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TISHMAN & LIPP, INC. v. DELTA AIRLINES

October 25, 1967

TISHMAN & LIPP, INC., Plaintiff,
v.
DELTA AIRLINES, Defendant


Pollack, District Judge.


The opinion of the court was delivered by: POLLACK

POLLACK, District Judge.

At the close of the plaintiff's case tried to the court and a jury, and again at the close of the entire case, the defendant moved for a directed verdict pursuant to Rule 50 of the Federal Rules of Civil Procedure and for a dismissal of the complaint; or, in the alternative, that judgment be entered against it for $50.00 on the ground that as a matter of law it is in no event liable to the plaintiff beyond that amount. The substance of the action was for recovery of the value of jewelry contained in a jewelry sample case which had been lost. Being of the opinion that plaintiff was not entitled to recover for the jewelry, the Court directed a verdict for the defendant. Subsequently it appeared that plaintiff intended to claim for the sample case as well as the contents thereof and the Court thereupon amended its direction to a grant of judgment for plaintiff in the amount of $50.00.

 The case comes to this court by removal from the Supreme Court of the State of New York on the ground of diversity of citizenship; jurisdiction is further posited on the Federal Aviation Act of 1958, 49 U.S.C.A. § 1301 et seq.

 The plaintiff is a New York jewelry concern. The defendant Delta Airlines, Inc. (Delta hereafter) is a Louisiana corporation operating as an air carrier of passengers and their baggage as well as a carrier of air freight under authority granted to it by the Civil Aeronautics Board (C.A.B. hereafter). Prior to the time of the occurrence in suit, Delta in pursuance of federal requirements, 49 U.S.C. § 1373, had filed with the C.A.B. its tariffs covering its rules, regulations and rates for the carriage of passengers and their baggage as well as for the transportation of air freight.

 Plaintiff's president, Mr. Tishman, had purchased air transportation with defendant which included a trip on March 19, 1964 from New Orleans to New York. Mr. Tishman presented himself at the Delta passenger counter at the New Orleans airport for the purpose of checking his luggage. Mr. Tishman's luggage consisted of an attache case which he carried with him aboard the plane, a suitcase containing personal belongings which he checked as baggage under his free weight allowance of 40 lbs., and two separated sections of his sample case, which, for reasons and with consequences as will appear infra, he elected to have transported as air freight baggage rather than as excess passenger baggage. He received "baggage airbills" for the two sample case sections together with an excess baggage ticket and receipt evidencing payment of $10.80, the tariff charge for air freight weighing 60 pounds. Each airbill recited "BAGGAGE CHECKED SUBJECT TO AIR FREIGHT TARIFF INCLUDING LIMITATIONS OF LIABILITY THEREIN CONTAINED." The excess baggage ticket and receipt was stamped "SUBJECT TO AIR FREIGHT TARIFFS." Had Mr. Tishman chosen to check the sample cases as excess baggage the cost to him under the passenger tariff would have been $26.12.

 At no time did Mr. Tishman reveal to the defendant's clerk in New Orleans what was enclosed in the sample case sections, nor did he declare any specific value therefor.

 On arrival in New York, Mr. Tishman went to the baggage claim area to obtain his baggage and one of the sample cases was missing and never found. Mr. Tishman immediately asserted that it contained jewelry worth $50,000., demanded an investigation and ultimately brought this action.

 The tariff rules of Delta filed with C.A.B. here relevant *fn1" had not up to the time of the loss been declared invalid by the C.A.B. for any reason.

 The filed air freight tariffs in effect during March, 1964, provided (1) that jewelry was unacceptable for shipment as baggage and was not to be enclosed in baggage and (2) that the carrier would not be liable for any loss of jewelry unless it was specifically described on the airbill. *fn2" Plausible reasons appear for such tariffs dealing as they do with the carriage of items of exceptional value which create special problems, including notice of the possible need of special handling or attention.

 The tariffs further provided that the defendant's liability for loss of air freight due to its negligence was limited to 50 cents per pound (a minimum of $50.00), unless a higher value was declared by the shipper, *fn3" and an additional charge of 10 cents per $100.00 value in excess of 50 cents per pound paid therefor. Upon such declaration and payment - optional with the shipper - defendant would become liable up to the value so declared. Thus, had plaintiff chosen to provide for full liability for loss of the two sample cases (said to contain approximately $75,000 of jewelry) the cost to him would have been the $10.80 base rate plus $75.00 or a total of $85.80.

 The defendant contended that the plaintiff, having elected to transport its jewelry by air freight, is bound by the applicable air freight tariffs; that, having violated those provisions with respect to carriage of jewelry as baggage, and having failed to disclose the contents of the sample cases or declare a value therefor, it is precluded from any recovery.

 The plaintiff advanced several objections to disposition of the case on the basis of the air freight tariffs. First, plaintiff contended that the filed tariffs on which the defendant relied are invalid and unreasonable and have been declared unlawful by the C.A.B.; second, that having deviated from its own tariffs by offering air freight services to Mr. Tishman, the defendant lost the benefit of their protection, and that, therefore the defendant is relegated to its common carrier's insurer's liability; third, that the tariff rules of the defendant are confusing and contradictory, and that one such rule, purporting to impose liability here, should be given effect over an exculpatory provision; fourth, that the defendant, its agents, servants or employees were guilty of gross negligence or conversion, and had lost the benefit of the tariff's protection; and finally, that the defendant was a common law bailee of plaintiff's jewelry, liable for negligent loss thereof.

 To the extent that they are valid, the tariffs filed with the C.A.B. constitute the contract of carriage between the parties. Lichten v. Eastern Airlines, Inc., 189 F.2d 939, 25 A.L.R.2d 1337 (2 Cir. 1951); Rosch v. United Air Lines Inc., 146 F. Supp. 266, at 267 (S.D.N.Y.1956). The shipper is deemed to have knowledge of the provisions of the tariff, irrespective of his actual knowledge thereof. *fn4" Furrow and Co. v. American Airlines, Inc., 102 F. Supp. 808, at 809 (W.D.Okl.1952); Boston & Maine Railroad v. Hooker, 233 U.S. 97, at 110-111, 34 S. Ct. 526, 58 L. Ed. 868 (1914).

 Plaintiff, however, attacked Delta's applicable tariff provisions as both invalid, i.e., not properly acceptable by the Board, and unreasonable.

 It is beyond dispute that the Board could properly accept tariffs containing exculpatory rules such as are here involved. Lichten v. Eastern Airlines, supra. There is no provision of the Federal Aviation Act of 1958 or its predecessor, the Civil Aeronautics Act of 1938 which prohibits exemptions from liability for loss or damage to specified property caused by the carrier, regardless of fault. By way of contrast, the Interstate Commerce Act, 49 U.S.C. § 20(11), contains a specific provision which prohibits exemptions from liability for loss due to the carrier's negligence. The court in Lichten relying on the statutory contrast denied recovery for loss of jewelry enclosed in passenger baggage in violation of the air carrier's tariff rules. Cf. Berkman v. Trans World Airlines, Inc., 209 F. Supp. 851 (S.D.N.Y.1962).

 Similarly, there is ample support for a finding of validity of Delta's tariff provision limiting liability to 50 cents per pound of air freight baggage or a minimum of $50.00, absent a declaration of a special or higher value by the shipper. Vogelsang v. Delta Air Lines, Inc., 302 F.2d 709, 712 (2d Cir. 1962); Cf. Herman v. Northwest Airlines, Inc., 222 F.2d 326 (2d Cir. 1955), cert. denied 350 U.S. 843, 76 S. Ct. 84, 100 L. Ed. 751.

 Assuming that Delta's air freight tariff rules are properly acceptable for filing under statutory authorization, the further question raised by the plaintiff is whether they are reasonable. Initially the inquiry for the court is whether the court should entertain a suit requiring the determination of such a question and whether the courts are able to grant relief thereon.

 In Lichten the court stated that it is well settled that questions of the reasonableness of rates and practices are to be left to the administrative agency in the first instance, and that under this doctrine of "primary jurisdiction" the reasonableness of the rule could be raised only after the exhaustion of administrative remedies. It is held to be essential in order to assure ...


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