Abel Holding Co., Inc. v. American Dist. Tel. Co.

• Decision Date: 04 February 1977
• Citation: 371 A.2d 111,147 N.J.Super. 263
• Parties: ABEL HOLDING COMPANY, INC., Plaintiff-Respondent, v. AMERICAN DISTRICT TELEGRAPH COMPANY and Crinnell Company, Defendants, and New Jersey Bell Telephone Company, Defendant-Appellant. ABEL HOLDING COMPANY, INC., Plaintiff-Appellant, v. AMERICAN DISTRICT TELEGRAPH COMPANY, et al., Defendants-Respondents.
• Court: New Jersey Superior Court — Appellate Division

Page 263

147 N.J.Super. 263

371 A.2d 111

ABEL HOLDING COMPANY, INC., Plaintiff-Respondent, v. AMERICAN DISTRICT TELEGRAPH COMPANY and Crinnell Company, Defendants, and New Jersey Bell Telephone Company, Defendant-Appellant.

ABEL HOLDING COMPANY, INC., Plaintiff-Appellant, v. AMERICAN DISTRICT TELEGRAPH COMPANY, et al., Defendants-Respondents.

Superior Court of New Jersey Appellate Division.

Argued Dec. 13, 1976.

Reargued Jan. 10, 1977.

Decided Feb. 4, 1977.

James L. Cooper, Atlantic City, for N.J. Bell Tel. Co. (Cooper, Perskie, Katzman, April, Niedelman & Wagenheim, Atlantic City, attorneys; Lewis B. April, Atlantic City, of counsel and on the brief; Mary M. Reiss, Atlantic City, on the brief).

Franklin Sachs, Newark, for Abel Holding Co., Inc. (Podvey & Sachs, Newark, attorneys; Henry J. Catenacci, Newark, on the brief).

Burtis W. Horner, Newark, for American Dist. Tel. Co. (Stryker, Tams & Dill, Newark, attorneys; Stephen D. Cuyler, Newark, on the brief).

Cole, Koury, Cole & Tighe, Atlantic City, for Grinnell Co., Inc., did not participate in the appeal.

Before Judges BISCHOFF, MORGAN and RIZZI.

PER CURIAM:

Plaintiff Abel Holding Company (Abel) filed a complaint April 6, 1972 seeking recovery for property damage and loss of profits sustained when a fire occurring December 27, 1969 extensively damaged an amusement center known as 'Steel Pier' in Atlantic City.

Defendants are the American District Telegraph Company (ADT), New Jersey Bell Telephone Company (Bell), and Grinnell Company, Inc. (Grinnell).

Following extensive discovery, a pretrial conference was held. Thereafter various motions for summary judgment, dismissal and other relief were argued by the parties. In ruling on these motions the trial judge filed an opinion, reported at 138 N.J.Super. 137, 350 A.2d 292 (Law Div.1975). Additional motions were argued before the same judge thereafter and disposed of in an unreported opinion dated March 3, 1976. The court's rulings on all motions were incorporated in an order dated April 27, 1976. Abel and Bell both appeal, pursuant to leave granted, from portions of that order.

The reported opinion sets forth in detail the relationship of the parties as well as the factual and legal theories relied upon by both plaintiff and defendants, and they will not be restated here. It is sufficient for our present purposes to note the following facts.

Plaintiff, the owner of the fire-damaged amusement pier, contracted in 1955 with ADT for the installation of a fire alarm system. The contract between the parties was on a printed form and was renewed periodically. The last executed contract, in effect at the time of the fire, was dated May 15, 1969. The alarm system installed by ADT was connected to the fire department by telephone lines owned by Bell. It is alleged that when the fire occurred the alarm system failed to work as a result of a defect in the alarm system and in the telephone line connections.

We consider, first, the issues raised by plaintiff's appeal.

I

The contract between Abel and ADT contained a provision limiting the liability of ADT to the greater of 10% Of the annual service charge or $250. (This clause is set out in full in the reported opinion, 138 N.J.Super. at 144, 350 A.2d 292.)

ADT moved for an order limiting plaintiff's recovery to 10% Of the annual service charge or $250, whichever is greater. The motion was granted and plaintiff appeals.

We affirm the action of the trial judge in limiting the liability of ADT, essentially for the reasons expressed in the reported opinion at 145 to 154, 350 A.2d 292.

II

Plaintiff moved for summary judgment on the issue of liability against both defendants Bell and ADT, and appeals from the denial of both motions.

We affirm the denial, substantially for the reasons expressed by the trial judge in both the reported opinion and the unreported letter opinion.

We turn to a consideration of the issues raised by Bell's appeal.

III

Bell first contends that the tariffs which it is required to file with the PUC have the force of law and that they completely define the duty owed by Bell to all persons, including plaintiff, even though plaintiff is not a customer or party to the service contract existing between Bell and ADT. Bell argues that the filed tariffs, when properly interpreted and applied, limit the liability of Bell to plaintiff insofar as plaintiff's action against Bell is based on negligence, breach of warranty and strict liability in tort.

Public utilities are required by statute (N.J.S.A. 48:2--21) and regulations promulgated thereunder (Administrative Order 14:280, now N.J.A.C. 14:11--7.1 Et seq.) to file tariffs setting forth complete schedules and charges for all classifications of service provided. Pursuant to this requirement Bell filed a tariff which provided in part:

In view of the fact that the customer has exclusive control of his communications over the facilities furnished him by the Telephone Company and of the other uses for which facilities may be furnished him by the Telephone Company, and because of unavoidableness of errors incident to the services and to the use of such facilities of the Telephone Company are subject to the terms, conditions and limitations herein specified.

The liability of the Telephone Company for damages arising out of mistakes, omissions, interruptions, delays or errors or defects in transmission, occurring in the course of furnishing service, channels, directory listings, for which a specific charge is made, or other facilities and not caused by negligence of the customer or of the Telephone Company in failing to maintain proper standards of maintenance, operation and practices and to exercise reasonable supervision, shall in no event exceed an amount equivalent to the proportionate charge to the customer for the period of service during which such mistake, omission, interruption, delay, or error or defect in transmission occurs. The guarantee in connection with semi-public service shall also be suspended for the time during which such interruption continues.

Bell argues that this tariff, and the limitation of liability clause contained therein, is binding alike on the customer and third parties.

A tariff was recently defined in the case of In re Application of Saddle River, 71 N.J. 14, 362 A.2d 552 (1976), as follows:

A tariff is a published schedule of rates, filed by a public utility, and thereafter, in the absence of successful challenge, applicable equally to all customers. Its application may or may not have been preceded by a rate-making hearing. As our Appellate Division has recently pointed out, such a tariff is not a mere contract. It is the law, and its provisions are binding on a customer whether he knows of them or not. Essex County Welfare Board v. New Jersey Bell Telephone Co., 126 N.J.Super. 417, 421--22, 315 A.2d 40 (App.Div.1974). (at 29, 362 A.2d at 560)

Limitation of liability clauses contained in filed tariffs have been upheld in various jurisdictions. Most often such cases involve claims based upon injuries due to allegedly negligent omission of plaintiff's name and number from the phone directory (see, E.g., McTighe v. New England Tel. & Tel. Co., 216 F.2d 26 (2 Cir. 1954); Bird v. Chesapeake and Potomac Tel. Co., 185 A.2d 917 (D.C.App.1962); see also, cases collected in Annotation, 92 A.L.R.2d 917, § 9 (1963)), or for failure to provide adequate phone service (see, E.g. Waters v. Pacific Tel. Co., 12 Cal.3d 1, 114 Cal.Rptr. 753, 523 P.2d 1161 (Sup.Ct.1974); Holman v. Southwestern Bell Tel. Co., 358 F.Supp. 727 (D.Kan.1973); Wheeler Stuckey, Inc. v. Southwestern Bell Tel. Co., 279 F.Supp. 712 (W.D.Okla.1967)). However, these cases involve disputes between the utility and the customer. Counsel has not referred us to any case where a clause in a filed tariff, limiting liability, was held binding upon a stranger to the relationship between the utility and the customer, and our own research has failed to disclose any.

There is no express statement in Bell's filed tariff indicating that it was intended to bind third parties. In the absence of an express statement limiting liability, clauses or provisions in contracts purporting to limit liability are strictly construed. Midland Carpet Corp. v. Franklin Associated Properties, 90 N.J.Super. 42, 46, 216 A.2d 231 (App.Div.1966). The same general principle should be applicable to filed tariffs so that where, as here, the plain language of the limitation of liability clause does not specifically apply to the situation involved, it will not be construed or applied so as to limit the right of one not a party to the contract to recover against one who is a party to the contract for the latter's tortious conduct. Carbone v. Cortlandt Realty Corp., 58 N.J. 366, 368, 277 A.2d 542 (1971); Horelick v. Pennsylvania R. Co., 13 N.J. 349, 358, 99 A.2d 652 (1953).

Moreover, Bell's contention that we should give full force and effect to the limitation of liability clause contained in the filed tariff against plaintiff conflicts with the general principle that

(W)here a party to the agreement is under a public duty entailing the exercise of care, he may not relieve himself of liability for negligence through an exculpatory clause; illustrative are common carriers, Public utilities, and the like. See Horelick v. Pennsylvania R. Co., 13 N.J. 349, 357, 99 A.2d 652 (1953); 6A Corbin, Contracts, § 1472 (1962); Cf. McCarthy v. National Association for Stock Car Auto Racing, Inc., 48 N.J. 539, 226 A.2d 713 (1967). (Mayfair Fabrics v. Henley, 48 N.J. 483, 226 A.2d 602 (1967))

Still another and more cogent reason exists for denying Bell's motion seeking an order limiting its liability to plaintiff under the filed tariffs. The filed tariff expressly conditions the effectiveness of the limitation of liability clause to situations 'not caused by negligence of * * * the telephone company in failing to maintain proper standards of maintenance,...