Adams Exp. Co. v. Darden

• Decision Date: 09 January 1923
• Docket Number: 3712.
• Citation: 286 F. 61
• Parties: ADAMS EXPRESS CO., v. DARDEN.
• Court: U.S. Court of Appeals — Sixth Circuit

286 F. 61

ADAMS EXPRESS CO., v. DARDEN.

No. 3712.

United States Court of Appeals, Sixth Circuit.

January 9, 1923

W. L Granbery, of Nashville, Tenn. (Maxwell & Ramsey, of Cincinnati, Ohio, and Bass & Sims, of Nashville, Ten., on the brief), for plaintiff in error.

K. T McConnico, of Nashville, Tenn. (Gordon & Laurent, of Louisville, Ky., John W. Gaines, Jr., and Pitts & McConnico all of Nashville, Tenn., on the brief), for defendant in error.

Before KNAPPEN, DENISON, and DONAHUE, Circuit Judges.

KNAPPEN Circuit Judge.

On July 7, 1915, while the Cummins Amendment to the Interstate Commerce Act (Comp. St. Sec. 8604a) was in force, defendant in error (whom we shall call plaintiff) delivered six horses to the Adams Express Company, at Latonia, Ky., for shipment to Windsor, Ontario. The horses were loaded in one end of a car furnished by the express company; the other end being occupied by seven horses owned severally by one Seamster and others. The rate charged by the express company was $165 for the car, one-half of which amount was paid by plaintiff and the other half by those who had the other end of the car. In the shipping contract, signed by Seamster, as 'owner or duly authorized agent of the owner' (plaintiff not being present), the horses were described as '13 running horses,' of a value (which the printed form of contract says was stated by the shipper) of $100 each. The classification minimum rates (as shown by the shipping contract) were stated therein as applicable only when the value of the carload of horses did not exceed $100 for each horse, accompanied by its paraphernalia (such as sulkies, harness, etc.), of a stated additional value. If the value of the shipment exceeded the value so stated, an additional charge for such excess, by way of percentage graduated according to first-class rates per 100 pounds, was provided for. The express company's agent knew that plaintiff's horses were valuable. The tariff rates, if based upon actual values, would greatly exceed those paid. Upon the trial, in response to the court's question whether it was insisted that there was 'any actual fraud or misrepresentation,' defendant's counsel said:

'No; not involving moral turpitude. We do not claim there was any deception. ' ^[1]

Soon after leaving latonia the car in question was wrecked, and five of plaintiff's horses were killed, by reason of the alleged negligence of the express company largely in providing for the shipment a wooden car alleged to have been old and rotten. On trial to a jury plaintiff recovered verdict and judgment for $32,500, as the value of his horses so killed. In this court the conclusion that such killing was proximately due to the negligence of the express company is not challenged-- defendant's sole ultimate contention on the merits being that the shipping contract was wholly void and unenforceable by plaintiff, because at involved the giving and acceptance of a rebate from defendant's usual tariff rates, in violation of the provisions of the Interstate Commerce Act.

The Carmack Amendment (Act June 26, 1906, c. 3591, 34 Stat. 595 (Comp. St. Secs. 8604a, 8604aa)), as construed by the Supreme Court, permitted an interstate carrier, by a fair, open, and reasonable agreement contained in the shipping contract or bill of lading, to limit the amount recoverable by the shipper to an agreed or conventional value, made for the purpose of obtaining the lower of two or more rates proportioned to the amount of the risk; it being held that such contracts did not contravene the settled principles of the common law preventing a carrier from contracting against its liability for loss by negligence. Adams Express Co. v. Croninger, 226 U.S. 491, 33 Sup.Ct. 148, 57 L.Ed. 314, 44 L.R.A. (N.S.) 257; Wells, Fargo & Co. v. Neiman-Marcus Co., 227 U.S. 469, 475, 33 Sup.Ct. 267, 57 L.Ed. 600; Pierce Co. v. Wells, Fargo & Co., 236 U.S. 278, 283, 35 Sup.Ct. 351, 59 L.Ed. 576. And until the passage of the Cummins Amendment (Act March 4, 1915, c. 176, 38 Stat. 1196) it was the lawfully established practice of interstate carriers to provide by their tariffs for limitation of the amount of liability corresponding to the rate paid. The Cummins Amendment, however, declared that the interstate carrier--

'shall be liable to the lawful holder of said receipt or bill of lading, or to any party entitled to recover thereon, whether such receipt or bill of lading has been issued or not, for the full actual loss, damage, or injury to such property caused by it * * * notwithstanding any limitation of liability or limitation of the amount of recovery, or representation or agreement as to value in any such receipt or bill of lading or in any contract, rule or regulation, or in any tariff filed with the Interstate Commerce Commission; and any such limitation, without respect to the manner or form in which it is sought to be made is hereby declared to be unlawful and void. ' ^[2]

Defendant properly concedes that the effect of the Cummins Amendment was to prohibit a limitation upon the amount of the carrier's liability in case it is liable at all (Chicago, etc., Ry. Co. v. McCaull-Dinsmore Co., 253 U.S. 97, 100, 40 Sup.Ct. 504, 64 L.Ed. 801; 33 Interst.Com.R. 682, 693), and that no such attempted limitation is found in the contract before us, which was made while the Cummins Amendment was in force. The situation as respects the contract in this case is not changed or affected by the second Cummins Amendment (Act Aug. 9, 1916, c. 301, 39 Stat. 441 (Comp. St. Sec. 8604a), passed more than a year after the making of the contract and shipment here in question) which second amendment excepts from the prohibition against limitation of liability 'property, except ordinary live stock, received for transportation, concerning which the carrier shall have been or shall hereafter be expressly authorized or required by order of the Interstate Commerce Commission to establish and maintain rates dependent upon the value declared in writing by the shipper or agreed upon in writing, as the released value of the property,' etc. As said by the Supreme Court in Chicago, etc., Ry. Co. v. McCaull-Dinsmore Co., supra, 253 U.S.at page 100, 40 Sup.Ct. 505, 64 L.Ed. 801 (in construing the clause of the Cummins Amendment which we have quoted, as applied to the basis and measure of recoverable damages for failure to deliver):

'Neither the convenience of the clause, nor any argument based upon the history of the statute or upon the policy of the later Act of August 9, 1916, c. 301, 39 Stat. 441, can prevail against what we understand to be the meaning of the words. ' ^[3]

It remains to consider whether the mere giving and receiving of rebate from the applicable tariff rate rendered the contract of shipment here in question void and unenforceable. Defendant's argument in that respect is briefly that such giving or acceptance of rebates was, by the act in force when the shipment was had, made unlawful, and subjected both the carrier and the shipper to penalty therefor, and that the case is therefore governed by the general rule that an illegal contract will not be enforced by the courts.

Whether or not the contract of shipment is nonenforceable depends upon the public policy of the United States in that respect, as evidenced by its statutes and the decisions of its courts. While the statute makes all rebating, and contracts therefor, unlawful and unenforceable, it is to be noted that, notwithstanding the fact that rebating has been forbidden for the past 35 years, and notwithstanding the numerous amendments of the original act, the statute has never declared the contract of carriage unenforceable by reason of rebating, or the carrier thereby absolved from liability for negligent failure to deliver. The statute in force when the shipment in question was made provided drastic remedies and penalties for rebating. Not only were both carrier and shipper made liable to criminal punishment, but the shipper was made liable to the United States for three times the amount of the rebate received or accepted. More than this, a carrier, at least when not in default, is entitled to recover from the shipper any deficiency of rates paid below the legal tariff rates. Congress presumably believed that public policy, evidenced by the statutes enacted, as has frequently been declared, in the interest of the shipping public, would be best subserved by holding the carrier liable for the value of the shipment lost or destroyed through its negligence, notwithstanding a violation of the provisions against rebating, for which specific penalties and remedies were otherwise provided.

It is now well settled that, when a statute imposes specific penalties for its violation, where the act is not malum in se, and the purpose of the statute can be accomplished without declaring contracts in violation thereof illegal, the inference is that it was not the legislative intent to render such contracts illegal and unenforceable. Harris v Runnels, 12 How. 79, 84, et seq., 13 L.Ed. 901; Farmers' & Mechanics' Nat. Bank v. Deering, 91 U.S. 29, 35, 23 L.Ed. 196; Fritts v. Palmer, 132 U.S. 282, 289, 293, 10 Sup.Ct. 93, 33 L.Ed. 317; Connolly v. Union Sewer Pipe Co., 184 U.S. 540, 545, 22 Sup.Ct. 431, 46 L.Ed. 679; Yates v. Jones National Bank, 206 U.S. 158, 179, 27 Sup.Ct. 638, 51 L.Ed. 1002; Dunlop v. Mercer (C.C.A. 8) 156 F. 545, 555, 86 C.C.A. 435. This rule is not in conflict with, but is an exception to, the general rule that an action cannot be maintained upon an...