Insurance Company of North America v. Lake Erie & Western Railroad Company

• Decision Date: 28 March 1899
• Docket Number: 17,994
• Parties: The Insurance Company of North America v. The Lake Erie and Western Railroad Company et al
• Court: Indiana Supreme Court

53 N.E. 382

152 Ind. 333

The Insurance Company of North America v. The Lake Erie and Western Railroad Company et al

No. 17,994

Supreme Court of Indiana

March 28, 1899

From the Marion Superior Court.

Affirmed.

W. A Ketcham, Lewis G. Farmer and F. E. Matson, for appellant.

W. H H. Miller, Ferdinand Winter, John B. Elam, McCullough &amp Spaan, A. C. Harris, John E. Iglehart and Edwin Taylor, for appellees.

OPINION

Dowling, J.

Suit by the appellant against the Lake Erie and Western Railroad Company, the Evansville and Terre Haute Railroad Company, and the Chicago and Eastern Illinois Railroad Company, as members of an association known as the "Midland Line," for the loss of fifty bales of cotton shipped under a bill of lading from Memphis, in the state of Tennessee, (U. S. A.) to Liverpool, England.

The Midland Line was an association of steamship and railroad companies acting as common carriers between the points named.

The appellant had issued a policy of insurance upon the cotton, and the property so insured having been destroyed by fire while in transit, appellant was compelled to pay the amount of the risk. Upon such payment, the bill of lading, with all rights of action thereunder, was assigned and transferred to appellant by the owner of the cotton. As such assignee, and claiming to be subrogated to the rights of such owner, the appellant sued to recover damages for the loss of the cotton.

The complaint was in two paragraphs, to the first of which a demurrer was sustained. The answer to the second paragraph was a general denial. The case was tried by a jury, and, at the conclusion of the evidence, the court refused to give any of the instructions asked for by appellant, and directed a verdict for appellees. Thereupon judgment was rendered and the insurance company appeals. The only error assigned is that the court erred in overruling the motion of the appellant for a new trial.

The paragraph of the complaint upon which the case was tried sets out the traffic arrangement between the defendants; the shipment of the cotton over defendants' lines under a bill of lading exonerating appellees from liability in case of the loss of the cotton by fire; and it alleges the destruction of the cotton by fire while in the possession of the Lake Erie and Western Railroad Company, one of the appellees. It charges that the loss of the cotton was occasioned by the negligence of the appellees, and states with some particularity, the circumstances under which the fire occurred. The other facts necessary to show a right of action in appellant are fully and properly pleaded.

That part of the contract in the bill of lading which limited the liability of the appellees, was in these words: "(1) That the said Midland Line shall not be liable for * * * loss or damage by fire. * * * It is also mutually agreed that the carrier shall not be liable for loss or damage occasioned * * * by fire from any cause, or wheresoever occurring."

It is settled by the decisions in this State that the carrier may by a stipulation contained in the bill of lading limit, to some extent, his strict common law liability. Adams Express Co. v. Fendrick, 38 Ind. 150; St. Louis, etc., R. Co. v. Smuck, 49 Ind. 302; Bartlett v. Pittsburgh, etc., R. Co., 94 Ind. 281; Rosenfeld v. Peoria, etc., R. Co., 103 Ind. 121, 53 Am. Rep 500, 2 N.E. 344. He cannot, however, by contract, exempt himself from liability for loss or damages resulting from his own negligence. Michigan, etc., R. Co. v. Heaton, 37 Ind. 448, 10 Am. Rep. 89; Indianapolis, etc., R. Co. v. Allen, 31 Ind. 394; Ohio, etc., R. Co. v. Selby, 47 Ind. 471, 17 Am. Rep. 719; Indianapolis, etc., R. Co. v. Cox, 29 Ind. 360.

It has often been held that a special contract relieving the carrier from responsibility for loss or damage by fire is valid, but it is generally understood that such exemption from liability does not protect the carrier when the fire or the consequent loss is the result of his own negligence. 4 Elliott on Railroads, section 1508, note 3.

The effect of a special contract limiting the common law liability of the carrier is to change the character of that liability by removing from it the important element of insurance of the goods by the carrier, and to place his responsibility for loss or damage upon the ground of negligence alone. The carrier does not, indeed, cease to be a carrier, but he is no longer an insurer. In numerous cases he is held, under such circumstances, to be a private carrier for hire, and hence subject to an entirely different rule from that which would have fixed his responsibility if no special contract had been made.

The controlling question in the present case is as to the burden of proof. On this subject there is an irreconcilable conflict among the decisions, and it would be a fruitless task to institute a comparison between them. The great weight of modern authority, and, as we think, the better reason sustain the rule that where the action is upon a bill of lading which limits the liability of the carrier by excepting certain perils, and it appears that the loss was within the restrictions of the special contract, the burden is upon the plaintiff to show that the accident or loss was the result of the negligence of the carrier.

This rule was long ago adopted by the English courts.

In Harris v. Packwood, 3 Taunt. 264, the carrier had given notice that he would not be accountable for any package whatsoever, above the value of twenty shillings, unless entered, and an insurance paid over and above the price charged for carriage according to value, no such insurance having been paid by the plaintiff. It was said by Mansfield (Sir J.) Ch. J.: "However, we may wish the law to be, we cannot make it different than as we find it. In looking into the books, we find the special acceptance much older than I had supposed it to be. And it leads to great frauds, for on account of the number of persons always attending about these open wagon-yards and offices, every person standing around is apprised that this or that parcel contains watches or jewels to the amount of many hundred pounds; this is a great inconvenience, but however inconvenient it is, it seems that from the days of Aleyn down to this hour, the cases have again and again decided that the liability of a carrier may be so restrained; then the question is, whether this loss is within the contract that has been made, and, it seems, according to one or two of the cases, that it is not; for the losses have been of a very suspicious nature; in one case, the parcel seems to have been lost before it left the yard but, however, as there was no proof here of express negligence, it seems that there must be a rule absolute for a nonsuit."

In Marsh v. Horne, 5 Barn. & Cress. 322, Abbott, C. J., said: "A person may engage to place goods in a course of conveyance and delivery, and yet declare that he will not be answerable for their loss. Indeed, this argument would altogether defeat the notices given by carriers, which have now prevailed in practice for so many years, and been recognized by so many decisions. And considering the notice given in the present case, we think the defendant could not upon the delivery of the goods have maintained a charge for any sum beyond the reasonable price of carriage, exclusive of the responsibility of the risk for loss. And as to the first point made in the argument, it may with equal propriety be said that the plaintiff, who was informed of the defendant's advertisement, and did not offer to comply with its terms, chose to stand his own insurer, as that the defendant, who knew the value of the goods to exceed five shillings, and did not demand to be paid for insurance, engaged, nevertheless, to take a responsibility upon himself and indemnify the plaintiff."

In Muddle v. Stride, 9 Car. & P. 380, which was an action against the proprietors of a steam vessel to recover damages for goods sent by such vessel and lost, Lord Chief Justice Denman, in summing up to the jury, observed that the jury were "to see clearly that the defendants were guilty of negligence before they could find a verdict against them."

Many cases in the Supreme Court of the United States hold that, when the loss falls within the exception in the bill of lading or contract of the carrier, the onus probandi is upon the shipper to show negligence on the part of the carrier.

Clark v. Barnwell, 53 U.S. 272, 12 HOW 272, 13 L.Ed. 985: "After the damage to the goods, therefore, has been established, the burden lies upon the respondents to show, that it was occasioned by one of the perils from which they were exempted by the bill of lading, and, even where evidence has been thus given bringing the particular loss or damage within one of the dangers or accidents of the navigations, it is still competent for the shippers to show that it might have been avoided by the exercise of reasonable skill and attention on the part of the persons employed in the conveyance of the goods; for, then, it is not deemed to be, in the sense of the law, such a loss as will exempt the carrier from liability, but rather a loss occasioned by his negligence and inattention to his duty. Hence it is, that, although the loss occurs by a peril of the sea, yet if it might have been avoided by skill and diligence at the time, the carrier is liable. But in this stage and posture of the case, the burden is upon the plaintiff to establish the negligence, as the affirmative lies upon him."

In Transportation Co. v. Downer, 78 U.S. 129 11 Wall. 129, 20 L.Ed. 160, Field J., delivering the opinion of the court, said: "On the trial the plaintiff made out a prima facie case by producing the bill of lading, showing the receipt of the coffee by the...