Chicago Railway Company v. Lindell/Opinion of the Court

October 17, 1925, appellee delivered to the railroad of the Southern Pacific Company at Kingsburg, Cal., a shipment of grapes for transportation to Chicago for delivery to a named consignee. The appellant received the car at Omaha, hauled it to Chicago, and there delivered it to the consignee without collecting the freight and other charges, which amounted to $683.79. Because of unreasonable delay on the part of appellant and its failure to use reasonable care to keep the car properly iced, the grapes were delivered in a damaged condition. Appellant sued in the United States District Court for the Southern District of California to recover such charges; and appellee by answer set up the loss. While claiming to have suffered damages of $1,011.70, he asked no affirmative relief, but only that the loss be held to be a set-off against appellant's claim. The court allowed the set-off.

The Circuit Court of Appeals, under section 239 of the Judicial Code, 28 U.S.C., § 346 (28 USCA § 346) certified to this court the following question:

'Where an interstate railroad carrier delivers to the     consignee at destination a consignment of freight without      collecting the transportation and other lawful charges and      thereafter brings an action at law to recover from the      shipper the amount thereof, in a United States court in a      district where the state law provides that if a defendant      omits to set up a counterclaim arising out of the transaction      constituting the foundation of the plaintiff's claim he      cannot thereafter maintain an action upon the same, and,      further, that where such cross-claims have existed 'the two      demands shall be deemed compensated,' is the shipper, acting      in good faith and without collusion, debarred by the      Interstate Commerce Acts, particularly the Hepburn Act (34      Stat. 587) from pleading, by way of set-off, a counterclaim      for a loss suffered by him as a result of the carrier's      failure to perform its obligations touching the      transportation and delivery of the identical shipment?'

The appellant is liable to the appellee for damages in an amount at least equal to the charges sued for. 49 U.S.C. § 20(11), 49 USCA § 20(11). And, unless the Hepburn Act stands in the way, the shipper has the right, under established practice in California, to set up his loss as a counterclaim. 28 U.S.C. § 724 (28 USCA § 724); California Code of Civil Procedure, §§ 437, 438, 439, 440; Payne v. Clarke (D. C.) 271 F. 525.

The provision follows: ' * *  * Nor shall any carrier charge or demand or collect or receive a greater or less or different compensation for such transportation of passengers or property, or for any service in connection therewith, *  *  * than the rates, fares and charges which are specified in the tariff *  *  * ; nor shall any carrier refund or remit in any manner or by any device any portion of the rates, fares, and charges so specified, nor extend to any shipper or person any privileges or facilities in the transportation of passengers or property, except such as are specified in such tariffs.' 49 U.S.C. § 6(7), 49 USCA § 6(7).

The purpose of the act to prevent discrimination has been emphasized by this court, and is well known. Since its enactment, carriers may not accept services, advertising, property, or a release of claim for damages in payment for transportation. They are required to collect the established rates, charges, and fares from all alike in cash. Louisville & Nashville R. R. v. Mottley, 219 U.S. 467, 31 S.C.t. 265, 55 L. Ed. 297, 34 L. R. A. (N. S.) 671; Chicago, Ind. & L. Ry. Co. v. United States, 219 U.S. 486, 31 S.C.t. 272, 55 L. Ed. 305; Lake & Export Coal Corp. v. Chesapeake & Ohio Ry. Co. (C. C. A.) 1 F. (2d) 968; State v. Union Pacific R. R. Co., 87 Neb. 29, 126 N. W. 859, 31 L. R. A. (N. S.) 657.

The adjustment of defendant's demand by counterclaim in plaintiff's action rather than by independent suit is favored and encourage by the law. That practice serves to avoid circuity of action, inconvenience, expense, consumption of the courts' time, and injustice. North Chicago Rolling Mill Co. v. Ore & Steel Co., 152 U.S. 596, 615, 616, 14 S.C.t. 710, 38 L. Ed. 565; Florida Railroad Co. v. Smith, 21 Wall. 255, 261, 22 L. Ed. 513; Partridge v. Insurance Co., 15 Wall. 573, 579, 21 L. Ed. 229. In the case last mentioned the court, speaking through Mr. Justice Miller, said (page 580 of 15 Wall., 21 L. Ed. 229): 'It would be a most pernicious doctrine to allow a citizen of a distant State to institute in these courts a suit against a citizen of the State where the court is held and escape the liability which the laws of the State have attached to all plaintiffs of allowing just and legal set-offs and counter claims to be interposed and tried in the same suit and in the same form.'

The practice of determining claims of shippers for loss or damage in suits brought by carriers to collect transportation charges is not repugnant to the rule prohibiting the payment of such charges otherwise than in money. The adjudication in one suit of the respective claims of plaintiff and defendant is the practical equivalent of charging a judgment obtained in one action against that secured in another. Neither is to be distinguished from payment in money.

It is well understood that payment by carriers to shippers under the guise of settling claims for loss and damage may in effect constitute discrimination that the act was intended to prevent. But it is not suggested how opportunity for collusion in respect of such matters would be lessened by abolishing counterclaims in cases such as this. Collusion and fraud may be practiced in the defense and settlement of separate actions brought on such claims, as well as when the same matters are put forward as offsets or counterclaims.

The act ought not to be construed to put aside state laws and long-established practice in respect of pleading unless the intention of Congress so to do is plain. There appears no reasonable probability that the relegation of shippers to separate actions for the enforcement of their claims for loss or damage would operate more effectively to enforce the purpose of Congress to prevent discrimination. There is no substantial ground upon which the act may be given the construction for which the carrier contends.

The question is answered 'No.'