Before Hastie and Forman, Circuit Judges, and Kirkpatrick, District judge.
Rhoades, Incorporated (hereinafter Rhoades), was the owner of a device known as an airboat*fn1 which it had demonstrated at Los Angeles and was desirous of exhibiting in Pittsburgh, Pennsylvania. Accordingly, it arranged with United Air Lines, Inc. (hereinafter United), to transport the airboat consigned to itself, via air freight from Los Angeles to Pittsburgh. United was without facilities to transport the airboat beyond Cleveland, Ohio. After its arrival there United arranged with the Pennsylvania Railroad Company (hereinafter Pennsylvania) for its carriage to its destination. On delivery to Rhoades at Pittsburgh the airboat allegedly was received in a destroyed state. In this diversity action Rhoades seeks damages against United in the sum of $15,000.*fn2
United impleaded Pennsylvania as a third party defendant. It admitted that the airboat was received by it in good condition and asserted that it was transferred to Pennsylvania in the same state. Pennsylvania denied liability and claimed that all the damage occurred prior to its taking over the shipment at Cleveland.
Although the parties stipulated that the airboat was so badly damaged during its transportation that it was rendered valueless, the amount of the recovery for the admitted damage was in issue. United urged that under the facts its liability was limited to $1,080, the limitation on the value of the item under the tariffs it had filed. Rhoades contended that United's liability was not limited and insisted that it was entitled to $15,000 in damages.
The jury was presented with, and answered, four special interrogatories as follows:
'Interrogatory No. 1. Did the defendant, United Air Lines, at Los Angeles, California accept plaintiff, Rhoades, Inc., airboat for shipment to Pittsburgh, Pennsylvania without at that time and place, issuing a receipt, air bill or bill of lading to the plaintiff for such airboat shipment? The answer, yes.
'Interrogatory No. 2. State the amount of total damage caused to the airboat while in transit from Los Angeles, California to Irwin, Pennsylvania. $7,500.
'Interrogatory No. 3. State the amount of money damage the plaintiff Rhoades, Inc. is entitled to from the defendant, United Air Lines. $7,500.
'Interrogatory No. 4. State the amount of money damage the defendant and third party plaintiff, United Air Lines, is entitled to, if any, from the third party defendant, Pennsylvania Railroad Company. Answer: None.'
Judgment was entered in favor of Rhoades against United in the sum of $7,500 and of no cause for action in favor of Pennsylvania in the third-party action brought by United. Rhoades filed a motion under Federal Rule of Civil Procedure 59 to alter or amend the judgment, and in the alternative, for a new trial on the question of damages. United moved for a new trial on all issues as to both Rhoades and Pennsylvania. All motions were denied by the District Court.*fn3 This case is now presented to us on the cross appeals of both Rhoades and United.
Rhoades' motion either to alter or amend the judgment or for a new trial as to damages is its reaction to what it considered a grossly insufficient verdict of $7,500. The merit in its position rests on the disposition of two issues:
(1) Whether United's counsel, in the course of conducting the trial, made a binding admission that if United were to be found not to have successfully limited its liability, then a verdict in favor of Rhoades for $15,750 should be rendered?
(2) Whether both United's and Pennsylvania's failure to controvert Rhoades' evidence of value limited the jury to a finding of the value of the ...