Chicago, Rock Island & Pacific Railway Co. v. Cramer
Headline: Rail carrier allowed to use filed tariff’s declared low value to limit loss payments; Court reversed judgment and permitted the railroad’s valuation defense, affecting shippers seeking higher recoveries.
Holding: The Court ruled that a railroad may use the value declared in its filed tariff to limit liability when a shipper declared a low value to get a lower rate, so the carrier's valuation defense should not have been stricken.
- Allows railroads to limit damage payments to tariff-declared values.
- Makes shippers' declared low value binding when used to obtain lower freight rates.
- Applies to interstate shipments under the federal Hepburn Act.
Summary
Background
A farmer named Cramer sued a railroad to recover $992 for loss and damage to a carload of 60 hogs shipped from Galt, Iowa, to Chicago. The railroad said the shipper overloaded the car and put in too much hay, which overheated and killed some hogs. The railroad also said the shipper had declared each hog's value at $10 or less to obtain a lower of two filed tariff rates, and the carrier therefore could limit recovery to that declared value. At trial the carrier's plea about the tariff valuation was struck out, and the jury returned a verdict for the plaintiff of over $600. The Iowa Supreme Court affirmed the judgment and sustained the order striking the plea based on an Iowa statute that forbids contracts that exempt a railroad's common-carrier liability.
Reasoning
The Court considered whether federal law changed that result for interstate shipments. Congress had passed the Hepburn Act in 1906 creating a uniform rule that a filed tariff becomes part of the shipping contract. The Court explained that when a filed tariff offers two rates by value and a shipper forwards goods at the lower declared value to get the lower rate, the carrier may rely on that valuation in a suit for loss. The Court cited recent cases with similar facts and concluded the plea should not have been stricken.
Real world impact
Because the trial court erred in striking the carrier's valuation defense, the Court reversed the judgment and sent the case back for further proceedings consistent with this ruling. Going forward, carriers can assert valuation limits that appear in their filed interstate tariffs, and shippers who declare low values to obtain lower rates may be bound by those declarations.
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