The CarmaCk amendmenT’s Hidden History

James Attridge*

In 1997, the United States Court of Appeals, First Circuit, commented: “inquiry into the intent of Congress is made difficult because the Carmack Amendment was adopted without discussion or debate. 40 Cong.7075 (1906) It is accepted, however, that the principle purpose of the amendment was to achieve national uniformity in the liability assigned to carriers.” Rini v. United Van Lines, 104 F.3d 502, 504 (1st Cir. 1997) Eleven years later in Danko v. Atlas Van Lines, 617 F. Supp. 2d 862 (D. Az. 2008), the Court found that Carmack had been enacted for an entirely different reason: to reaffirm the vitality of the five common carrier defenses: 1) fault of the shipper, 2) inherent vice, 3) act of God, 4) act of the public enemy, and 5) act by public authority. Then in 2010, the United States Supreme Court stated in Kawasaki Kisien Kaisha v. Regal Beloit Corporation, 561 U.S. 89 (2010) that the purpose of the Carmack Amendment was to relieve the shipper of the burden of ferreting out the guilty party by imposing strict liability on the initial carrier.

Why this disparity? How can the purpose of one short law be stated with such certainty in three completely different ways? The answer lies in the fact that legislative history

is but only one tool of statutory interpretation and that the scant legislative history that underpins the holding in Kawasaki is augmented by other equally valid approaches. These alternatives establish the foundations of the Supreme Court decisions in Adams Express v. Croninger, 266 U.S. 491 (1913) and Missouri Pacific Railway Co. v. Elmore and Stahl, 377 U.S. 134 (1964).

A brief history lesson is in order. English common law mandated that common carriers must accept all freight tendered to them by members of the public: “If an Innkeeper refuse to entertain a Guest, when his house is not full, an action will lie against him: and a Carrier, if his horses not be loaded and he refuse to take a packet Proper…one that has made a Profession of a publick Employment is bound to the utmost Extent of that Employment to serve the Publick.” Lane v. Cotton, 12 Mod. 472 (1701), Bastard v. Bastard, 2. Shower 81 (1679) This “common carrier obligation” endured over time and was recognized by the U.S. Supreme Court as recently as 1967 in American Trucking Associations v. Atchison, Topeka and Santa Fe Railway Co., 387 U.S. 397, 406 (1967) and later in 1991 in B.J. Alan Co., Inc. v. ICC, 879 F. 2d. 561 (D.C. Cir. 1991), an appellate decision drafted by Ruth Bader Ginsburg.

The common law also rendered a common carrier strictly liable “like an insurer” for loss and damage to freight. Oliver Wendell Holmes put it this way: “…the common carriers’ strict liability for the loss of goods

can be traced to the origin of the general law of bailments…These old laws gave a remedy against thieves not to the bailor, but to the bailee, who in turn had to respond for loss without any possibility of excluding liability.”1 The law of carrier liability originally evolved in the context of bailment rather than contract or tort, when common carriers were, well, commoners. Shippers, on the other hand, were members of the merchant class and the law was skewed in their favor.2 Eventually the common law carved out the five generally accepted carrier defenses and permitted carriers to embargo freight of volatile nature and later to limit their liability exposure for items of extraordinary value. Eventually, Courts allowed carriers to limit their liability for items of indeterminate value, like livestock, by ‘special contract.” New York Railroad v. Lockwood 84 U.S., (17 Wall.) 357, 376, 380 (1873)

Then things changed. After America achieved independence the thirteen original states, as well as the later admitted ones, adopted “reception statutes” declaring British common law controlling up to the date of the statute’s adoption. From that point forward each state was on its own to adopt changes to the law as it saw fit. Lawrence Friedman, leading scholar of American legal history, described the inevitable dissonance producing “a Republic of Bees.” States all buzzed about in their own independent directions, leaving a legal Tower of Babel.3

Beginning with the Baltimore & Ohio in 1830, railroads began crisscrossing the country. Between the

*Law Office of James Attridge (San Francisco, California)

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end of the Civil War in 1865 and the dawn of the twentieth century, the amount of American railroad track expanded from 35,000 miles to over 258,000. Moreover, courts and legal scholars began to embrace the concept of “substantive due process:” the notion that the 14th Amendment’s liberty clause forbade states from interfering with rights of private contract, no matter how lopsided those contracts might be. By the 1870’s American and British Courts were both approaching carrier liability issues in the context of contract, rather than the common carrier obligation and the law of bailment.4

The common carrier evolved rapidly from a commoner to a Robber Baron. Saint Christopher and Tevye the milkman had morphed into the likes of J.P. Morgan and E.H. Harriman. And an army of lawyers, lobbyists and bought legislators turned the law upside down in their favor. The Supreme Court was stocked with railroad lawyers like Joseph Bradley, who had once been the General Counsel of the Camden and Amboy Line. States like Illinois and Minnesota attempted to rein in pricing abuses but were rebuffed by the high court in Wabash, St. Louis, & Pacific Railway v. Illinois, 118 U.S. 557 (1886), holding that states could not regulate interstate traffic. This led to public demand for creation of the Interstate Commerce Commission (“ICC”) in 1887. President Grover Cleveland, who had once represented the New York Central Railroad, and who would only two years later be named Of Counsel to Morgan’s Wall Street firm, Bangs, Stetson, Tracy & MacVeigh (now known as Davis, Polk, and Wardwell) appointed Thomas M. Cooley, Chief Justice of the Michigan Supreme Court, and guru of “substantive due process” the ICC’s first Chairman. Cooley set about to establish the labyrinth of procedures that armed the Commission’s critics for decades. Yet, for its first nineteen years, the ICC did little to police rates,

prevent discrimination, or stanch backstairs rebating.

By 1892 anti-railroad sentiment expressed by movements like the National Grange of the Patrons of Husbandry was in full flower. Since 1868 more than 150 bills were introduced in Congress to nationalize the railroads and in 1874 the Windom Committee proposed that the government operate its own competing lines. James B. Weaver, candidate of the Populist Party advocated a government takeover of the rails and became the first third-party candidate in history to receive one million votes. Control of the Democratic Party was wrested away from Grover Cleveland and the eastern capitalists by the “Great Commoner,” William Jennings Bryan four years later. In September 1901 President William McKinley was assassinated and succeeded by Teddy Roosevelt. Western Republicans like “Handsome Albert” Cummins shifted with the political winds and abandoned their railroad patrons (or in Cummins’ case, his former clientele).5

Public sentiment demanded greater railroad regulation and Teddy Roosevelt was determined to provide it. The railroads themselves knew this was inevitable and resigned themselves to a bill that would keep them in, rather than put them out, of business. The fight over the Hepburn Act of 1906 was never a matter of if or when, but of how much. Roosevelt was determined to give the ICC independent rate approval authority and he cut a deal with “Uncle Joe” Cannon, the cranky oligarch who was Speaker of the House. Cannon agreed not to kill the Hepburn Bill aborning if T.R. agreed not to propose lowering protective import duties. The bill, sponsored by Iowa Republican William Peters Hepburn of Iowa, Chairman of the Interstate and Foreign Commerce Committee, empowered the Commission to establish maximum rate formulas and to reject tariff filings that did not conform. Moreover, judicial review of

ICC rulings was limited to challenges based upon procedural fairness only. When it came to the nuts and bolts of rate setting, primary jurisdiction rested with the Commission and its expertise. Thanks to a Rules Committee that restricted debate and banned amendments, it passed the House intact on February 8, 1906. Then the fun began.6

The Senate version featured numerous amendments, including what was then known only as Amendment 47, tossed into the hopper by Tennessee populist Edward Ward Carmack. Thanks to a coalition of Republican westerners and Southern Democrats, efforts by the railroad interests to subject Commission rulings to broad judicial review were watered down, and a Conference Committee Report was placed in the Congressional Record on June 28, 1906. Three paragraphs of that report constitute the entire legislative history of Amendment 47. Conference Committee reports are “…the most reliable evidence of congressional intent as (they) represent the final statement of terms as agreed to by both houses.” Northwest Forest Resource Council v. Glickman, 82 F. 3d. 825 (9th Cir. 1996); Resolution Trust Co. V. Gallagher, 10 F. 3d. 416 (7th Cir. 1993) These paragraphs make it clear that the Carmack Amendment was enacted to fix liability upon the origin carrier and to permit the shipper to file suit at the point of origin:

“Amendment No. 47 is that which is known as the original carrier’s liability provision. As agreed to in conference it is changed so as to provide that the holder of the original receipt or bill of lading…may collect from the initial carrier for any loss sustained on any road carrying the property……We have made the initial carrier, the carrier that takes and receives the shipment, responsible for the loss of the article in the way of damages.

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We save the shipper from going to California or some distant place to institute his suit. Why? The reasons inducing us to do that was (sic) that the initial carrier has a through-route connection with the secondary carrier, on whose route the loss occurred, and a settlement between them would be an easy matter, while the shipper would be at heavy expense in the institution of a suit. If a judgment is obtained against the initial carrier, no doubt exists but the secondary carrier would pay it at once. Why? Because the arrangement, the concert, the cooperation, the through-route courtesies between them would be broken up if prompt payment was not made. We have done that in conference.”7 Almost immediately challenges

and test cases abounded. The first two seminal Carmack Amendment cases were Atlantic Coast Line Railroad Co. v. Riverside Mills, 219 U.S. 186, (1910) and Adams Express, supra. Both opinions were written by Justice Horace Lurton, described by Professor Peter Irons in A People’s History of the Supreme Court as having “left no mark on constitutional law.”8

Nonetheless, Lurton, who bore a staggering resemblance to The Lorax, bears a cameo mention. As a young sergeant in the Confederate Army he became a prisoner of war, managed to escape, and joined an ad hoc militia known as Morgan’s Raiders, who wreaked havoc throughout the Ohio Valley. Morgan was arrested and hanged and young Lurton sent to an island prison on Lake Michigan for abetting the insurrection. After pleas from his mother, Abraham Lincoln paroled him on the condition that he attend law school instead of fight. He attended Cumberland Law School in Birmingham (now Stetson) and was eventually elected to the Tennessee

Supreme Court as a Democrat. He later served as one of the original members of the United States Court of Appeals, Sixth Circuit, alongside William Howard Taft. In 1909 President Taft elevated him to the high court despite the fact his party affiliation and advanced age made Lurton a curious choice. Cynics note that Taft, who still harbored post-Presidential Supreme Court ambitions, had a penchant for appointing old guys unlikely to outlive him. Of his six appointments, five were over the age of fifty one. Lurton has the distinction of being the only ex-con ever appointed to the Supreme Court.

In Atlantic Coast Line, Lurton declared the Carmack Amendment constitutional, pooh-poohing a substantive due process attack: “There is no such thing as absolute freedom of contract. Contracts that contravene public policy cannot be lawfully made at all. The power to regulate commerce is absolute.” He also cited the Conference Committee Report on Amendment 47 to establish that the legislative purpose of Carmack was to preserve the right of the shipper to sue the originating carrier in the forum of his choosing. Thus, the line of holdings culminating with Kawasaki are direct descendants of the Atlantic Coast Line decision.9

Three years later, however, Lurton went beyond the three paragraph legislative history and adopted the expansive view that Carmack was enacted for the broader purpose of achieving uniformity, particularly in the application of limitations of liability. In Adams Express Lurton called upon the judicially accepted tool of analyzing extrinsic evidence to divine just what problem Congress was addressing when it passed the law. This is a perfectly legitimate tool to employ for purposes of statutory interpretation, even though it is not based on actual legislative history.10 Lurton recounted the development of the law in the context of the “Republic of Bees,” noting that in Pennsylvania

Railroad v. Hughes, 191 U.S. 477, 491 (1904), the Court had dropped a broad hint to the Congress that uniformity was needed and only Congress had the power to make it a reality: “…we look in vain for any regulation of the matter here in controversy. There is no sanction of agreements of this character limiting liability to stipulated valuation until Congress shall legislate upon it. … In the absence of Congressional legislation a state may require a common carrier although in the execution of a contract of interstate carriage…to be liable for the whole loss…”

This problem was widely prevalent at the time. In 1884, the Supreme Court upheld the reasonableness of a limitation of liability permissible under New York law in Hart v. Pennsylvania Railroad, 112 U.S. 331 (1884) but Pennsylvania chose not to heed the Supreme Court’s thinking and refused to allow carriers to limit their liability at all. Grogan v. Adams Express Co., 114 Pa. St .523 The opinion in Hughes lamented this anomaly but noted that until Congress acted pursuant to its authority under the commerce clause there could be no uniformity in a Republic of Bees: “The cases are numerous and conflicting…different rules prevailing in different states…the highest court of Pennsylvania may administer the common law according to its understanding of it” Id. p. 486. In A Treatise on the Law of Carriers published in 1906, the year Carmack was enacted, Robert Hutchinson wrote: “Our state courts are divided upon this subject, as we have seen them to be upon several other questions relating to the rights and duties of carriers…” and referenced 26 different approaches to carrier liability amongst the 45 states then admitted to the union.11

There is one other possible source Justice Lurton relied upon when declaring the true purpose of the Carmack Amendment: He might have learned of it from Edward Ward Carmack himself. Carmack

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and Lurton were both Tennessee Democrats and familiar faces around Nashville in 1906. There is nothing I can find indicating they were pals, but it stands to reason they had to bump into each other frequently.

Thus, the conclusion that Carmack was enacted to assure uniformity under the Supremacy Clause as stated in Rini is perfectly valid and augments, rather than clashes, with the choice of forum/origin carrier liability rationale expressed in Kawasaki.

Decades later the Supreme Court in Elmore and Stahl digressed yet again and held that Carmack “…codifies the common law rule that a carrier, though not an absolute insurer, is liable unless it can show a) act of God b) public enemy, c) act of the shipper himself d) public authority e) inherent

vice or nature of the goods.” At first blush, this interpretation

appears to be woven out of whole cloth, because the statute itself says no such thing. Carrier defenses are not mentioned in Carmack at all. However, because of its primary jurisdiction and lofty expertise, federal courts have found decisions of the ICC to be presumptively valid. ICC v. Jersey City, 332 U.S. 503, 512-513 (1944); Midwestern Transportation, Inc. v. ICC, 635 F. 2d. 771, 774 (10th Cir. 1980) And in 1919 the Commission undertook an extensive analysis of the history of carrier liability and concluded that Carmack constituted a Congressional effort to restore the common law principles of bailment as the cornerstone of carrier liability, and to discard the judicial adulterations by the courts enamored of “substantive

due process” and laissez-faire thinking. In Re: Bills of Lading, 52 ICC 671 (1919) Thus, the Supreme Court ruled that Carmack was a Congressional mandate to repeal the late nineteenth century trends in legal thinking about carriers and supplant them with the common law of yesteryear. In other words, it’s a retro statute.

So, there are three different shoots of law emanating from the same vine: all are valid, though distinct: 1) one based purely on scant legislative history, 2) one based on extrinsic evidence of legislative motive, and 3) another based on judicial deference to administrative interpretation. Like Shamrocks, The Three Musketeers, or a BLT, the Carmack Amendment is of triune nature. Now you know why.

Endnotes 1 Holmes, Oliver Wendell: “Common Carriers and the Common Law” 13 Am. L. Rev. 611 (1879) 2 Basedow, Jurgen: “Common Carriers-Continuity and Disintegration in United States Transportation Law” Transportation Law Journal, Vol. III

No. 1 (1988) 3 Friedman, Lawrence: “A History of American Law,” Simon & Schuster, New York, 1973 4 Basedow, supra, p. 17 5 Watkins, Edgar: “Outstanding Events in Railway Regulation” Columbia Law Review Vol XIX p. 47; Interstate Commerce Commission Activities

1887-1937, ICC Bureau of Statistics, Washington, D.C., (1937) p.28-30 6 The best treatment of the passage of the Hepburn Act is found in Goodwin, Doris Kearns: “The Bully Pulpit,” Simon and Schuster, New York

2013, p. 253-258. It is worth noting that Chairman Hepburn, who had been Iowa’s favorite son candidate for President was defeated in the next election because his Democrat/Populist challenger claimed that the bill he introduced didn’t go far enough.

7 40 Cong. 9579, 9580, June 28, 1906. 8 Penguin Books, New York, 1999, p. 260 9 These cases include Reider v. Thompson 339 U.S.113 (1950) and SC Johnson and Sons, Inc. v. Louisville & Nashville Railroad, 695 F. 2d. 256 (7th

Cir. 1982)10 United States v. Brown, 333 U.S. 18 (1948); Jones, A. “Extrinsic Aids in the Federal Courts” 25 Iowa Law Review 737 (1940)11 Callaghan and Company, Chicago 1906 p. 479, 491

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