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receiving property for transportation from a point in one State or Territory or the District of Columbia to a point in another State, Territory, District of Columbia, or from any point in the United States to a point in an adjacent foreign country shall issue a receipt or bill of lading therefor, and shall be liable to the lawful holder thereof for any loss, damage, or injury to such property caused by it lor a carrier to which the property has been delivered on a through bill of lading) *** and no contract, receipt, rule, regulation, or other limitation of any character whatsoever shall exempt such common carrier *** from the liability hereby imposed **
That section further provides that the carrier's liability shall be for the full actual loss, damage, or injury caused by it or a carrier to which the property has been delivered on a through bill of lading, notwithstanding any limitation of liability or limitation of the amount of recovery or representation or agreement as to value in any such receipt or bill of lading or in any contract, rule, regulation, or in any tariff filed with this Commission; and any such limitation, without respect to the manner or form in which it is sought to be made, is unlawful and void.
Section 20(11) contains several provisos, one of which is pertinent here. It provides that carriers, upon express authorization of this Commission, may establish and maintain rates dependent upon the value declared in writing by the shipper or agreed upon in writing as the released value of the property, in which case such declaration or agreement shall have no other effect than to limit liability and recovery to an amount not exceeding the value so declared or released. Thus, released rates authorized by a specific order of this Commission, are the only exception to the general rule set forth in section 20(11) of the act.
The history recited in our Notice and Order instituting this investigation shows that most motor common carriers of house hold goods maintain tariff provisions (generally set forth in the contract terms and conditions of their bills of lading) which state that they will not be liable at all for physical loss or damage to documents, currency, money, jewelry, watches, precious stones, or articles of extraordinary value from external causes while being carried or held in storage in transit, when those items are not specifically listed on the bill of lading; or for loss or damage caused by or resulting from breakage of china, glassware, bric-a-brac, or similar articles of a brittle or fragile nature unless packed by the carrier or unless such breakage results from negligence of the carrier, when the shipper has released the value of each article in the shipment to a value not exceeding 60 cents per pound per article.
A practice by several large household goods carriers, disclosed in the investigations related in our Notice and Order, is to take the position, under the tariff provision questioned above, that items of high value which are lost or damaged are items of extraordinary value and were not declared as such by the shipper at the time the bill of lading was executed. This practice of declining claims relating to the loss or damage to such items is often employed when the lost or damaged articles are such things as antiques or are musical instruments of unusual quality. The end result often is that the carrier escapes all or a portion of its liability and the shipper either accepts the limited settlement offered or must resort to extended, often expensive legal procedures.
As previously stated, the only exception authorizing a limitation on such liability is embodied in the proviso to section 20(11) permitting released rates subject to prior Commission authorization. By Released Rates Order No. MC-505, 102 M.C.C. 277 (June 7, 1966), the Commission expressly authorized released rates for carriers of house hold goods as defined in 49 CFR 1056.1(a). Paragraph (b) of that order stated that “the released values provided herein may not be decreased," and paragraph (e) recited that “This section does not constitute authority for the establishment of released rates or charges on any description of traffic other than herein specifically indicated ***." As noted in our interim report, this released rates order contains no authority (express or implied) to exempt any household goods article from all liability whether or not such article is expressly identified by the shipper. Accordingly, we concluded that tariff rules, as set forth in the house hold goods carriers' bills of lading, which purport to limit liability as described above, appear to constitute an improper attempt by such carriers to disclaim their liability by, among other things, requiring notice from the shipper of the nature of the goods being shipped. In addition, our interim report considered certain other representative tariff provisions which, in our view, are not in the public interest.
REPRESENTATIONS OF THE PARTIES
Consumers.-All of the individual consumers who filed comments herein express agreement that regulations are needed to clarify certain carriers' rights and obligations insofar as liability limitation is concerned. Several individuals recounted certain personal experiences involving items lost or damaged while being transported by interstate household goods carriers. Ms. Hulsart
suggests that a separate rule be drafted specifying how "special items" are to be packed and listed. Mr. McGlaun argues that the liability exceptions should be limited to hostile acts of a foreign power or certain “acts of God.” In his view, customers should not bear losses due to floods or riots. Mr. L. F. Maher states that carriers should be required to inform consumers that replacement costs are not considered in processing claims for lost or damaged items. Mr. Cwiek expresses his agreement with the proposed regulation and suggests that any new rules include (1) a provision that carriers may not refuse to ship any item which they have the capability to pack properly, (2) a provision that the license of a carrier be revoked if said carrier is found to have adopted any illegal practices relative to the weighing of individual shipments, and (3) a provision that a carrier pay a fine to the owner for each day goods are delivered after the scheduled delivery date. The penalty should increase proportionately for each day the mover fails to deliver beyond the announced day of delivery.
Shipper and governmental interests.- This Commission's Bureau of Enforcement states that it is in substantial support of the tentative conclusions and proposed rules and regulations set forth in our interim report. The Bureau expresses concern that the proposed regulation does not adequately define the carriers' liability with respect to items inherently defective. Similarly, the Bureau recommends the adoption of a specific uniform rule regulating the carriers' claims processing practices. It cites the “clear receipt" defense used by carriers and the inability of most shippers to circumvent it, and thus urges the Commission to adopt strong measures to eliminate the problem, including the promulgation of specific claims processing rules.
The Bureau also reiterates its prior recommendation that carriers of household goods be required to file, publish, and provide to customers upon request, their schedules of depreciation and tables of average useful life for specific types of household goods. It voices no disagreement with the proposal in the interim report to stress the use by carriers of replacement value as a base for applying the depreciation factor with respect to lost or damaged items. It notes that the tables of average useful life would still have to be applied as a means of determining the extent of presumed physical deeterioration and depreciation, subject to proof by the shipper to the contrary. It suggests that in instances wherein items cannot be replaced or no suitable replacement is obtainable, the proper measure of damages should then be the original cost, augmented by
a factor derived from a consumer price index to take account of inflation, and adjusted downward to reflect depreciation over average useful life. In summary, it contends that whatever method is employed, it should be specified in our regulations so as to prevent the current misuse of depreciation guidelines unreasonably and unlawfully to limit the just amount of shippers' recoveries.
With respect to the proposed regulations set out in appendix B to the interim report (see appendix B to this report) the Bureau questions the language of subsection 1056.16(c)(i). It contends that the language therein is ambiguous and may be interpreted to mean that a carrier must assume liability for frozen foods and refrigerated articles, even those of which it has no knowledge. It suggests that the subparagraph be changed so as to include se parate and distinct provisions for perishable articles, on the one hand, and frozen foods and articles requiring refrigeration on the other. With respect to subsection 1056.16(c)(ii)(e), the Bureau argues that carriers should be allowed to exclude liability for loss or damage resulting from all "acts of God" regardless of the level of declared or released value. Finally, with respect to section 1056.16(d), the Bureau notes that this provision fails to specify the carrier's notice requirement in the event of storage in transit for less than 10 days and suggests that an appropriate provision covering short-term storage should be included.
The Department of Defense, the General Services Administration, the National Industrial Traffic League, the Office of Consumer Affairs, the Pennsylvania Public Utility Commission, the Shippers' National Freight Claim Council, and Boise Cascade Corporation, all endorse the conclusions expressed in our interim report. GSA is of the further opinion that certain of these conclusions set forth in the text of the report should be included in the proposed regulation. It specifies that the new rules should include an explicit statement relative to a carrier's liability for services performed by third parties engaged by the carrier and a clear statement that depreciated replacement costs will be the basis for settlement for loss and damage. SNFCC supports the continued utilization of released rates and limited liability on household goods, but suggests that the present level of such limitations (60 cents and $1.25 per pound) is unjust and unreasonable, in consideration of present economic values. It recommends that the Commission consider prescribing increased liability limits commensurate with the increases in rates published since the original prescription of the liability limitations. In
addition, SNFCC states that it is in complete agreement with the Commission's statement that carriers holding goods for storage-intransit should be required to notify the shipper in writing at least 10 days prior to the expiration of the specified storage time. However, SNFCC strongly urges that the Commission require that such notification be made by certified mail, return receipt requested.
DOT emphasizes that household goods shippers are in a uniquely vulnerable position in that few of them understand their responsibilities and rights. It believes that the Commission should act now to alleviate the “clear receipt" problem by including specific provisions dealing with this practice in the terms and conditions of the Uniform Household Goods Bill of Lading, and by promulgating specific claims processing rules. We did consider in our interim report a rule establishing a specified number of days for the reporting of concealed damage claims. However, DOT warns that such a rule could place an additional burden on the shipper. It emphasizes that while shippers ought not be permitted an unreasonable amount of time to submit damage claims, any such rule must provide sufficient time for latent defects to be found. Our interim report also suggested a possible rule that no concealed damage claims could be declined without inspection. DOT cautions that such a regulation would not reach the clear receipt abuse because carriers could simply make a pro forma inspection, allege that the damage or loss occurred after delivery and still use the clear receipt defense. Finally, DOT objects to any plan to require that carriers obtain the shipper's clear receipt initials on each separate package or item delivered. It states that such a rule would have to require that each carton be opened and its contents examined. Otherwise, it asserts a carrier could claim that the very carton which may turn out later to contain damaged goods was specifically cleared by the shipper.
DOT suggests that the clear receipt problem can best be resolved by adding to the contract terms and conditions of the uniform house hold goods bill of lading a new section 7 which would permit the consignee to note damaged or missing items either at time of delivery or by certified mail to the carrier's destination agent, within 10 days after delivery. Such action by a consignee would preclude a carrier from claiming clear receipt as a defense. The proposed contract term would further provide that a carrier may not decline a claim for loss or for concealed or other damage solely on the basis that the shipper, consignee, or owner to whom the shipment is delivered signed a clear receipt for the shipment.