In September 1947, the plaintiff-appellee (hereinafter Flanzbaum), delivered to one Ezra Klein, doing business as Terminal Trucking Company (hereinafter Klein), 986 war-surplus Reading automobile storage batteries to be repacked and stored in Klein's warehouse in New York City. Having entered into an agreement with an auto supplies dealer in Cranston, Rhode Island, to deliver 744 of the batteries there, Flanzbaum requested Klein to make arrangements whereby they could be shipped to Cranston. Klein had not handled interstate shipments and had no license from the Interstate Commerce Commission to transport interstate, so he hired the defendant-appellant (hereinafter M & M) to carry the batteries to Rhode Island. A form straight bill of lading was borrowed from the Baltimore & Ohio Railroad, and it was filled out by Klein on October 31, 1947, with Klein named as the carrier, Flanzbaum as consignor, and the Rhode Island purchaser as consignee. The batteries were transported by M & M and arrived in Cranston in damaged condition; they were rejected by the consignee.

Flanzbaum in 1948 sued Klein in the United States District Court for the Eastern District of New York to recover $4,719, the alleged difference between the contract price with the Rhode Island buyer and the price at which some of the damaged batteries were sold. Jurisdiction was based on diversity of citizenship, Flanzbaum being a citizen of New Jersey and Klein a citizen of New York.

It was not until the case was noticed for trial in 1953 that Klein moved to implead M & M as a third-party defendant. Leave having been granted, the third-party complaint was served on M & M on December 28, 1953. M & M moved to dismiss the third-party complaint, and, on March 16, 1954, Judge Abruzzo dismissed it on the ground that Klein was barred by 'gross laches' and the statute of limitations from asserting the claim. No appeal was taken from this order.

The case then proceeded to trial before Judge Galston, sitting without a jury, and in a judgment entered on June 16, 1955, the court held Klein liable on its bill of lading for the damage to the batteries plus interest and cost, amounting in all to $6,902.62.

Execution against Klein was returned unsatisfied, however, and Flanzbaum then petitioned in the New York State Supreme Court, Queens County, for leave to sue M & M as a debtor of his judgment debtor under 687-a, subd. 6, of the New York Civil Practice Act. Flanzbaum claimed that M & M was liable to Klein under 49 U.S.C.A. 20(12) (the Carmack Amendment), alleging that the batteris were damaged while in the custody of M & M. The petition was denied on the ground that the earlier dismissal of the third-party complaint by Judge Abruzzo was res judicata and exonerated M & M from liability. On appeal to the Appellate Division for the Second Judicial Department, the decision was reversed. Flanzbaum v. Klein, 3 A.D.2d 749, 160 N.Y.S.2d 169. The Appellate Division held that the action was not barred since it said that the earlier complaint against M & M was brought under 49 U.S.C.A. 20(11), which the present claim was based on 49 U.S.C.A. 20(12).

Flanzbaum then began his action against M & M in the New York State Supreme Court, Queens County, and M & M, as a Massachusetts citizen, removed the action to the United States District Court for the Eastern District of New York. After M & M's motion for summary judgment and Flanzbaum's motion to strike the affirmative defenses and enter summary judgment were denied by Judge Abruzzo, the case went to trial before Judge Bruchhausen. Before hearing any evidence, the trial judge granted the motion to strike M & M's affirmative defenses on the ground that the Appellate Division, in passing on Flanzbaum's petition for leave to sue M & M under 687-a, subd. 6, 'necessarily rejected the defenses,' and that determination was the law of the case and binding on the district court. He thereupon entered judgment for the plaintiff in the amount of the damages awarded by Judge Galston in the earlier case, and, under the authority of 49 U.S.C.A. 20(12), added $1,250 as reasonable counsel fees incurred by Klein in its defense of the earlier action, as well as interest and costs, for a total recovery of $10,502.84. M & M then appealed to this court. We think that the district court erred in holding that the New York court had determined the issue of M & M's liability.

All that the Appellate Division held was that Flanzbaum could sue M & M. As we understand 687-a, subd. 6, which is set forth in the margin,1 that provision does no more than authorize suit when there is probable cause to believe that the party on whom execution is levied is a debtor of or otherwise liable to the plaintiff's judgment debtor. The closing sentence of the subsection indicates that, on the subsequent trial, judgment may be in favor of the defendant; it is clear that the court does not determine liability upon the preliminary application under 687-a, subd. 6. See 1952 New York Law Revision Comm'n Report 357, 365. Moreover, if the court on a 687-a, subd. 6, proceeding must decide whether or not the party upon whose property execution has been levied is liable to the judgment debtor, there is no reason at all for any later suit. Finally, a New York court has held in Fred W. Kellerman, Inc. v. Dale Park Homes, Inc., Sup.1956, 3 Misc. 2d 968, 155 N.Y.S.2d 814, that parties who are indispensable with regard to the issue of the defendant's liability to the judgment debtor need not be given notice of a proceeding under 687-a, subd. 6. If the court were indeed finally to determine liability at that point, all indispensable parties would certainly have to be given notice and an opportunity to be heard. We hold, therefore, that the question of M & M's liability was not passed upon in the Appellate Division's decision which held merely that Flanzbaum was not barred by res judicata and that there was probable cause to believe that M & M's liability would be established in further proceedings.

M & M contends further that the complaint should be dismissed as a matter of law on the ground that no liability on the part of M & M can here exist under the Carmack Amendment. 49 U.S.C.A. 20(12) provides:

'The common carrier, railroad, or transportation company issuing such receipt or bill of lading, or delivering such property so received and transported, shall be entitled to recover from the common carrier, railroad, or transportation company on whose line the loss, damage, or injury shall have been sustained, the amount of such loss, damage, or injury as it may be required to pay to the owners of such property, as may be evidenced by any receipt, judgment, or transcript thereof, and the amount of any expenses reasonably incurred by it in defending any action at law brought by the owners of such property.'

'Such receipt' refers to the receipt provided for in 20(11), which must be issued by any carrier 'subject to the provisions of this chapter.' M & M maintains that Klein, not being a motor carrier engaged in interstate commerce within the definitions of 49 U.S.C. 303(a)(14), (15), or (17), could not issue the bill of lading prescribed by 20(11), and therefore could not have been held liable under that section or be entitled to indemnification under 20(12).

Upon the papers before the district judge and before us, however, we cannot say whether Klein did or did not come within the definitions prescribed by 303(a)(14), (15), or (17). In order to carry out the broad remedial purposes of the Motor Carrier Act and of the Carmack Amendment, these definition should be liberally construed so as to affect nearly all interstate shipments even if the initial carrier does not cross a state line. Earle v. Brinks, D.C.S.D.N.Y.1943, 54 F. Supp. 676. We do not now decide whether Klein could recover against M & M under 49 U.S.C.A. 20(12), since this issue hinges on a more thorough examination of the facts than was permitted in the proceedings below. Nor do we now decide whether the earlier action brought by Flanzbaum against Klein was brought under 49 U.S.C.A. 20(11), or whether, if its claim was not then based on the Carmack Amendment, a suit may now be brought under 20(12).

We do, however, hold that the district judge erred in deciding that M & M was bound by Judge Galston's findings of fact in the earlier suit by Flanzbaum against Klein. The complaint which sought to bring in M & M as a party was dismissed. Not having been a party to the earlier action, M & M is not bound by any adjudication made therein. Liberty Mutual Insurance Co. v. George Colon & Co., 1932, 260 N.Y. 305, 183 N.E. 506. Nor is there any merit to Flanzbaum's contention that M & M is bound because it was vouched in to the earlier action. It is only if proof of the same facts which established Flanzbaum's cause of action and entitled him to relief against Klein would also establish Klein's right to indemnification from M & M that M & M could be bound because it was vouched in to the earlier suit. See Municipal Service Real Estate Co. v. D.B. & M. Holding Corp., 1931, 257 N.Y. 423, 427, 178 N.E. 745, 78 A.L.R. 323. But Klein was held liable because the damaged condition of the batteries as delivered violated its obligation under the bill of lading. The finding that the damage occurred while the batteries were in the custody of M & M was a necessary condition for the obligation to indemnify, but it need not have been made to establish Klein's liability. M & M should be given an opportunity to contest this allegation in a suit to which it is properly made a party.

The judgment below is reversed and the case remanded for further proceedings.