The opinion of the court was delivered by: William T. Hart, District Judge.
MEMORANDUM OPINION AND ORDER
Presently before the court are the parties' cross-motions for
summary judgment. Both sides agree that the only question is
purely legal — whether, on the undisputed facts of this case, a
common carrier can recover its freight charges from the party
which accepted the goods as consignee. Jurisdiction exists
pursuant to 28 U.S.C. § 1337. Kansas City Terminal Ry. Co. v.
Jordon Mfg. Co., 750 F.2d 551 (7th Cir. 1984).
Plaintiff C.F. Arrowhead Services, Inc. ("CF") is a common
carrier operating pursuant to authority issued by the Interstate
Commerce Commission ("ICC"). In October of 1981 CF carried
various goods from Tennessee to Michigan. The consignor and
seller of the goods was Mattrace Enterprises ("Mattrace") and the
consignee and apparent buyer of the goods was defendant AMCEC
Corporation ("AMCEC"). CF carried the goods pursuant to tariffs
on file with the ICC and issued bills of lading and freight bills
for each of the shipments. Each bill of lading provided that if
a certain box were not checked, then the freight was prepaid.
None of the boxes were checked. Each bill of lading also
contained a provision that the shipment was received subject to
the applicable tariffs. Section seven of the applicable tariff
The owner or consignee shall pay the freight and
average, if any, and all other lawful charges
accruing on said property, but, except in those
instances where it may lawfully be authorized to do
so, no carrier shall deliver or relinquish possession
at destination of the property covered by this bill
of lading until all tariff rates and charges thereon
have been paid. . . . PROVIDED, that, a consignee
shall not be liable for transportation charges
(beyond those billed against him at the time of
delivery for which he is otherwise liable) which may
be found to be due after the property has been
delivered to him subject to all of the following
(a) The shipper or consignor has instructed the
carrier to deliver the property to a consignee
other than the shipper or consignor.
(b) The consignee is an agent only and has no
beneficial title in the property and
(c) Prior to delivery the consignee has notified
the delivering carrier in writing that he is only
an agent and has no beneficial title in the
(d) In cases where the shipment has been
reconsigned or diverted to a point other than that
specified in the bill of lading the consignee has
also notified the delivering carrier in writing of
the name and address of the beneficial owner of
Where the consignee is not liable for certain
transportation charges in accordance with this
provision and the preceding conditions, the shipper
or consignor, or, in the case of a shipment so
reconsigned or diverted as specified in condition
(d), the beneficial owner shall be liable for such
Although the shipment was marked as prepaid, Mattrace had
apparently not in fact prepaid because after making the shipment.
CF billed Mattrace for the freight charges. Mattrace did not pay
and cannot now be located so CF demanded payment from AMCEC, who
refuses to pay.
CF cites numerous cases holding that the bill of lading has the
same effect as a statute. See, e.g., City of New Orleans v.
Southern Scrap Material Co., 491 F. Supp. 46, 48 (E.D.La. 1980),
and cases cited therein. Usually, the tariffs are used to
determine how much must be paid, but they also can govern the
issue here presented; namely, who shall pay. Blanchette v. Hub
City Terminals, Inc., 683 F.2d 1008 (7th Cir. 1981). Here, CF
argues that the only way AMCEC could have escaped liability for
the freight charges was to satisfy the four conditions (a)
through (d) quoted above. Since it is undisputed that AMCEC did
not comply with those conditions, CF concludes that AMCEC is
AMCEC argues that the portion of section 7 of the tariff quoted
above that begins "PROVIDED FURTHER . . ." means that "when a
shipment is designated prepaid (meaning that actual prepayment by
the shipper is not necessary), a shipper or consignee will be
liable for undercharges, even though the consignee is not liable
for the amount designated prepaid" (defendant's response at 3,
emphasis in original). AMCEC interprets the PROVIDED FURTHER
clause as based on the assumption that when a shipment is
designated prepaid the consignee is not liable for the freight
charges, and views the purpose of that clause as ensuring that
nonetheless the consignee will be liable for undercharges that
might be discovered later. AMCEC cites no authority for this
interpretation, and argues only that "[t]here is no other reason
for such language to be in the statute" (id.).
This court rejects both parties' interpretations of the tariff.
Resolution of this case is found in the first sentence of section
7. The first part of that sentence, which is the only part CF
quotes, makes the consignee liable for the freight charges; that
is, the charges that are due at the time of delivery. As the rest
of the sentence makes clear, however, that liability is not
absolute. The carrier, unless lawfully authorized to do so (an
exception not involved here), must not relinquish possession of
the goods being carried until the freight charges have been paid.
The obvious meaning of the sentence as a whole is that the
consignee must pay the charges if the carrier so demands but the
carrier must make that demand before giving up the goods. So
read, the sentence makes a very practical (and traditional)
compromise: the carrier can use its possession of the goods to
ensure payment and the consignee can refuse delivery ...