Illinois Central R.R. Co. v. Crail
281 U.S. 57 (1930)
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Rule of Law:
Under the Cummins Amendment, the measure of 'full actual loss' for a carrier's failure to deliver part of a shipment of fungible goods to a dealer is the wholesale market price at the destination when that price fully compensates the dealer, and the dealer can replace the shortage at that price in the ordinary course of business without incurring additional expense or loss of sales.
Facts:
- Crail, a coal dealer in Minneapolis, purchased a carload of coal while it was in transit.
- The shipment, originally weighing 88,700 pounds, was delivered by Illinois Central R. R. Co. to Crail's industrial siding.
- Upon delivery, it was discovered that there was a shortage of 5,500 pounds of coal.
- Crail had not pre-sold any of the coal from this shipment and intended to add it to his general stock for resale.
- The shortage did not cause Crail to lose any sales or interfere with the maintenance of his usual stock.
- In the ordinary course of his business, Crail purchased coal of like quality in carload lots at a wholesale price of $5.50 per ton.
Procedural Posture:
- Crail sued Illinois Central R.R. Co. in the U.S. District Court (the trial court).
- After the first trial, the District Court awarded Crail damages based on the wholesale value of the lost coal.
- Crail, as appellant, appealed to the U.S. Court of Appeals for the Eighth Circuit.
- The Court of Appeals reversed the trial court's judgment, holding that damages should be based on the retail value, and remanded the case for a new trial.
- On retrial, the District Court awarded damages based on the retail value as instructed by the appellate court.
- Illinois Central R.R. Co., as appellant, appealed the second judgment to the Court of Appeals.
- The Court of Appeals for the Eighth Circuit affirmed the District Court's second judgment.
- The Supreme Court of the United States granted certiorari to review the ruling of the Court of Appeals.
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Issue:
Does the Cummins Amendment's 'full actual loss' provision require damages for a partial loss of a bulk shipment to a dealer to be measured by the retail market value of the undelivered goods, even when the dealer could replace the shortage at the wholesale price without losing any sales?
Opinions:
Majority - Mr. Justice Stone
No. The proper measure of damages for 'actual loss' under the Cummins Amendment is limited to compensation for the injury suffered, which in these circumstances is the wholesale market price, not the retail price. The fundamental principle of damages is to provide compensation, not a windfall. Awarding the retail price would compensate Crail for costs he did not incur, such as retail delivery, and for a profit he had not yet earned through a contract of resale. Since Crail was a dealer who could and did replace the shortage in the course of his business by making bulk purchases at the wholesale price without any additional expense or disruption, his actual loss is the wholesale value of the undelivered coal. The market value rule is a convenient means to determine loss, but it must be discarded in favor of a more accurate measure when, as here, its rigid application would not reflect the actual damages sustained.
Analysis:
This decision clarifies that the 'full actual loss' standard under the Cummins Amendment is synonymous with the common law principle of compensatory damages, aiming to make the injured party whole rather than providing a windfall. It establishes that the 'market value' rule for damages is not a rigid formula but a flexible tool that should be adapted to the specific facts of a case. For future cases involving partial loss of fungible goods shipped to a wholesaler, courts must now look beyond a simple retail vs. wholesale distinction and analyze how the consignee actually mitigates their loss in the ordinary course of business, favoring the measure that most accurately reflects the true financial injury.
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