simply provides that even though a shipment may be marked prepaid
(thus suggesting no further charges will be owed) both the
shipper and the consignee are liable for erroneous undercharges.
Who is liable for the amount originally thought to be due the
PROVIDED FURTHER clause does not reveal, by implication or
Construing the tariff as a whole, Western Transportation Co. v.
Wilson & Co., Inc., 682 F.2d 1227, 1230 (7th Cir. 1982), this
court concludes that on these facts it does not make AMCEC liable
for freight charges due at the time of delivery.
CF also argues that AMCEC is liable for the charges by
operation of law because it accepted delivery of the goods. This
doctrine existed at common law, see Pittsburgh, C., C. & St. L.
Ry. Co. v. Fink, 250 U.S. 577, 581, 40 S.Ct. 27, 63 L.Ed. 1151
(1919), but for present purposes it appears to have originated in
three Supreme Court cases: Fink, supra; New York Central & H.R.R.
Co. v. York & Whitney Co., 256 U.S. 406, 41 S.Ct. 509, 65 L.Ed.
1016 (1921); and Louisville & N.R. Co. v. Central Iron & Coal
Co., 265 U.S. 59, 44 S.Ct. 441, 68 L.Ed. 900 (1924). (The latter
case involved the liability of the consignor rather than
consignee, but the Court discussed and restated the consignee
rule.) These cases undoubtedly established that a consignee who
upon delivery pays the freight charge thought to be due remains
liable for the difference when the carrier later discovers that
the rate stated was lower than the applicable statutory rate.
However, that situation is at least arguably distinguishable from
the question whether a consignee is liable for any freight
charges at all when the carrier makes no demand for them before
delivery. Moreover, all three of these cases were decided before
the present version of the first sentence of section 7 of the
uniform bill of lading was adopted in 1922 in 66 I.C.C. 63
(1922). Given the earlier version — "The owner or consignee shall
pay the freight and average, if any, and all other lawful charges
accruing on said property, and, if required, shall pay the same
before delivery" (see In the Matter of Bills of Lading, 52 I.C.C.
671, App.B (1919), quoted in Central Iron, 265 U.S. at 64-65, 44
S.Ct. at 441-42) — it is not surprising the Court did not
consider whether the liability of a consignee turned on whether
payment was demanded before delivery.*fn1
Given the change in the uniform bill of lading, one might have
thought the rules concerning consignee liability also would
change, especially since the Fink case made quite clear that
liability should be determined according to the applicable
provisions regulating interstate commerce. 250 U.S. at 581, 40
S.Ct. at 27. It is also worth noting that the Supreme Court
recently left open whether a violation of the contract
represented by the bill of lading is a defense to a suit for
freight charges. Southern Pacific Transportation Co. v.
Commercial Metals Co., 456 U.S. 336, 344 n. 9, 102 S.Ct. 1815,
1821 n. 9, 72 L.Ed.2d 114 (1982).*fn2 Nonetheless, later cases have
continued to state, relying almost exclusively on the three early
Supreme Court cases, that acceptance of delivery makes a
consignee liable for all freight charges, without regard to when
payment is demanded. Some of these statements appear as dicta.
See, e.g., Illinois Steel Co. v. Baltimore & O.R.R. Co.,
320 U.S. 508, 513, 64 S.Ct. 322, 325, 88 L.Ed. 259 (1944); O'Boyle
Tank Lines, Inc. v. Beckham, 616 F.2d 207, 209
(5th Cir. 1980); Union Pacific R.R. Co. v. Hall Lumber Sales,
Inc., 419 F.2d 1009, 1012 (7th Cir. 1969), cert. denied,
399 U.S. 905, 90 S.Ct. 2194, 26 L.Ed.2d 559 (1970); Atchison, T. & S.F.
Ry. Co. v. Midland Cooperatives, Inc., 306 F. Supp. 723, 726
(W.D.Okla. 1969); Consolidated Freightways Corp. v. Bergan,
99 Idaho 609, 586 P.2d 1053, 1056 (1978). In other cases, however,
the statement was directly relevant to the decision. See, e.g.,
States Marine International, Inc. v. SeattleFirst National Bank,
524 F.2d 245, 248 (9th Cir. 1975); Southern Pacific Co. v. Miller
Abattoir Co., 454 F.2d 357, 359 (3d Cir. 1972); Northwestern P.R.
Co. v. Burchwell Co., 349 F.2d 497, 498 (5th Cir. 1965); Empire
Petroleum Co. v. Sinclair Pipeline Co., 282 F.2d 913, 916 (10th
Cir. 1960); New York C.R. Co. v. Transamerican Petroleum Corp.,
108 F.2d 994, 997-98 (7th Cir. 1939). This weight of authority
causes this court to accept the rule despite its somewhat
AMCEC argues that despite the rule just discussed CF is
estopped to collect from it because its payments to Mattrace
expressly included the freight charges and it accepted delivery
in reliance on CF's representation that Mattrace had in fact paid
CF for the freight. The estoppel exception to the consignee
liability rule is well-established in this circuit. Consolidated
Freightways Corp. v. Admiral Corp., 442 F.2d 56 (7th Cir. 1971).
See also In re Roll Form Products, Inc., 662 F.2d 150 (2d Cir.
1981); Missouri P.R. Co. v. National Milling Co., 409 F.2d 882
(3d Cir. 1969); Missouri P.R. Co. v. Lake Charles Grain & Grocery
Co., 320 F. Supp. 1064 (W.D.La. 1971). CF responds that an
essential element of the estoppel exception is that the consignee
pay the freight charges to the consignor after delivery in
detrimental reliance on the carrier's misrepresentation that it
had received payment from the consignor.*fn3 See Hilt Truck Lines,
Inc. v. House of Wines, Inc., 207 Neb. 568, 299 N.W.2d 767
(1980). Here, AMCEC had already paid most of the purchase price
and the freight charges to Mattrace before the shipments were
made. However, this court does not view that factual difference
as precluding use of the estoppel exception. Given the rule of
consignee liability discussed above, accepting delivery is
obviously a detriment to a consignee since it then is liable for
the freight charges. Since AMCEC obviously would not want to pay
the freight charges twice, it would not have accepted delivery if
it had known that, contrary to CF's representation, Mattrace had
not prepaid the freight charges. Therefore, AMCEC "changed its
position detrimentally in reliance on" CF's misrepresentation.
Commercial Metals, 456 U.S. at 347, 102 S.Ct. at 1822 (discussing
the Admiral case). Moreover, the equities are all on AMCEC's
side. Allowing CF to recover under these circumstances would
"require an innocent consignee to defray freight charges exactly
double the amount contemplated by the applicable tariffs." 442
F.2d at 65 (Stevens, J., concurring). And "most significant, the
defendant-consignee . . . had no means by which to protect itself
from freight charge liability." 456 U.S. at 347, 102 S.Ct. at
1823. Therefore, the court finds that on the undisputed facts CF
is estopped to claim its freight charges from AMCEC.
IT IS THEREFORE ORDERED that C.F. Arrowhead Services, Inc.'s
motion for summary judgment is denied and AMCEC Corporation's
cross-motion for summary judgment is granted. This case is
dismissed with prejudice.