
But as the discussion earlier in this opinion suggests, the
common-law doctrine of declared value rates predated the
tariff filing scheme. All the pre-1979 CAB-filed tariffs did
in that respect was to create a system of constructive notice
to shippers (somewhat akin to the recording system for
documents affecting real estate — or aircraft — titles).
While Regulation ER-1080 — whose aim was to leave the setting
of air carriage tariffs to market forces — meant air carriers
could no longer presume a shipper's notice of CAB-approved
tariffs, it did not bar the carriers themselves from providing
shippers with the requisite notice of declared value rates. As
First Pennsylvania Bank, 731 F.2d at 1120 put it:
With respect to rates, a succinct statement of
the effect of the deregulation would be that the
CAB was shorn of its powers to pass upon the
reasonableness of rates for interstate air
transportation of property, and to prescribe
future rates to replace those found to be
unreasonable. Abolition of these powers of the
CAB simply abrogated pro tanto the doctrine of
"primary jurisdiction" with respect to such rates.
The courts were thus left free to proceed without
circuity to apply directly the familiar federal
common law rules relating to the subject matter of
released value rates.
Here there can be no doubt Inman, as shipper, did have
actual notice of Republic's tariffs and an adequate
opportunity to declare a higher value for the shipment.
Republic's airbill to Inman (Complaint Ex.
1) states twice on its face (once at the top and once in the
space provided for the shipper's signature) that it is subject
to the "Conditions of Contract" set out on the reverse. Those
include specific liability limitations:
Carriage is subject to the Carrier's governing
rules, rates, and classifications, stated in the
most recent Official Airline Freight Rate Tariff.
Such rules, rates, and classifications are
incorporated into this Contract and are available
for inspection by the parties hereto at all
points where Carrier's air freight transportation
is sold or shipments are accepted by the Carrier.
A shipment shall have a declared value of $0.50
per lb. (but not less than $50.00) unless a
higher value is declared on the airbill at the
time of receipt of the shipment from the shipper,
and if a higher value is so declared, an
additional transportation charge of $0.40 shall
be required for reach $100.00 (or fraction
thereof) by which such higher value exceeds $0.50
per lb. or $50.00, whichever is higher.
Carrier shall not be liable for special or
consequential damages unless, at the time of
receipt of the shipment, Carrier is given notice
in writing on the airbill of the circumstances
which could result in such damages. Carrier's
liability for such damages shall not exceed the
declared value of the shipment.
By tendering the shipment to the carrier for
transportation, the shipper, for himself and all
other parties having an interest in the shipment,
agrees to the limitations set forth in these
rules and affirms the description of the shipment
as recited on the airbill and the fact that the
shipment is not of a nature unsuitable for the
carriage by air or hazardous thereto.
Those conditions provide unequivocal notice of Republic's
rate and liability structure, affording Inman ample
opportunity to have declared a value in excess of the
contract-specified amount of $0.50 per pound. Inman did not.
Accordingly neither Inman nor those on whose behalf it acted
— parties with an interest in the shipment — may look to
anything but the airbill itself as a basis for recovery from
Republic. Counts II-VI are dismissed with prejudice.*fn3
Although Republic acknowledges it is open to suit for breach
of the carriage contract, it challenges Count I on the ground
that plaintiffs are not in a position to assert that contract
claim. Republic points out the airbill identifies Inman as the
shipper and Norwood as the consignee.
It nowhere identifies plaintiffs as parties to the carriage
contract. Under those circumstances, Republic argues, its
liability runs to the parties with whom it dealt, not to
parties who stand at some remove from the transaction.*fn4
That argument does not directly address plaintiffs'
allegation (Complaint ¶ 14) that they are third-party
beneficiaries of the carriage contract with Republic, but it
does point to the poverty of that assertion. It is hornbook
contract law that a third-party beneficiary must be an intended
beneficiary of the performance of the contract. Restatement
(Second) of Contracts 2d §§ 302, 304 (1981). With Republic
having no specific awareness of plaintiffs' existence or of
their interest in the contract, it is wholly implausible to
conclude they were intended beneficiaries. At most they were
incidental beneficiaries of Republic's performance and as such
have no right to sue. Id.
To turn from the general law to the specific, the law
governing the liability of interstate carriers makes plain
that in cases involving an intermediate freight handler
between the carrier and the original shipper, the carrier's
liability runs to the middleman alone. As the Supreme Court
stated in Chicago, Milwaukee, St. Paul & Pacific R.R. Co. v.
Acme Fast Freight, Inc., 336 U.S. 465, 487, 69 S.Ct. 692, 702,
93 L.Ed. 817 (1949), setting out the long standing rule
applicable to such three-party cases:
As shippers, [freight forwarders] have, of
course, always had a right of action against the
underlying carrier at fault. The defense that the
goods are not those of the forwarder is not open
to the carrier, since, as we have held, the
carrier is not concerned with questions of
ownership, but must treat the forwarder as
See also Montgomery Ward & Co. v. Peter J. McBreen &
Associates, 40 Ill. App.3d 69, 72, 351 N.E.2d 324
, 326 (1st
Dist. 1976) (citing Acme Fast Freight and holding an air
carrier's liability for loss of cargo runs to the freight
forwarder, not to the original shipper). While plaintiffs may
have a claim against Inman or Norwood, they are not in a
position to state one against Republic.*fn5
must be granted as to Count I as well.*fn6
There is no genuine issue of material fact. Republic is
entitled to a judgment as a matter of law on all six counts of
the Complaint. This action is dismissed with prejudice.