Hartford Fire Ins. Co. v. Chicago, M. & St. P. Ry. Co., 614.

• Decision Date: 07 October 1895
• Docket Number: 614.
• Citation: 70 F. 201
• Parties: HARTFORD FIRE INS. CO. et al. v. CHICAGO, M. & ST. P. RY. CO.
• Court: U.S. Court of Appeals — Eighth Circuit

70 F. 201

HARTFORD FIRE INS. CO. et al. v. CHICAGO, M. & ST. P. RY. CO.

No. 614.

United States Court of Appeals, Eighth Circuit.

October 7, 1895

On February 1, 1890, the Chicago, Milwaukee & St. Paul Railway Company, the defendant in error, leased to Simpson, McIntire & Co., a copartnership, certain portions of its depot grounds at Monticello, in the state of Iowa, 'upon the express condition that the said railway company, its successors and assigns, shall be exempt and released, and said parties of the second part (Simpson, McIntire & Co.), for themselves and for their heirs, executors, and administrators, and assigns, do hereby expressly release them, from all liability or damage by reason of any injury to or destruction of any building or buildings now on, or which may hereafter be placed on, said premises, or of the fixtures, appurtenances or other personal property remaining inside or outside of said buildings, by fire occasioned or originated by sparks or burning coal from the locomotives, or from any damage done by trains, or cars running off the track, or from the carelessness or negligence of employes or agents of said railway company. ' Simpson, McIntire & Co., had, or constructed, a cold-storage building and warehouse on the leased premises, stocked it with butter and eggs, and insured the buildings and stock with the Hartford Fire Insurance Company and seven other insurance companies, which are the plaintiffs in error, and the buildings and stock were burned. The insurance companies brought an action against the railway company in the court below, and alleged in their complaint that they had insured Simpson, McIntire & Co. against loss by fire on their cold-storage building, warehouse and stock that these were destroyed by a fire caused by the negligence of the railway company on November 11, 1892; that the insurance companies had paid Simpson, McIntire & Co. $23,450 on account of their loss by this fire; that they were thereby subrogated to the rights of Simpson, McIntire & Co. against the railway company, and were entitled to recover from it that amount with interest. The railway company answered this complaint, and one of the defenses it pleaded was the condition of the lease to Simpson, McIntire & Co., by which they exempted and released the railway company from all liability for damage to their buildings and stock caused by fire set by the railway company. The plaintiffs in error demurred to this defense on the ground that this stipulation of the lease was against public policy and void. Their demurrer was overruled, and judgment was rendered against them thereon. The writ of error in this case was sued out to reverse this judgment, and the ruling upon the demurrer is the error assigned.

Charles A. Clark and Richard W. Barger, for plaintiffs in error.

Charles B. Keeler, for defendant in error.

Before CALDWELL, SANBORN, and THAYER, Circuit Judges.

SANBORN Circuit Judge, after stating the facts as above, .

Is a condition, in a lease by a railway company of a portion of its right of way, that it shall not be liable to the lessee for any damage to any buildings or personal property thereon caused by fire set by its locomotives, or by the negligence of its officers or servants, in violation of public policy, and therefore void? This is the question in this case. The public policy of a state or nation must be determined by its constitution, laws, and judicial decisions; not by the varying opinions of laymen, lawyers, or judges as to the demands of the interests of the public. Vidal v. Girard's Ex'rs, 2 How. 127, 197; U.S. v. Trans-Missouri Freight Ass'n, 7 C.C.A. 15, 73, 58 F. 58; Swann v. Swann, 21 F. 299. If this was a question of local law, or of the public policy of the state of Iowa alone, it would require little consideration by this court. There are many provisions of the statutes of the state of Iowa relating to the duties of individuals and corporations to use care to prevent damage from fire. The two which bear most directly upon the question under consideration in this case are sections 1289 and 1308 of the Code of that state, which provide 'that any corporation operating a railway shall be liable for all damages by fire that is set out or caused by operating of any such railway' (McClain's Ann. Code Iowa 1888, Sec. 1972); and 'no contract, receipt, rule, or regulation, shall exempt any corporation engaged in transporting persons or property by railway from liability of a common carrier, or carrier of passengers, which would exist had no contract, receipt, rule, or regulation, been made or entered into' (Id. Sec. 2007). In Griswold v. Railroad Co. (Iowa) 57 N.W. 849, the supreme court of Iowa considered these statutes and the public policy of that state, and, after repeated argument and the most careful deliberation, held that a provision in a lease by a railway company of a portion of its right of way, on which the lessee had placed an elevator and warehouse and personal property, which exempted the railroad company from liability for damages by fire negligently communicated by its servants to these buildings and their contents, violated no law of that state, was not injurious to the public interests, and was not against public policy. This was the decision of the highest judicial tribunal of that state. It constitutes an authoritative construction of the statutes of the state (Dempsey v. Township of Oswego, 4 U.S.App. 416, 435, 2 C.C.A. 110, 51 F. 97; Rugan v. Sabin, 10 U.S.App. 519, 3 C.C.A. 578, 53 F. 415; Travelers' Insurance Co. v. Oswego Tp., 7 C.C.A. 669, 674, 59 F. 58; Madden v. Lancaster County, 12 C.C.A. 566, 570, 65 F. 188) and a very persuasive authority that the contract here in question is not contrary to public policy.

Upon the latter question, however, it is not conclusive upon the national courts. Whether or not such a provision of a contract is against public policy is a question of general law, and not dependent solely upon any local statute or usage. Over this question the national courts exercise concurrent jurisdiction with those of the state, and, while the decisions of the latter are always entitled to the weight of persuasive authority, the federal courts must in the end exercise their own judgment. Railroad Co. v. Lockwood, 17 Wall. 357, 368; Myrick v. Railroad Co., 107 U.S. 102, 1 Sup.Ct. 425; Carpenter v. Insurance Co., 16 Pet. 495, 511; Swift v. Tyson, 16 Pet. 1; Railroad Co. v. National Bank, 102 U.S. 14; Burgess v. Seligman, 107 U.S. 20, 33, 2 Sup.Ct. 10; Smith v. Alabama, 124 U.S. 465, 478, 8 Sup.Ct. 564; Bucher v. Railroad Co., 125 U.S. 555, 583, 8 Sup.Ct. 974; Liverpool & G.W. Steam Co. v. Phoenix Ins. Co., 129 U.S. 397, 443, 9 Sup.Ct. 469. We turn accordingly to the consideration of this question.

Before entering upon its discussion, it is important to note the terms and effect of the lease before us, and the situation of the parties and of the property which was destroyed. Before the lease was made, the lessees had no right to enter upon, or to place any property upon, the leased premises, and the railway company owed to the lessees no duty to exercise ordinary care not to set fire to any property on those premises, because, presumptively, there was none there, and because, if any one put any there, the only duty of the company was not willfully and wantonly to injure it, because it would be there in violation of law. If, however, the railway company should lease the right of way to Simpson, McIntire & Co., and should permit them to put buildings and personal property thereon, it would thereby subject itself to a new burden and assume a new duty,-- the duty of exercising ordinary care to prevent the burning of their property on these premises by the operation of its railroad. It was apparently willing to discharge all the duties it owed to the public, and to every individual of the public, and it did not undertake, by this lease, to limit or restrict its liability to discharge any of those duties, but it simply undertook to prevent its assumption of a new duty. Its quasi public character as a railroad company, its position as a common carrier, imposed upon it no duty to lease any of its right of way to these lessees, or to any one else, nor had they, or any one, any right to the use of the leased premises before this lease was made. The property that was burned was the private property of the lessees. None of it was in process of transportation by the railway company, none of it was awaiting delivery by the company to its consignees after transportation, and none of it had been received by the company for transportation. The warehouses and the property in them bore the same relation to the carrying business of the company, according to this record, that the store and contents of any merchant or commission man would bear to it. Neither the lease, nor the relation of the property to the railway company, arose out of the discharge of any duty imposed upon the corporation by its position of a common carrier, or by its character of a quasi public corporation.

The question, then, is, was it a violation of public policy for the lessees to agree, under these circumstances, that, if they were permitted to put their buildings and property upon the right of way of the railroad company, and to use them thereon, the duties and liabilities of the latter to them and to the public, should remain as they were before the lease was made, and should not be increased by any additional burden? No act of congress, no statute, no decision of any court (except a decision of the supreme court of Iowa, which was overruled by Griswold v. Railroad Co., supra), which prohibits such an agreement or declares it to be against public policy, has been called to our attention. Counsel for ...