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Mechanical Technology Inc. v. Ryder Truck Lines Inc.

November 14, 1985

MECHANICAL TECHNOLOGY INCORPORATED, PLAINTIFF-APPELLEE, CROSS-APPELLANT,
v.
RYDER TRUCK LINES, INC., DEFENDANT-APPELLANT, CROSS-APPELLEE



Ryder appeals from a judgment of the United States District Court for the Northern District of New York (Roger J. Miner, Judge), holding Ryder liable for damage to computer equipment shipped by MTI. MTI cross-appeals from the district court's denial of its motion to amend the judgment by adding pre-judgment interest. Affirmed in part, reversed in part and remanded. Judge Winter concurs in the result in a separate opinion.

Author: Kaufman

Before: KAUFMAN, MESKILL, and WINTER, Circuit Judges.

KAUFMAN, Circuit Judge:

Since the dawn of this century, the highways of our nation have served as the arteries of a burgeoning interstate commerce. Although their wares may now be products of the technological revolution, commercial shippers still turn to trucks for safe and inexpensive transport. Similarly, shippers have for decades enjoyed the opportunity to contractually choose between full recovery for damage and low shipping costs.

In this appeal, we are called upon to interpret the explicit and implicit terms of such a contract. A shipper, Mechanical Technology Incorporated ("MTI"), sued a common carrier, Ryder Truck Lines, Inc. ("Ryder"), for damage to MTI computer equipment shipped via Ryder trucks. Ryder appeals from a judgment awarding damages to MTI in the amount of $171,360. Although agreeing that Ryder is liable, we hold that Ryder's liability was contractually limited, and consequently reduce MTI's award to $22,175. We also believe that a cross-appeal by MTI for pre-judgment interest is without merit.

The facts of this commercial dispute are crucial to the resolution of the legal questions presented. We therefore carefully delineate the factual setting of this appeal.

I. BACKGROUND

Ryder is a national trucking firm. As authorized by 49 U.S.C. ยง 10730, Ryder has properly filed and published with the Interstate Commerce Commission a tariff listing several freight rates available to shippers of data processing equipment.*fn1 Each rate carries a corresponding level of liability per pound, which is termed a "released rate." A higher freight rate, therefore, secures a higher level of liability. The tariff expressly provides that if the shipper fails to state a released rate, then the shipment is deemed released at a rate of $5.00 per pound. Similarly, a released rate of $5.00 is presumed if the shipper designates a level of liability in excess of $25.00 per pound.

To fulfill its contractual requirements with the United States Air Force, MTI purchased and readied for shipment twelve items of computer equipment. The total weight of the pieces was 4,435 pounds. Douglas Halgren, and MTI supervisor, selected Ryder to transport the equipment from Latham, New York, to Kelly Air Force Base in San Antonio, Texas. Ryder, however, used only ordinary freight trailers, which lacked the means of adequately securing goods against damage in transit. Generally, computer goods are shipped via air-ride vans equipped with an elaborate suspension system. Although warned by fellow MTI employees that Ryder did not use air-ride vans, Halgren insisted on contracting with Ryder for shipment of the computer equipment to San Antonio.

In preparation for shipment, another MTI employee, Michael Ciani, prepared a shipping order individually listing the pieces of computer equipment. Ciani marked the shipping order "Prepaid" and "Insure for $238,000." Working from the shipping order, MTI's shipping clerk, Bernard Izzo, completed a bill of lading on one of MTI's own forms. Near the top of the bill of lading was a notice in small but readable print: "RECEIVED, subject to the classifications and tariffs in effect on the date of the receipt by the carrier. . . ." In addition to describing the goods to be shipped, Izzo also made the notations "Prepaid" and "Insure for $238,000" on the form. Izzo, however, did not fill in the section bearing this legend:

NOTE--When the rate is dependent on value, shippers are required to state specifically in writing the agreed or declared value of the property. The agreed or declared value of the property is hereby specifically stated by the shipper to be not exceeding per

Ryder's driver accepted the goods on February 23, 1981, and signed the bill of lading, with the spaces for released value left blank.

The equipment, carried solely by Ryder trucks, arrived in Texas in damaged condition. MTI thereupon purchased replacement computer parts to meet its contractual obligations at an additional cost of $171,360.

On August 13, 1982, MTI filed a complaint in New York Supreme Court, alleging breach of contract and negligence by Ryder. On the basis of diversity jurisdiction, Ryder successfully petitioned for removal of the action to the United States District Court for the Northern District of New York. At trial, Ryder made an offer of proof concerning its tariff for computer equipment. The district judge, however, rejected the ...


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