On Damaged Goods: Salvage a Claim, Not the Wreckage

Q: Your reply to the question about the carrier’s right to pick up damaged goods in the March 19, 2012, issue is unclear to me. You said the carrier has no right to salvage damaged goods even when it pays the claim in full.

If my car is a total loss and the insurance company pays me the value of the car, the insurance company gets the car. I don’t have the option of keeping the damaged vehicle.

If a carrier damages a shipment and pays me the full value, why would the carrier not have a right to pick up the damaged shipment?

Most carriers have third-party companies survey the damage and make an assessment of the value, which gives some transparency to the transaction.

If the carrier is paying for the loss, it seems to me it would be entitled to obtain possession of the damaged goods. But you stated, “If the goods were totaled, tell the carrier so and that they’ve long since been dumped.”

Please elaborate.

A: Apparently your experience with auto insurers differs from mine. The one time I had a car totaled, the junkyard got the car, not the insurance company. I suppose nobody would have minded even if I’d wanted to keep the wreck, say as a lawn ornament.

Insurers generally don’t total cars that are still drivable or repairable. And in any case, freight isn’t cars and carriers aren’t insurers, so your comparison isn’t apt.

What the carrier is entitled to, as an offset against its claim payment, is the value of the salvage, not the goods themselves. If the goods retain economic value, the claimant may, at its option (not the carrier’s), turn the goods over to the carrier for salvage, arrange for salvage itself or dispose of the goods as it will while paying the carrier the amount they could have been salvaged for out of its own pocket.

As I say, freight isn’t cars. A car is an anonymous mass-produced article built by a corporate manufacturer who isn’t the owner for utilitarian purposes. (OK, we’re ignoring that this particular car belonged to your granddad and has great sentimental value to you, but your insurer won’t pay you for that anyway.)

But freight may have been produced by its owner, may well bear the owner’s name or logo, and may injure the owner’s reputation if put on the market in damaged condition. Further, there’s the possibility of product-liability lawsuits against the easily traceable owner if somebody buys the damaged stuff and it hurts him or her.

Which is to say, the owner may not want its salvaged products out there competing with its shiny new and pristine ones. And it has the right to bar salvage sales, provided only that it compensates the carrier for whatever salvage value the goods may have retained.

The carrier, that is, doesn’t suddenly transform itself into the shipper/claimant’s de facto customer by damaging the goods. It gets to pay for the damage by dint of its role as bailee of the goods, not as the heir of whatever shards remain. The shipper’s transfer of custody to the carrier for transportation purposes never becomes a transfer of ownership without the owner’s consent.

I left your final question — why must the carrier take the claimant’s word for the damage rather than having the right to inspect the goods itself? — for the end because its answer lies in the original question, of which you evidently lost track.

Read it again. This particular carrier had waited seven months before suddenly demanding the damaged goods be made available for inspection. Can you imagine your auto insurer stalling for more than half a year while you sat and stewed with a driveway full of wreckage? (If you can, find another insurer posthaste.)

Carriers, if they choose to inspect, must do so “promptly.” Sometimes “promptly” can mean tomorrow morning if, for example, the goods are perishable and are rotting away by the minute. But even if they aren’t, the word surely doesn’t translate to seven long months, during which the claimant must keep them available.

And if the carrier fails to meet this “promptly” obligation, it must accept the claimant’s inspection as its own. This carrier was a day late and a dollar short. I told the claimant to play square with it economically, and that’s all it can hope for.

Consultant, author and educator Colin Barrett is president of Barrett Transportation Consultants. Send your questions to him at 5201 Whippoorwill Lane, Johns Island, S.C. 29455; phone, 843-559-1277; e-mail, BarrettTrn@aol.com. Contact him to order the most recent 351-page compiled edition of past Q&A columns, published in 2010.

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