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CONRAIL v. NEVINS-PETRILLO WAREHOUSE & DISTRIBUTIO

June 1, 1983

CONSOLIDATED RAIL CORPORATION, Plaintiff,
v.
NEVINS-PETRILLO WAREHOUSE & DISTRIBUTION SYSTEMS, INC., and JEFFREY NEVINS, Defendants



The opinion of the court was delivered by: WERKER

HENRY F. WERKER, D. J.

Plaintiff Consolidated Rail Corporation (Conrail) commenced this action under the Interstate Commerce Act to recover demurrage and related transportation charges from defendant Nevins-Petrillo Warehouse & Distribution Systems, Inc. (Nevins-Petrillo). Nevins-Petrillo is a New York corporation engaged in the business of unloading, warehousing and distributing freight moved by rail. During the period relevant to this action, Nevins-Petrillo owned and operated a warehouse which was adjacent to Conrail's Harlem River/Oak Point railroad yards in the Bronx, New York. Conrail contends the charges accrued under duly filed tariffs during certain months of 1977, 1978 and 1979.

 A bench trial was held on April 19 and 20, 1983. At the close of the trial, the court dismissed the third-party complaint against third-party defendant Armel Ice Cream Company, Inc. (Armel), and directed Conrail and Nevins-Petrillo to submit proposed findings of fact and conclusions of law by May 20, 1983.

 The court has considered the exhibits received in evidence, the testimony of the witnesses, the trial transcript, and memoranda of law submitted by the parties. It finds that Conrail is entitled to recover demurrage charges in the amount of $130,410.

 The following constitute the court's findings of fact and conclusions of law. *fn1"

 I.

 1. Prior to the delivery of the rail shipments which are the subject of this action, Nevins-Petrillo asked Conrail to grant it credit to cover the payment of transportation charges which would arise in connection with Conrail deliveries to the Nevins-Petrillo warehouse. By letter dated November 19, 1976 (exhibit 1 in evidence), Conrail forwarded to Nevins-Petrillo for completion blank copies of the Demurrage Average Agreement Application, Credit Application, and Guaranty form.

 2. In December 1976, Nevins-Petrillo submitted to Conrail its completed "'Application for Settlement of Car Demurrage Charges under the Average Agreement Plan." (exhibit 2 in evidence). The application was signed by Jeff Nevins, president of Nevins-Petrillo. This application and the Average Agreement Plan for payment of demurrage charges both conformed to Freight Tariff 4-K (exhibit 5 in evidence) which was in effect at that time. Item 850 of Tariff 4-K provides that such an agreement becomes effective on the first day of the month following receipt of the application by the railroad.

 3. Together with the above-referenced application, Nevins-Petrillo also executed and submitted the written guaranty (exhibit 3 in evidence) wherein it guaranteed to pay to Conrail all demurrage charges which accrued under the terms of the Average Agreement, on any and all of the Conrail cars delivered to the Nevins-Petrillo warehouse or shipped out of said warehouse, without regard to whether such cars or shipments were consigned to Nevins-Petrillo. The guaranty was was also signed by Jeff Nevins, president of Nevins-Petrillo, and attested to by Carl Petrillo, vice-president and secretary-treasurer of Nevins-Petrillo.

 4. After receipt of the completed application and guaranty, Conrail granted the request for credit and later billed Nevins-Petrillo for demurrage charges in accordance with the Average Agreement method. Under the Average Agreement Plan, instead of paying demurrage charges on a per-car basis, (straight demurrage), charges for the month are accumulated and credit is given to the customer for cars which are released early. One bill is then rendered at the end of the month for all the net charges accumulated during that month.

 5. Prior to the issuance of the monthly demurrage bills for the charges which are the subject of this suit, Nevins-Petrillo had, on several occasions, paid demurrage bills which were rendered under the Average Agreement.

 6. Prior to the rail deliveries which form the basis of this lawsuit, Nevins-Petrillo submitted a contract bid to the New York City Board of Education, Bureau of Supplies, to provide handling and storage services for rail shipments to the Bureau. A condition of that contract was that demurrage and related charges would be the responsibility of the contractor. After submission of its bid, Nevins-Petrillo entered into this contract with this agency; a portion of the shipments included in the present action came under this contract.

 7. On January 9, 1979, Nevins-Petrillo signed a agreement with Armel regarding payment of demurrage charges. (exhibit 17 in evidence). The agreement provided in relevant part:

 "It is agreed and acknowledged between Armel Warehouse Co. and Nevins-Petrillo Warehouse & Dist. Co. that Armel is not liable for demurrage and detention and all other charges including freight for those [United States Department of Agriculture] cars that have been placed by Conrail at the Harlem River Station and the Nevins-Petrillo siding or any such siding assigned by Nevins-Petrillo.

 Notification of arrival of cars arrives at Nevins-Petrillo and it is [Nevins Petrillo's] responsibility to unload cars for Armel as agreed. This agreement has been in effect since December 12, 1976."

 8. After the execution of the aforesaid agreements, and during the years of 1977, 1978 and 1979, Nevins-Petrillo received at its warehouse, from Conrail, incoming railroad cars consigned to various entities but to the "care of" Nevins-Petrillo at its Harlem River/Oak Point facility.

 9. Under Item 610 of Freight Tariff 4-K the party responsible for the demurrage/detention charges, in order to avoid the charges, must unload and release incoming rail cars to the railroad within a certain free time period after the time that notification of the arrival of the car is given by the railroad to that party.

 9. Pursuant to Items 800 et seq. of Tariff 4-K, Conrail prepared and forwarded to Nevins-Petrillo copies of the Monthly Demurrage Audit Statements (MDAS) and the corresponding Statement of Demurrage Charges for certain months of 1977, 1978 and 1979 for which the demurrage charges accrued. See Exhibits 25 through 64 in evidence. The total amount demanded in these statements was $130,410 (which includes a $1,490 correction).

 10. Nevins-Petrillo has refused payment of all charges demanded by Conrail.

 11. Nevins-Petrillo never requested written notice of the ...


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