Citations
- 584 S.W.2d 284
Full opinion text
GUITTARD, Chief Justice.
This suit was brought under the Texas Deceptive Trade Practices Act, Tex.Bus. & Comm.Code §§ 17.42-17.50 (Vernon Supp. 1979) for damages to household goods being shipped from Irving, Texas, to Fairbanks, Alaska. The trial court rendered judgment against the packer, who also acted as agent of the carriers, for treble damages and an attorney’s fee. The principal question is whether the Texas Act is pre-empted by the Carmack Amendment to the Interstate Commerce Act, 49 U.S.C. § 20(11), (1970), which concerns liability for goods shipped in interstate commerce.
We hold that the Carmack Amendment does not pre-empt the Texas Act with respect to liability for false, misleading, or deceptive acts and practices that occurred before the contract of carriage was made. For like reasons, we hold that a contractual limitation of liability does not apply. However, we conclude that the cause must be reversed and remanded for a new trial because the trial court erred in excluding evidence of the shipper’s acceptance of insurance benefits under coverage provided by the contract. We also hold that damages for mental anguish cannot be recovered for this kind of loss, and we give directions concerning special issues to be submitted on another trial.
1. Pre-emption of Deceptive Trade Practices Act by the Carmack Amendment
Defendant does not challenge the sufficiency of the evidence to support the jury’s findings of deceptive trade practices. Consequently, we must assume that plaintiff has established his cause of action for deceptive trade practices unless the Texas Deceptive Practices Act is inapplicable because of the interstate character of the shipment involved. Defendant’s principal contention is that the Act does not apply because this suit is an action for damages to freight shipped in interstate commerce within the Carmack Amendment to the Interstate Commerce Act, 49 U.S.C. § 20(11) (1970), which regulates such claims and excludes all recovery based on state statutes or common-law grounds.
Plaintiff asserts that his claim is not based on the contract of carriage or on any rule of carrier liability, under either statute or common law, but that it rests solely on the Texas Deceptive Trade Practices Act. He argues that the interstate character of the shipment does not exempt defendant from the penalties of the Texas law for false, misleading, and deceptive acts and practices.
This question has given us difficulty because the opinions of the Supreme Court of the United States on the question of federal pre-emption of state law, though numerous, provide no clear guidance. Each case turns on the peculiarities and special features of the regulatory scheme in question. City of Burbank v. Lockheed Air Terminal, Inc., 411 U.S. 624, 637, 638, 93 S.Ct. 1854, 36 L.Ed.2d 547 (1973).
Of course, if there is a direct conflict between federal and state law, the federal law controls under the Supremacy Clause in Article VI of the United States Constitution. Perez v. Campbell, 402 U.S. 637, 91 S.Ct. 1704, 29 L.Ed.2d 233 (1971); Swift and Co. v. Wickham, 382 U.S. 111, 86 S.Ct. 258, 15 L.Ed.2d 194 (1965); Gibbons v. Ogden, 9 Wheat. 1, 22 U.S. 1, 6 L.Ed. 23 (1824); see, e. g., Note, The Preemption Doctrine: Shifting Perspectives on Federalism and the Burger Court, 75 Colum.L.Rev. 623 (1975). Likewise, state legislation is invalidated by a federal statute that either expressly or impliedly by its structure and purpose evinces an intention to occupy the field and exclude state regulation. Jones v. Rath Packing Company, 430 U.S. 519, 97 S.Ct. 1305, 1309, 51 L.Ed.2d 604 (1977). The test is whether under the circumstances of the particular case the state law stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress. Perez v. Campbell, 402 U.S. 637, 91 S.Ct. 1704, 29 L.Ed.2d 233 (1971); Hines v. Davidowitz, 312 U.S. 52, 67, 61 S.Ct. 399, 85 L.Ed. 581 (1940).
Accordingly, we must examine the Car-mack Amendment and the decisions construing it to determine the purposes and objectives of Congress. The subject matter of the amendment is contracts for interstate transportation of property and the liability of carriers for breach of such contracts. The statute contains detailed provisions concerning the liability of initial and connecting carriers for losses in interstate shipments, issuance of bills of lading, contractual limitations of liability, and notice and filing of claims. This statute was construed authoritatively in the leading case of Adams Express Co. v. Croninger, 226 U.S. 491, 33 S.Ct. 148, 57 L.Ed. 314 (1912), which held that the provision of this law permitting a carrier to fix its rates with respect to the agreed or declared value of the property renders inapplicable any local law forbidding limitation of liability to less than the full value. The Supreme Court poirited out that the purpose of the Carmack Amendment was to free interstate shipments from the diversity of legislative and judicial holdings that made it difficult for shippers and carriers to know the extent of the carrier’s responsibility for goods delivered to it for transportation from one state to another. The court stated:
That the legislation supersedes all the regulations and policies of a particular state upon the same subject results from its general character. It embraces the subject of the liability of the carrier under a bill of lading which he must issue, and limits his power to exempt himself by rule, regulation, or contract. Almost every detail of the subject is covered so completely that there can be no rational doubt but that Congress intended to take possession of the subject, and supersede all state regulation with reference to it. [226 U.S. at 505-506, 33 S.Ct. at 152],
Following Croninger, the Supreme Court held in Atchison, T. & S. F. Ry. v. Harold, 241 U.S. 371, 36 S.Ct. 665, 60 L.Ed. 1050 (1916), that the Carmack Amendment applies to liability for an error in a bill of lading even though Congress has not legislated specifically on that subject. The court said that the amendment “was an assertion of the power of Congress over the subject of interstate shipments, the duty to issue bills of lading, and the responsibilities thereunder, which, in the nature of same, excluded state action.” The court reaffirmed its position that the “prime object” of the amendment “was to bring about a uniform rule of responsibility as to interstate commerce and interstate commerce bills of lading.” This principle of uniformity of responsibility for shipments in inter-, state commerce has been held to exclude recovery of the attorneys’ fees provided by state law in an action for damages to an interstate shipment. Strickland Transport Co. v. American Distrib. Co., 198 F.2d 546, 547 (5th Cir. 1952); Southwestern Motor Transport Co. v. Valley Weathermakers, Inc., 427 S.W.2d 597 (Tex.1968).
Comprehensive though the Carmack Amendment may be in its regulation of contracts of carriage in interstate commerce and claims arising out of such contracts, we conclude that deceptive trade practices, except possibly to the limited extent of misrepresentations affecting the applicable rate, do not fall within the ambit of federal regulation. The uniformity sought by the Carmack Amendment, according to the authorities above mentioned, is uniformity in the requirements of a contract of carriage in interstate commerce and in the carrier’s liability for breach of its duties under such a contract. The Deceptive Trade Practices Act does not purport to regulate these matters and presents no obstacle to full accomplishment of uniformity in these respects. It applies to false, misleading, and deceptive acts or practices in general and makes no special provision for interstate shipments or other transactions in interstate commerce. We find nothing in the Carmack Amendment or in the decisions construing it suggesting that uniformity was sought with respect to legal liability for false, deceptive, or misleading acts or practices preliminary to the formation of the contract for interstate shipment. We conclude that protection of interstate shippers from such practices is left to the police powers of the several states.
We recognize that in this case damages for violation of the Deceptive Trade Practices Act may be measured by the same loss, at least in part, as damages for breach of the contract of carriage. This coincidence should not obscure the differences in the purposes of the two statutes, in the scope of activities they undertake to regulate, or in their respective grounds of liability. In these important respects, the two neither conflict nor overlap. Measurement of damages by the same loss does not present an obstacle to full accomplishment of the purpose of the federal legislation. For this purpose the treble damage penalty imposed by the Deceptive Trade Practices Act is no different from a fine or civil penalty determined on some other basis. Consequently, we find no basis to hold that the state’s regulation of deceptive trade practices relating to interstate shipments has been pre-empted by federal legislation.
Although this exact problem was not considered in any of the cases cited to us, our holding is consistent with the decisions of the Supreme Court of the United States concerning federal pre-emption. The most nearly analogous case we have found is Huron Portland Cement Co. v. City of Detroit, 362 U.S. 440, 80 S.Ct. 813, 4 L.Ed.2d 852 (1960). There an ordinance regulating emission of smoke from boilers was held applicable to boilers of ships engaged in interstate commerce while within the city’s boundaries, even though such ships and their boilers had been licensed under federal law, inspected by federal authority, and certified by federal officials as safe for navigation. The Supreme Court held that there was no overlap between the federal inspection law, which was concerned- with protection against the perils of maritime navigation, and the city ordinance, which aimed to eliminate air pollution for protection of the health and welfare of the local community. Id. at 445, 80 S.Ct. 813. The court pointed out that state regulation based on the police power, which does not discriminate against interstate commerce or operate to disturb its required uniformity, was not an undue burden on interstate commerce. That decision may be compared with Douglas v. Seacoast Products, Inc., 431 U.S. 265, 97 S.Ct. 1740, 52 L.Ed.2d 304 (1977), which held that federal regulations licensing fishing vessels pre-empted a state licensing law imposing more restrictive requirements on vessels owned by non-residents than on those owned by local citizens, but in that case the court observed that reasonable and even-handed conservation measures stood unaffected by the decision.
Also, in Askew v. American Waterways Operators, Inc., 411 U.S. 325, 93 S.Ct. 1590, 36 L.Ed.2d 280 (1973), a Florida statute imposing strict liability for damages incurred by the state or by private persons as a result of discharge of oil and other chemicals into its territorial waters was held not pre-empted by a federal statute authorizing federal regulations requiring maintenance of equipment to prevent oil spills by ships and terminal facilities and imposing on their owners liability without fault for clean-up costs incurred by the federal government as a result of such spills. Similarly, in Dickson v. Uhlmann Grain Co., 288 U.S. 188, 53 S.Ct. 362, 77 L.Ed. 691 (1933), the court held that the Federal Grain Futures Act, which imposed certain requirements for sales of grain for future delivery, did not supersede a Missouri statute prohibiting gambling on grain futures. Other decisions standing for the same principle are cited in the margin.
Defendant argues that if the Deceptive Trade Practices Act is applicable, all the plaintiff would have to do to avoid the federal law would be to prove a representation that the goods would not be damaged in shipment. Consequently, defendant insists, the limitation of liability provided by the Carmack Amendment would be nullified if the penalties of the Deceptive Trade Practices Act were permitted to apply.
We do not agree. We may concede for present purposes that the Carmack Amendment and its provision for limitation of liability applies to any case in which the wrongful conduct alleged would amount to a breach of the contract of carriage, whether the suit is brought in the form of an action on the contract or on some statutory or common-law ground. Nevertheless, in this ease, plaintiff’s action is not based on any conduct that could be considered a breach of the contract of carriage. It is based on false, misleading, and deceptive acts and practices of defendant’s agent that occurred before the parties entered into the contract. Plaintiff Raymond Brown alleged that he engaged the services of defendant American Transfer & Storage Company to move his household belongings and Chevrolet automobile to Fairbanks, Alaska; that plaintiff was induced to enter into the contract by the false, misleading and deceptive representations of defendant’s agents that defendant would provide a “door to door” service, including careful packing, storage, movement, delivery, and placement in defendant’s residence, and that certain types of containers and vaults would be used to assure safe delivery; and that as a result of such representations plaintiff was damaged in the amount of $23,200 for loss or damage to his household goods, $1,050 for repairs to his automobile, and $5,000 in mental anguish.
These allegations were amply supported by the evidence. Defendant was not itself an interstate carrier, but it served as an agent for interstate carriers and as a packer of goods for interstate shipment. In response to a telephone call from plaintiff, defendant’s agent, Joe Stanton, came to plaintiff’s home in Irving, surveyed its contents, and described the services that defendant offered. Stanton represented that the goods would be packed securely in wooden vaults or crates before plaintiff’s eyes in Irving, Texas, that the containers would not be opened or tampered with until delivered to plaintiff’s new home in Fairbanks, Alaska, that when they arrived there they would be unpacked and placed in the house at plaintiff’s direction, and that the automobile would be shipped separately. Relying on these representations, plaintiff entrusted his goods to defendant for shipment. The evidence shows that these representations misled plaintiff with respect to defendant’s actual method of operation. Defendant’s employees took the goods and packed them, as represented, but then, without plaintiff’s knowledge, removed the goods from the wooden containers and stacked the furniture and the cardboard boxes containing plaintiff’s other possessions in a single Sealand container, together with the automobile. This method, according to plaintiff’s witnesses, was inadequate for overseas shipment. When received in Fairbanks most of the goods were missing or damaged and the automobile needed repair. Moreover, the evidence shows that the practice of the terminal carrier, which delivered the goods in Fairbanks, was not to unpack the goods and place them as directed, but merely to set the furniture and cardboard containers in the house. Defendant did not deny these facts, but undertook to defend its practices as acceptable methods of transportation. In the light of this evidence, the jury was justified in finding that Stanton’s representations constituted deceptive trade practices and that plaintiff was adversely affected in that the inadequate packing of the goods caused a substantial portion of them to be lost, destroyed and damaged, that plaintiff and his wife were put to additional trouble in unpacking and arranging those that remained, and that they were without an automobile while theirs was being repaired. We hold that for the cause of action so established the applicable provisions of the Deceptive Trade Practices Act have not been preempted by the Carmack Amendment.
2. Limitation of Liability
Apart from the pre-emption question, defendant asserts that the court erred in not limiting plaintiff’s damages to thirty cents per pound of the weight of the goods shipped, as specified in the order for services signed by plaintiff and also in the bill of lading. It also complains that the court erroneously excluded those portions of the order and of the bill of lading which contain such limitations of liability. Plaintiff responds that the limitation of liability was properly excluded because it was void and unenforceable under section 17.42 of the Texas Deceptive Trade Practices Act, which provides that any waiver by a consumer of the provisions of the Act “is contrary to public policy and is unenforceable and void.”
We conclude that plaintiff’s contention in this respect is well taken insofar as the contractual limitation of liability is relied on as an absolute limitation of the damages. The limitation may be effective to limit liability under the contract, but, as already pointed out, this suit is not brought on the contract. It is rather an action under the Deceptive Trade Practices Act for damages from misrepresentation made before the contract was signed. Since we have already held that application of the Deceptive Trade Practices Act has not been preempted by the Carmack Amendment, we hold also that section 17.42 is effective to nullify any contractual limitation of liability insofar as this action is concerned. Nevertheless, we conclude that the court erred in excluding the contractual limitation insofar as it bears on the question of admissibility of the matter of insurance payments, to which we now turn our attention.
3. Insurance Coverage and Payment
Alternatively, defendant asserts that even if the Deceptive Trade Practices Act applies, the court erred in excluding from evidence the insurance certificate obtained by defendant to cover plaintiff’s shipment and in excluding evidence of the $11,009.22 payment received by plaintiff in settlement of his claim under that certificate. Defendant alleged in its answer that as a part of its agreement with plaintiff, defendant, as agent for the insurance company, issued a certificate of insurance covering loss or damage to plaintiff’s goods, that plaintiff had made a claim under this certificate and had received a payment of $10,000 for loss and damage to his household goods and personal effects and $1,009.22 for damages to his automobile. Evidence supporting these allegations was excluded by the court in response to plaintiff’s motion in limine, and defendant tendered the evidence in a bill of exception. The jury found that the damage to plaintiff’s household goods and furniture was $18,434 and that the cost of repair of his automobile was $1,059.22. The jury also found damage from mental anguish in the amount of $5,000. The trial court rendered judgment for three times the sum of these amounts, plus an attorney’s fee.
Plaintiff seeks to support the trial court’s exclusion of the insurance coverage and settlement by invoking the collateral source rule and arguing that the insurance payment is immaterial because defendant is not entitled to the benefit of any insurance coverage procured for plaintiff.
We conclude that the collateral source rule does not apply and that the issuance of the insurance policy and the payment under it were admissible to rebut the amount of damages claimed by plaintiff because the insurance was procured pursuant to the contract between the parties.
The theory behind the collateral source rule is that a wrongdoer should not have the benefit of insurance independently procured by the injured party, and to which the wrongdoer was not privy. Texas & P. Ry. v. Levi, 59 Tex. 674, 676 (1883); Graves v. Poe, 118 S.W.2d 969 (Tex.Civ.App.—El Paso 1938, writ dism’d); Perrott v. Shearer, 17 Mich. 48, 56 (1868). The rule is an exception to the general principle forbidding more than one recovery for the same loss. See Maxwell, The Collateral Source Rule in the American Law of Damages, 46 Minn.L.Rev. 669 (1962). That principle was firmly established by the Supreme Court of Texas in Bradshaw v. Baylor University, 126 Tex. 99, 84 S.W.2d 703 (1935) and was reaffirmed in T. L. James & Co. v. Statham, 558 S.W.2d 865, 868 (Tex.1977).
The general principle, rather than the collateral source rule, was applied by the supreme court in Publix Theatres Corp. v. Powell, 123 Tex. 304, 71 S.W.2d 237, 241 (1934). There a lease of a theater required the lessee to keep the premises insured. A fire occurred as a result of the negligence of a corporation affiliated with the lessee. The lessor collected the insurance proceeds and then sued the negligent party for the loss. The supreme court held that by providing the insurance, the lessee had satisfied the claim of the damaged party. The court distinguished cases applying the collateral source rule on the ground that in those cases the payment by the insurance company was the result of a contract to which the wrongdoer was not privy.
Here, likewise, the record shows that the insurance coverage in question was not procured independently by plaintiff, but was procured by defendant pursuant to the contract between the parties. The order for moving services signed by plaintiff provides as follows:
IN THE ABSENCE OF ANOTHER SEPARATE WRITTEN AGREEMENT AND IN CONSIDERATION OF THE RATES TO BE CHARGED FOR THE SERVICES TO BE PERFORMED, I AGREE THAT THE LIABILITY OF AMERICAN TRANSFER AND STORAGE CO. IS LIMITED TO THIRTY CENTS (.30$) PER POUND PER ARTICLE AND TO TWENTY-FIVE DOLLARS TOTAL CLAIM. I WILL ARRANGE ADDITIONAL INSURANCE IF DESIRED.
This same order provides for insurance on the goods in the amount of $26,100 at a premium of $522. The bill of lading and freight bill, also signed by plaintiff, and issued by defendant as agent for Columbia Export Packers, Inc., provides:
2. This carrier’s liability for loss or damage is limited to a maximum of 30