Lancaster v. McCarty

Background

Partners doing business as the Cisco Furniture Company shipped two rugs and three chairs by rail from Fort Worth to Cisco, Texas, and sued the receivers of the Texas & Pacific Railway for damage to the goods and statutory attorney’s fees. The bill of lading used the Interstate Commerce Commission form and was stamped with a valuation limiting rugs to less than $75 per 100 pounds; each rug weighed 40 pounds. The rugs were badly damaged in transit and worth about $5 after damage, while the shippers claimed higher pre-shipment value. The Texas Court of Civil Appeals applied a Texas statute that forbids carriers from limiting liability by notice or bill of lading.

Reasoning

The basic question was whether state law or the federal Interstate Commerce Commission’s classification and rate order (the Western Classification) controlled how damages are measured. The Court relied on prior decisions upholding the Commission’s authority to set classifications and rates to prevent discrimination between interstate and intrastate traffic. Because the shipment was governed by the Commission’s order and the second Cummins Amendment permits a carrier to limit liability when authorized by the Commission, the agreed valuation on the bill of lading properly limited recovery. Under that federal classification, the only recoverable amount for the rugs was less than $60.

Real world impact

The decision enforces federal rate and classification orders over conflicting state rules, so shippers on interstate railroads can be bound by carrier valuation limits when authorized by the Commission. The judgment was reversed and the case sent back for further proceedings consistent with this opinion.