F.A. Straus & Co. v. Canadian Pacific Ry. Co.

• Decision Date: 18 November 1930
• Citation: 173 N.E. 564,254 N.Y. 407
• Parties: F. A. STRAUS & CO., Inc., v. CANADIAN PAC. RY. CO.
• Court: New York Court of Appeals Court of Appeals

254 N.Y. 407

173 N.E. 564

F. A. STRAUS & CO., Inc.,

v.CANADIAN PAC. RY. CO.

Court of Appeals of New York.

Nov. 18, 1930.

Action by F. A. Straus & Company, Incorporated, against the Canadian Pacific Railway Company. From a judgment of the Supreme Court, Appellate Division (227 App. Div. 316, 238 N. Y. S. 50), which modified and affirmed as modified a judgment of the Trial Term (134 Misc. Rep. 439, 234 N. Y. S. 622) in favor of the plaintiff by reducing the same from $2,434.07 to $596.50, both parties appeal. The defendant appeals from so much of the judgment as affirmes the judgment, as reduced, in favor of the plaintiff, and the plaintiff appeals from so much of the judgment as reduces its recovery at the Trial Term.

Judgment of Appellate Division reversed in part, and judgment of Trial Term affirmed.Appeal from Supreme Court, Appellate Division, First Department.

Harold B. Elgar and Frank Rashap, both of New York City, for respondent-appellant.

Neil P. Cullom and James E. Freehill, both of New York City, for appellant-respondent.

HUBBS, J.

The defendant, a common carrier, undertook to carry, under a through bill of lading, a quantity of silk from Shanghai, China, via Vancouver, to New York City, consigned to order, notify F. A. Straus & Co., Inc. When the boat upon which the silk was shipped reached Vancouver, it was discovered that three bales of silk had been stolen from the silk room in which it had been placed at Shanghai. This is an action in conversion to recover the value of the silk stolen. The trial court submitted to the jury, without objection on the part of the defendant, the following issues:

First. Did the theft of the silk occur because of the defendant's negligence?

Second. Was the theft committed by the defendant's servants?

The jury found that the theft occurred because of the defendant's negligence and that the theft was committed by its servants.

The evidence presented a question of fact and the verdict of the jury was justified, provided the defendant is not exempt from liability under a provision of the bill of lading. United States ex rel. Matthews v. Massachusetts Bonding & Insurance Co., 238 N. Y. 334, 144 N. E. 631;Hasbrouck v. New York Cent. & H. R. R. Co., 202 N. Y. 363, 95 N. E. 808, 35 L. R. A. (N. S.) 537, Ann. Cas. 1912D, 1150; The Ghazee (C. C. A.) 172 F. 368.

The defendant contends that it is exempt from liability for theft by its servants or others or for negligence of persons in its employ, by reason of the provisions of clause EW-2 contained in the bill of lading, which reads: ‘The carrier shall not be responsible to any extent for any loss, damage or delay arising from or consequent upon * * * robbers, thieves of whatever kind, whether in the service of the carriers or not, pilferage * * * any act or omission, negligence, default or error in judgment of the carriers' pilot, master, officers, marines, engineers, crew, stevedores, lightermen, warehousemen, agents or other persons whomsoever in the service of the carriers or their agents, or for whom the carriers would otherwise have been responsible, whether on board the said ship,’ etc.

It has long been the rule in the federal courts that an agreement between a shipper and carrier which purports to absolutely exempt the carrier from liability for its negligence is void. The reasons for the rule have been stated to be that the effect of an exemptionfrom liability for negligence is to encourage a lack of care on the part of the carrier; that the shipper and carrier are not upon equal terms and the shipper is at the mercy of the carrier unless protected by the law; and that considerations of public policy require that the shipper be so protected. New York C. R. Co. v. Lockwood, 17 Wall. 357, 21 L. Ed. 627; The Kensington, 183 U. S. 263, 22 S. Ct. 102, 46 L. Ed. 190.

Early in the jurisprudence of this state it was decided that an agreement between a shipper and a common carrier exempting the carrier from liability for negligence was void as against public policy. Cole v. Goodwin & Story, 19 Wend. 251, 281, 32 Am. Dec. 470;Gould v. Hill, 2 Hill, 623. Later the courts changed their position and held that an agreement between a shipper and common carrier exempting the carrier from liability constituted a valid, enforceable contract. The contract was conceived to be a purely private one, in which the public had no concern and it was presumed that the carrier parted with a sufficient consideration for the exemption, and that any other rule would constitute ‘an unwarrantable restriction upon * * * commerce.’ Dorr v. New Jersey Steam Navigation Co., 11 N. Y. 485, 493,62 Am. Dec. 125;Nelson v. Hudson River R. Co., 48 N. Y. 498;Cragin v. New York Cent. R. Co., 51 N. Y. 61, 10 Am. Rep. 559.

Although the United States courts and the courts of most of the states adhered to the federal rule (see 10 C. J. 155, where the decisions in other jurisdictions are collated), the courts of this state continued to follow their early decisions, and enforced agreements exempting common carriers from liability for negligence. Kenney v. New York, Cent. & H. R. R. Co., 125 N. Y. 422, 425,26 N. E. 626, 627. There it is said: ‘The rule is firmly established in this state that a common carrier may contract for immunity from its negligence or that of its agents.’

While the early decisions in this state expressed the public policy of the state at the time, changed conditions have resulted in a change of the public policy of the state. The rule of freedom of contract, which reflected the public policy of the state in the days of the canal boat and stage coach, has ceased to be applicable under modern conditions. That fact has been recognized by the Legislature in various enactments. In 1911 the Legislature added to the Personal Property Law section 189 (Laws 1911, c. 248; Consol. Laws, c. 41), which reads:

‘A carrier may insert in a bill, issued by him, any other terms and conditions, provided that such terms and conditions shall not--

‘(a) Be contrary to law or public policy, or

‘(b) In any wise impair his obligation to exercise at least that degree of care in the transportation and safe-keeping of the goods entrusted to him which a reasonably careful man would exercise in regard to similar goods of his own.’

The section reads the same as section 3 of the Uniform Bills of Lading Act (4 U. L. A. p. 8).

The effect of that section is to prevent a common carrier from inserting in a bill of lading for an intrastate shipment a provision totally exempting it from liability for its negligence.

The Public Service Commission Law, § 38 (Laws 1913, c. 344; Consol. Laws, c. 48), provides that: ‘No contract, stipulation or clause in any receipt or bill of lading shall exempt or be held to exempt any common carrier * * * from any liability for loss,’ etc.

The General Business Law, § 91, subd. (i), Laws 1909, c. 25; Consol. Laws, c. 20, provides:

‘A warehouseman may insert in a receipt, issued by him, any other terms and conditions, provided that such terms and conditions shall not: * * *

‘(b) In any wise impair his obligation to exercise that degree of care in the safe-keeping of the goods intrusted to him which a reasonably careful man would exercise in regard to similar goods of his own.’

Section 331 of the Banking Law (Laws 1914, c. 369; Consol. Laws, c. 2) makes all provisions of law affecting warehousemen applicable to safe deposit companies.

By those various statutes the will of the Legislature has been clearly expressed to the effect that contracts which purport to totally exempt in the cases named from liability for negligence are against the public policy of the state and the early decisions, which expressed a different view and represented the public policy of the state when made, have been superseded. Public policy is necessarily variable. It changes with changing conditions. It is evidenced by the expression of the will of the Legislature contained in statutory enactments. Whatever the term may imply in other jurisdictions, in this state: ‘The courts have often found it necessary to define its juridical meaning, and have held that a state can have no public policy except what is to be found in its constitution and laws. * * * Therefore, when we speak of the public policy of the state, we mean the law of the state, whether found in the constitution,the statutes, or judicial records.’ People v. Hawkins, 157 N. Y. 1, at page 12,51 N. E. 257, 260, 42 L. R. A. 490, 68 Am. St. Rep. 736.

The power to determine what the policy of the law shall be rests with the Legislature within constitutional limitations, and when it has expressed its will and establisheda new policy, courts are required to give effect to such policy. South & Central American Commercial Co., Inc., v. Panama Railroad Co., 237 N. Y. 287, 291, 142 N. E. 666.

It is contended by the defendant that even though the law of this state prevents a common carrier from contracting for exemption from liability for negligence on an...