Grace v. Louisville & N.R. Co.

• Decision Date: 21 September 1935
• Citation: 89 S.W.2d 354,19 Tenn.App. 382
• Parties: GRACE v. LOUISVILLE & N. R. CO.
• Court: Tennessee Court of Appeals

89 S.W.2d 354

19 Tenn.App. 382

GRACE v. LOUISVILLE & N. R. CO.

Court of Appeals of Tennessee, Middle Section.

September 21, 1935

Certiorari Denied By Supreme Court Jan. 11, 1936.

Appeal in Error from Circuit Court, Davidson County; Richard P Dews, Judge.

Action by B. R. Grace against the Louisville & Nashville Railroad Company. To review a judgment of dismissal, plaintiff brings error.

Affirmed.

Joseph Higgins and A. V. McLane, both of Nashville, C. C. Jackson of Murfreesboro, and P.J. Anderson, of Gainesboro, for plaintiff in error.

Albert Stockell and J. E. Travis, both of Nashville, for defendant in error.

DE WITT, Judge.

The plaintiff was struck and injured by a truck owned by the Lassley-Bass Transfer Company and operated by its servant while the plaintiff was walking across Third Avenue South, in the city of Nashville. This action was brought by him against the Louisville & Nashville Railroad Company for damages for negligence of the driver upon the theory that the Lassley-Bass Transfer Company was at the time of the accident acting as an agent of the railroad company and engaged as such in its business. Upon the trial, at the close of the evidence offered by the plaintiff, the trial judge sustained the defendant's motion for peremptory instructions and dismissed the suit, upon the ground that the only conclusion to be drawn from the evidence was that the Lassley-Bass Transfer Company was an independent contractor. The sole question here presented is whether or not this was error.

Seeking to enlarge its shipping facilities, the railroad company had inaugurated a system of receiving from or delivering to its shippers their outgoing and incoming freight at their places of business. This is termed "pick-up and delivery service." For this purpose the railroad company entered into contracts with all of the transfer companies in Nashville, whereby each was subject to call for such service during a week or other period exclusively of the others during the year. During the week in which plaintiff was hurt the Lassley-Bass Transfer Company did all of the "pick-up and delivery service" for the railroad company when called upon and did no work for others, although at other times it was generally engaged in a transfer business. The accident occurred while the truck was being driven, and occupied alone by a servant of its owner, for the purpose of obtaining goods from a shipper, to be carried to the railroad company's freight house, pursuant to a call from its freight clerk.

Under its contract the Lassley-Bass Transfer Company provided the servants and truck and operated it without direction, or provision for direction of operation, by the carrier. It collected the freight charges, gave receipts therefor, accounted for the moneys, and delivered to the carrier the freight bills and orders. It was an insurer of the freight while in its possession. It covenanted to protect, save harmless, and indemnify the carrier from and against all loss, damages, costs, and expenses that might be suffered by the carrier, or any other persons, on account of injury to or death of persons, loss or destruction of or damage or delay to property, caused by negligence of the transfer company's employees, in performing or failing to perform its duties under the contract, issuance of any fraudulent bills of lading or giving of false receipts by its agents, failure to make collections and remittances, theft, embezzlement, or defalcation on the part of the transfer company or its agents. The carrier was authorized to procure and keep in full force for the carrier's protection public liability and property damage insurance on all of the transfer company's vehicles used by it in transporting freight under the agreement; and also insurance for the carrier's protection against loss, damage, or delay of freight, or on account of issuance of any fraudulent bills of lading or receipts for freight--all premiums for such insurance to be paid by the transfer company by deductions from its compensation. For its services the compensation of the transfer company was fixed at 7 1/2 cents per one hundred pounds of freight handled by it to or from the carrier's depot. It was expressly stipulated that it was the intention of the parties that the transfer company would be and remain an independent contractor and that nothing therein contained should be construed inconsistently with that status; and that the transfer company would not display the name or any advertisement of the carrier upon any of its vehicles. The contract was to be in force for one year and thereafter until terminated by either party on thirty days' written notice to the other party; and the carrier reserved the right to terminate the contract for inability of the transfer company to procure the insurance or keep it in force, or for unsatisfactory service, or because of modification or abrogation of the contract by any order of a federal or state commission or decree of court, or for act of the transfer company in picking up or delivering freight for any carrier operating on any highway in competition with rail transportation service of carriers, or engaging itself in such transportation of freight in such competition.

The first contentions made in behalf of the plaintiff are: (a) That the railroad company merely extended its franchises and operations when it began the practice of gathering freight by sending to the premises of shippers; (b) that it was in the exercise of a power confided to it alone by the Legislature and nondelegable; (c) that it cannot escape responsibility for the acts of any instrumentality which it may use under its charter and legal privileges; (d) that it adopted this method of gathering freight and followed it for profit and by virtue of its corporate purposes and essentially as an extension of its granted right to act as a common carrier; and (e) that the truck driver was on a mission having a direct connection with the railroad company and was the agent through whom that company had chosen to augment its revenues. As the basis of these contentions, the rule is invoked that a public or quasi-public corporation cannot farm out its franchises. It is said by counsel: "Nor can it escape responsibility for injuries inflicted upon the public while contracting through an instrumentality that pro hac vice was a direct emanation from that corporation's right to pick up freight and to exercise its functions upon the streets of Nashville. The law will not tolerate the use of that convenient device known as an independent contractor-ship. Railroads are not permitted to carry on their corporate business in any way without that wholesome accompaniment of responsibility for damages inflicted by those agencies."

It is true that a railroad company cannot delegate the exercise of its franchise to individuals or others not authorized by law to carry on such business. Briggs v. Clawson Brothers, 8 Tenn.App. 251; State v. McMinnville & M. Railroad, 6 Lea, 369, 370; McMinnville & M. Railroad v. Huggins and Price, 3 Baxt. 177. This nondelegable privilege involves duties which the railroad company owes directly to its shippers and passengers, but do these duties extend to the public at large, so that the railroad company cannot contract with another for the extension of its service without liability to others than its patrons?

We have no doubt that the contract herein involved was within the power of the railroad company to make.

It did not provide for any extension of the line of its railroad but a mere service of transportation. Therefore it did not violate the prohibitions of the Interstate Commerce Act § 1, par. 18, 49 U.S.C.A. § 1(18), against an extension of a line of railroad without a certificate of convenience and necessity from the Interstate Commerce Commission. This distinction is clearly demonstrated in the opinion of the United States Circuit Court of Appeals, Third Circuit, in New York Dock Railway v. Pa. R. Co., reported in 62 F.(2d) 1010. The service of "store door delivery and receipt of freight," as sometimes termed, is there described as "accessorial terminal service." That case involved such service by trucks of the railroad companies themselves, but the aforesaid distinction is apposite to the case before us. The contract in question was made by the carrier for extension of its service to shippers, and in order that it might meet the competition of motortrucks operating over the public highways. In New York Dock Ry. v. Pa. R. Co., supra, such service by a railway carrier with its own trucks was held to be within its power. It was consistent with its purposes and promotive of its authorized business. What the carrier could thus do with its own trucks it certainly could do with trucks of others engaged for that purpose. It is analogous to a contract made by a railway company with a sleeping car company for furnishing special accommodations to passengers. The principle applies to contracts for use of facilities in aid of transportation as distinguished from abandonment of charter rights and privileges. Pullman's Palace-Car Co. v. Mo. Pac. Railway Co., 115 U.S. 587, 6 S.Ct. 194, 29 L.Ed. 499 (as to power to contract with Pullman Company); Smith v. L. & N. R. R. Co., 131 Tenn. 531, 175 S.W. 557, L.R.A. 1916A, 1107 (as to power to contract with a stockyards company for deliveries of all stock at such company's yards); Express Cases (Memphis & L. R. R. Co. v. Southern Exp. Co.), 117 U.S. 1, 6 S.Ct. 542, 554, 29 L.Ed. 791 (as to power to contract with express companies). In the last-mentioned case it was said:

"So long as the public are served to their reasonable satisfaction, it is a matter of no importance who serves them. The railroad company performs its whole

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