Western Union Telegraph Company v. Commercial Milling Company

• Decision Date: 28 November 1910
• Docket Number: No. 15,15
• Citation: 31 S.Ct. 59,54 L.Ed. 1088,218 U.S. 406,21 Ann. Cas. 815
• Parties: WESTERN UNION TELEGRAPH COMPANY, Plff. in Err., v. COMMERCIAL MILLING COMPANY
• Court: U.S. Supreme Court

218 U.S. 406

31 S.Ct. 59

54 L.Ed. 1088

WESTERN UNION TELEGRAPH COMPANY, Plff. in Err.,

v COMMERCIAL MILLING COMPANY.

No. 15.

Argued October 26, 1901.

Decided November 28, 1910.

This is an action for damages for failure to deliver a telegram given to the telegraph company at Detroit, Michigan, to be delivered at Kansas City, Missouri.

On the 15th of August, 1904, the milling company was offered 10,000 bushels of wheat, of a certain kind, at $1.01 a bushel, for immediate acceptance. The telegram in controversy was sent to accept the offer. It was promptly transmitted by the company to its relay station at Chicago within a minute or two after it was filed at Detroit. What became of it afterwards is not shown; it was not delivered. On the face of the telegram were the following words: 'Send the following message, without repeating, subject to the terms and conditions printed on the back hereof, which are hereby agreed to.' One of the conditions referred to was this: 'It is agreed . . . that the said company shall not be liable . . . for nondelivery of any unrepeated messages beyond the amount received for the same.' Fifty times the amount received for the message was fixed as the damages for nondelivery in case of its repetition, and there was a provision for insurance upon the payment of a premium.

The case was tried to a jury, and the milling company gave evidence of the above facts and of its damages. The telegraph company offered no evidence. The telegraph company asked certain instructions, which to understand, the statute of the state in regard to telegrams must be given. It is entitled, 'An Act to Prescribe the Duties of Telegraph Companies Incorporated, Whether within or without This State, Relative to the Transmission of Messages, and to Provide for the Recovery of Damages for Negligence in the Nonperformance of Such Duties.' [Act 195, Pub. Acts 1893.] Section 1 of the act provides as follows:

'Sec. 1. The people of the state of Michigan enact that it shall be the duty of all telegraph companies incorporated either within or without this state, doing business within this state, to receive despatches from and for other telegraph companies' lines, and from and for any individual, and on payment of the usual charges for individuals for transmitting despatches, as established by the rules and regulations of such telegraph company, to transmit the same with impartiality and in good faith. Such telegraph companies shall be liable for any mistakes, errors, or delays in the transmission or delivery, or for the nondelivery of any repeated or nonrepeated message, in damages to the amount which such person or persons may sustain by reason of the mistakes, errors, or delays in the transmission or delivery, due to the negligence of said company; or for the nondelivery of any such despatch, due to the negligence of such telegraph company or its agents, to be recovered with the costs of suit by the person or persons sustaining such damage.'

As to the statute, the telegraph company requested the court to instruct the jury (1) that it did not prohibit a contract like the one made by the parties; (2) the milling company must recover on the contract or not at all; (3) the message was interstate commerce and the statute cannot be held to apply to it. If the statute be held to be prohibitory, it is void as an attempted regulation of interstate commerce, in violation of the interstate commerce clause of the Constitution of the United States.

The court refused the instructions, and expressed in its charge to the jury a view antagonistic to the propositions of law expressed in them. A verdict was rendered for the milling company in the sum of $960. The telegraph company moved for a new trial, repeating the propositions expressed in the instructions, and added the further ground that the statute, when construed as prohibiting contracts between persons sui juris, is in violation of the 14th Amendment to the Constitution of the United States. Judgment was entered on the verdict, which was affirmed by the supreme court of the state by a divided court.

Messrs. Rush Taggart, C. D. Joslyn, George H. Fearons, and Henry D. Estabrook for plaintiff in error.

[Argument of Counsel from pages 409-411 intentionally omitted] Mr. Ralph B. Wilkinson for defendant in error.

[Argument of Counsel from pages 411-413 intentionally omitted] Mr. Justice McKenna, after stating the case as above, delivered the opinion of the court:

Intercourse between the states by the telegraph is interstate commerce. Western U. Teleg. Co. v. Texas, 105 U. S. 460, 464, 26 L. ed. 1067, 1068; Western U. Teleg. Co. v. Pendleton, 122 U. S. 347, 356, 30 L. ed. 1187, 1188, 1 Inters. Com. Rep. 306, 7 Sup. Ct. Rep. 1126. So considering, one division of the supreme court of Michigan was of the opinion that the statute of the state in regard to telegraph messages, if not limited to those which were delivered within the state, would be unconstitutional. In arriving at that conclusion it was considered whether the common law of the state prohibited the stipulation against liability for negligence, and it was asked, if it did not, 'can a statute of a state deny to one engaged in interstate commerce the right which he theretofore possessed of making a contract limiting his lia- bility?' The first question was answered in the negative, on the authority of the Western U. Teleg. Co. v. Carew, 15 Mich. 525, and subsequent cases. The second question was also answered in the negative, as we have seen. It was, in effect, said that if the first question could be answered in the affirmative, the case would be determined by the local law, and there would be no power of revision in this court, citing Delmas v. Merchants' Mut. Ins. Co. 14 Wall. 661, 20 L. ed. 757, and Pennsylvania R. Co. v. Hughes, 191 U. S. 477, 48 L. ed. 268, 24 Sup. Ct. Rep. 132. This presents the seeming paradox that a prohibition against a limitation of liability, if prescribed by the common law, would be valid, and that a like prohibition prescribed by a statute would not be. It is not clear whether it is meant to be said that in the first instance there would be, and in the second instance there would not be, a proper limitation of the liberty of contract and a valid interference with interstate commerce.

The other division of the court, on the other hand, expressed the view that 'the legislature intended its action to be coextensive with its authority to act, and that the statute should be given the broadest possible application,' and held to cover state and interstate messages, and 'to forbid a limitation of liability' for negligence, and 'to make void the stipulation contained in the contract.' The power of the legislature to pass it was asserted, and that it did not burden interstate commerce. 'The contract,' it was said, 'was made in the state, is single, involves in its performance service of defendant within and without this state for a single charge.' The service was not performed, and for the breach of the common-law and contract duty the milling company has brought suit, it was said, and that the telegraph company seeks to avoid liability by the stipulation on the back of the message. To this defense it was answered:

'By the law of the state, the stipulation is of no force or effect. The court so declared. It is contended here that in so doing the court was in error. It will be well to have in mind the effect of the statute as it was applied by the trial court. Undoubtedly, it was the application of a local law to the contract. But the local law does not attempt to state, measure, or define any duty of defendant, or to establish, define, or fix the consequences of its miscarriage. The liability of defendant is established without reference to the statute. It is when it asks to be discharged therefrom, by giving effect to the stipulation, that the local law becomes, if at all, effective. These considerations answer those objections which are based upon the notion that the local law has been given extraterritorial effect, and they require, also, that this case and Western U. Teleg. Co. v. Pendleton, 122 U. S. 347, 30 L. ed. 1187, 1 Inters. Com. Rep. 306, 7 Sup. Ct. Rep. 1126, shall be distinguished.'

Western U. Teleg. Co. v. Pendleton leaves nothing to be said upon the principles relating to interstate telegraphic messages and the limitations upon the states of power to regulate them. A statute of Indiana was adjudged invalid which prescribed that despatches should be transmitted in the order of their delivery, whether intended for delivery within or without the state, 'under penalty, in case of failure to transmit, or if postponed out of such order, of $100, to be recovered by the person whose despatch is neglected or postponed.' The statute was construed by the supreme court of the state to apply to despatches not delivered in the state, even against the practice of the companies, authorized by the laws of another state. The message was delivered to the telegraph company in Indiana, addressed to the care of a person in Ottumwa, Iowa, who lived over a mile from the telegraph station, and not within the delivery district. These facts were set up in the answer, and that, in accordance with the custom and usage of the office, and in order to facilitate the delivery of the message, a copy of the telegram was promptly placed in the postoffice, properly...