Railroad Bills and Expiration Dates

Railroad Bills and Expiration Dates

Copyright 2009, Traffic World, Inc.

Q:

I have a railroad trying to bill me for moves from a little over a year and a half ago totaling about $15,000.

From looking at these bills, they were originally billed to my supplier, then the patron was changed to my company this month.

These shipments are more than 18 months old, are they beyond the statute of limitations?



A:

No, they aren't. But don't pay them just yet.

Shortly before enactment of the ICC Termination Act of 1995 the time limit for motor carriers to sue for their freight charges was reduced from three years to 18 months (measured from the date of delivery). That change was carried forward by 49 U.S.C. § 14705(a).

The time limit for railroads, though, was left unchanged both then and by ICCTA; per 49 U.S.C. § 11705(a) it remains three years. So these bills are timely presented to you.

(By the way, the other billing protections of the ICCTA revision of the law, such as the 180-day time limit on balance-due bills, likewise apply only to motor carriers, not railroads.)

However, unless you're woefully behind in your payments to your supplier, you still probably don't owe them.

The carrier gains its right to collect from the bill of lading, which is the contract between the carrier and the shipper. You weren't party to that contract initially, of course, but the law says that a consignee, by accepting delivery, thereby accepts the contract and becomes co-equally bound by its terms; Corpus Juris Secundum, 13 C.J.S. Carriers § 478.

So far so good for the railroad; it can hold you liable for the unpaid (by your supplier) charges. Where it hits a snag is that the selfsame B/L under which it's trying to collect almost certainly identified the shipments as prepaid.

Now, you know and I know that "prepaid" ordinarily signifies a carrier's intention to bill and collect later from the shipper. But that's not the meaning of the word; what that word says is that the carrier already has its money. In other words, the carrier told a little fib.

And, in reliance on that fib, you presumably paid your supplier's invoices in full - an amount that, either by separate line item or incorporation in a "delivered" price, included the supposedly prepaid transportation charges.

Which means that, if you paid the carrier, you'd be paying twice for the same service. And the law frowns on that; it holds that the carrier is equitably estopped from enforcing collection from you in these circumstances.

See, e.g., Griffin Grocery Co. v. Penn. R. Co., 92 S.E.2d 854; C. F. Arrowhead Services, Inc. v. AMCEC Corp., 614 F.Supp. 1384; Inman Freight Systems, Inc. v. Olin Corp., 807 F.2d 117 (U.S.C.A.8, 1986); Southern Auto Sound, Inc. v. Consolidated Freightways, Inc., 510 So.2d 1085; and In re Penn-Dixie Steel Corp., 6 B.R. 817, aff'd 10 B.R. 878, among many others.

Evidently the carrier extended credit to your supplier, who proved uncreditworthy. But that was its own unilateral choice, taken without your consent or knowledge. You can't accordingly be held economically liable for the loss it thereby incurred.

So unless I've got something wrong with my understanding of your situation, don't pay.



Q:

I have a general question about freight payment.

My contract reads, "Carrier shall invoice [my company] within three months of delivery, and any invoice that is not sent to [my company] within this time period shall be deemed as paid."

Basically, I do not wish to be a carrier's accountant waiting for a freight bill.

If the law states that I need to pay within 18 months, can my contract overrule this governmental ruling if both the carrier and my company agreed?

Can a signed contract ever override a government rule?



A:

Well, you've got a few things confused here, but yes, your contract takes precedence.

The law doesn't say you must pay a carrier's freight bill within 18 months or any other time frame. What it does is give the carrier 18 months to sue you if you don't pay; 49 U.S.C. § 14705(a).

And it's a law, not a "government rule" (or "ruling").

However: "If the shipper and carrier, in writing, expressly waive any or all rights and remedies under [the law] for the transportation covered by the contract, the transportation provided under the contract shall not be subject to the waived rights and remedies and may not be subsequently challenged on the ground that it violates the waived rights and remedies." 49 U.S.C. § 14101(b)(1).

There are some limits to this, but nothing relevant to your situation. Your contract provision basically eliminates any cause of action for a carrier's lawsuit if the bill is more than three months late.

You know, though, you and your carriers might both be better off if you switched to self-invoicing - the carrier gives you a disk with its rates and charges, and you pay based on that and the bill of lading. That eliminates any billing delays and avoids the whole problem.



-- 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 536-page compiled edition of past Q&A columns, published in 2001, at $80 plus shipping.