Through the Motor Carrier Act of 1935, Congress provided Federal regulation of interstate motor transportation. This legislation is now part II of the Interstate Commerce Act. Congress did not write a new section in this law to provide for carrier liability, but section 219 made section 20(11) applicable to common carriers by motor vehicle.

It is important to note that the Carmack amendment did not increase the extent of the carrier's liability as imposed by common law. The five common law exceptions to the carrier liability have been carried forward by the Interstate Commerce Act. In order for the carrier to be excused from liability for loss or damage arising from one of these excepted causes, one of the latter must be the immediate and proximate cause of the injury, one which could not have been anticipated and averted by the carrier, and one with which no action of the carrier intervenes or conjoins.

In view of the history of section 20(11) of the act as discussed herein, we are of the opinion that, when stating those instances wherein household goods carriers may limit their liability, it is unnecessary for our regulations to specify those exceptions to the common law strict liability standard. Section 20(11) continued the carriers' common law defenses and contrary to the regulation proposed in our interim report, we do not appear empowered to restrict carriers from disclaiming liability under one of these five exceptions. However, it is within the statutory authority of the "Bronstein v. Baltimore & O.R. Co., 29 F. Supp. 837 (1939); Chesapeake & Ohio Railway Company v. Thompson Manufacturing Company, 270 U.S. 416, 422 (1926).

'Relative to this discussion, carriers may exclude liability for loss or damage resulting from "acts of God" regardless of the levels of declared or released value. As previously noted, this is one of the recognized common law defenses available to common carriers. However, it is also recognized that carriers may waive this defense provided it is done for compensation and is not discriminatory. The current household goods carriers' tariffs provide that the "act of God" defense is inapplicable if the shipper releases the shipment at other than the minimum of 60 cents per pound per acticle. Thus, when a shipper releases a shipment at other than the minimum liability, he is purchasing not only an increase in the amount for which the carrier will be liable, but also an increase in the overall liability of the carrier by including protection for loss or damage resulting from "acts of God."

If household goods carriers with such provisions in their tariffs endeavor to amend their current tariffs to delete this protection, it is only reasonable to assume that they must amend the current added value tariff charge to reflect this diminution of carrier liability. Any attempt to amend the current tariffs pertaining to the "acts of God" liability provision must be made in accordance with prescribed tariff filing requirements. Clearly, a determination as to the acceptability of such a tariff filing cannot be included in this proceeding.

Also, several parties questioned the failure of the proposed regulation to allow a carrier to disclaim liability for loss or damage resulting from "strikes, lockouts, labor disturbances, riots. civil commotions, or the acts of any person taking part in any such occurrence or disorder." (footnote continued on next page)

Commission to promulgate a rule restricting those instances wherein a carrier may add to those common law liability exceptions. Additionally, the household goods carriers will be ordered to amend their bill of lading and appropriate tariffs to conform to the regulation promulgated herein as discussed both above and later in this report, i.e., to reflect only those defenses allowed by common law and by the provisions of 49 CFR 1056.16. This action will be required to be accomplished within 60 days of the publication of notice of the adoption of the rules set forth in appendix C, in the Federal Register.

Some further elaboration on specific tariff or bill of lading provisions is necessary. One of the more complex matters involved in this proceeding pertains to the "articles of extraordinary value" provision contained in the general rules governing the tariffs of most household goods carriers. Under this tariff provision, a carrier will not assume liability for specified items, including articles of extraordinary value, unless such items are specifically listed on the bill of lading. Many ambiguities surround the current application of what is an item of extraordinary value. It is applied after the shipment has been completed, and is often interpreted against the shipper.

In view of these circumstances, we believe that the public interest is best served by the requirement that house hold goods carriers be fully liable, pursuant to the outstanding released rates order for all items accepted for shipment. To require prior notice of an article of unusual value is not feasible. Often times it is after a claim arises that a carrier asserts that the disputed item is one of extraordinary value. Accordingly, to eliminate this ambiguity as to what is an item of extraordinary value, we believe that a carrier must either accept full responsibility for all items transported (within the released rates provisions) or else the carrier must specifically request exception from its certificate of items it does not desire to transport, in accordance with the Commission's usual revocation procedures. As noted in our interim report, we are also of the opinion that those tariff provisions which seek to limit a carrier's liability when

(footnote 9 continued)

Although the adopted regulations contain no specific exceptions, the omission of this liability exclusion from the proposed regulation was deliberate on our part. A strike by shipper's or carrier's employees and actions of labor organizations are not the acts of a "public enemy" which would excuse failure for nonde livery under the noted common law liability exception. Compare Montgomery Ward & Company v. Northern Pac. Terminal Co., 128 F. Supp. 475. We believe it is the carrier's responsibility to safely transport its lading with sufficient protection against loss or damage resulting from such causes.

appliance servicing or unservicing is performed by third persons engaged by the carrier should be eliminated. Such tariff provisions typically concern the servicing of articles or appliances which, if not properly serviced, may be damaged in, or incident to, transit. Under such a rule, a carrier, if it does not possess the qualified personnel to properly service such articles, will upon request of shipper engage third persons to perform the service. The rule further provides that when such third persons are engaged by the carrier to perform any service, the carrier will not assume responsibility for their activities or conduct, amount of their charges, or the quality or quantity of service furnished.

Under the present rule, it is a major inconvenience for the shipper to be obliged to contact the servicing party at origin if improper workmanship is discovered after delivery. Shippers, however, rely upon the carrier to select the serviceman and to see that the servicing is properly performed; the carrier, which is more knowledgeable as to what must be done, should accept responsibility for the work of a person with whom the carrier has contracted. Thus, such tariff provisions must be amended so that carriers may not disclaim liability for the quality of appliance servicing performed by third persons engaged by the carrier. GSA has suggested that the new rule should include an explicit statement relative to this matter of third-party services. We are in agreement with this idea, and accordingly, appropriate language has been inserted into the adopted regulation [49 CFR 1056.16(c).]

Similarly, GSA suggests that the proposed rule should include a specific provision requiring carriers to use depreciated replacement costs as the basis for the settlement of loss or damage. We agree up to a point. As noted in our interim report, we believe that movers must be reasonable in the application of depreciation when it must be used. This Commission continually receives complaints from shippers who are forced to pay more than the current value of an item to purchase a replacement for a damaged or lost item. While we recognize the concept of depreciation to be sound, we believe that such depreciation factor should be set against the replacement cost of the involved item. Accordingly, the new regulation will specifically require that carriers use the replacement cost as a base to apply a depreciation factor when settling claims for loss or damage. The regulation, however, will also provide a standard for the item which is not replaceable or for which a suitable replacement is not available. As suggested by the Bureau of Enforcement, the proper measure of damages in such circumstances will 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.

Several parties have noted that the proposed subsection 1056.16(c)(i) is ambiguous. They argue that this subsection can be interpreted to read that a carrier must assume liability for frozen foods even if it has no knowledge that these are included in the shipment. We agree that the parenthetical language included in this proposed subsection creates an ambiguity, and are of the view that the elimination of this parenthetical "except frozen foods and other articles requiring refrigeration" will clear said ambiguity. To insure that this subsection is clarified, we are of the further view that the second sentence of the proposed subsection (c)(i) should be rephrased to read that "a carrier accepting for shipment perishable articles may impose reasonable conditions necessary to insure the safe transportation of such commodities." Frozen food or other articles requiring refrigeration would be included within this proposed subsection (c)(i) relative to perishable articles.

With respect to this same subsection (c)(i), Wheaton states that the term "perishable articles" should also be interpreted to include live plants. Wheaton further contends that a carrier should not be expected to assume liability for loss or damage to live plants, even when it has notice that these are included in the shipment. We understand Wheaton's point that many shippers prefer to have their plants moved, even at the risk of their dying en route, rather than be forced to leave them at the origin point. However, we do not believe carriers should be allowed to disclaim all liability relative to their safe transportation. Accordingly, we agree that the term "perishable articles" should be interpreted to include live plants. At the same time, we believe that live plants should be treated no differently from other perishables. Thus, the carrier need not assume liability if these items are included in the shipment without its knowledge, and it may, when accepting these items for shipment, impose reasonable conditions necessary to insure their safe transportation.

With respect to the proposed subsection 1056.16(d), the Bureau of Enforcement cites a loophole in that no notice requirement is imposed in the event goods are to be stored in transit for a period of less than 10 days. We are of the view that if such a situation occurs, a carrier must give the required notice to the shipper no less than 1 day prior to the expiration of the specified period of time during which the goods are to be held in such storage, and keep a record thereof. Also relative to the proposed subsection (d), we agree with the suggestion that in those situations where the goods are to be held in storage for 10 days or more, the notice should be by certified

mail, return receipt requested. The proposed subsection (d) will be subsection (e) in the adopted regulation.

DOT has stated that the Commission should take positive action to alleviate the "clear receipt" problem. It suggests, as does our own Bureau of Enforcement, that we should promulgate specific claims processing rules. We are aware of the abuse of this defense, but adhere to our view as expressed in the interim report, i.e., the Commission should continue to monitor closely the clear receipt problem and at a later date, if no improvements are made, should consider the proposal of strong measures to eliminate problems connected with this defense. In the interim, we note that "clear receipt" is only prima facie proof and may be rebutted by other competent evidence of loss or damage or evidence that the shipper did not sign the bill of lading with knowledge of damage or was coerced into signing it without opportunity for inspection of his goods.

SNFCC supports the continued utilization of released rates and limited liability on household goods, but suggests that the present level of such limitation (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. We appreciate this suggestion of SNFCC, but we note that the promulgation of such increased liability limits is not within the scope of the involved proceeding.

We also note our discussion in the interim report relative to the problems which sometimes arise because a shipper will declare the value of his shipment by quoting a dollar amount greater than $1.25 for each pound of weight in the shipment." We restate our position that if this is done in the shipper's own handwriting, for the purpose of assessing applicable charges and establishing liability for loss and damage, such released rate figure will be viewed as a declaration of the lump sum value of the shipment. In other words, shipper will be deemed to have released his goods to the lump sum

Under the current terms of the uniform household goods bill of lading, a carrier's maximum liability for loss and damage shall be either the lump sum value declared by the shipper or an amount equal to $1.25 for each pound of weight in the shipment whichever is greater, except in those instances where a shipper expressly releases the shipment to a value of 60 cents per pound per article. A further provision declares that a shipper signing the contract must insert in his own handwriting either his declaration of a lump sum value of the shipment or the words "60 cents per pound per article." Otherwise the shipment will be deemed released to a maximum value equal to $1.25 times the weight of the shipment in pounds.