Louisville & N. R. Co. v. Gilbert

• Decision Date: 30 January 1890
• Citation: 12 S.W. 1018
• Parties: LOUISVILLE & N. R. Co. <I>v.</I> GILBERT <I>et al.</I>
• Court: Tennessee Supreme Court

Page 1018

12 S.W. 1018

LOUISVILLE & N. R. Co.

v. GILBERT et al.

Supreme Court of Tennessee.

January 30, 1890.

Appeal in error from circuit court, Davidson county; WILLIAM K. McALISTER, Jr., Judge.

Baxter Smith, for appellant. Dickinson & Frazier, for appellees.

CALDWELL, J.

On the 18th day of October, 1885, W. F. Embry, as agent of Gilbert, Parks & Co., delivered seven bales of cotton to the Louisville & Nashville Railroad Company at Columbia, Tenn., for shipment to his principals, at Nashville. Before its departure, and while yet in the depot of the company at Columbia, it was destroyed by fire. Thereafter Gilbert, Parks & Co. sued the railroad company for non-delivery. The action originated before a justice of the peace, from whose judgment there was an appeal to the circuit court at Nashville. Here the case was tried by his honor, the circuit judge, without a jury, and judgment was rendered in favor of the plaintiffs for the agreed value of the cotton, interest, and costs. The railroad company has prosecuted an appeal in error to this court.

There is no controversy about the consignment, loss, and value of the cotton; nor is there any denial that the defendant company would be liable for the loss, under the rules of the common law. These are all conceded. But it is insisted in behalf of the company that its common-law liability was limited by special contract, and that special contract is relied upon in bar of any recovery. The bill of lading under which the shipment was to be made is produced in evidence. It contains a fire clause which stipulates that the company shall not be liable for loss or damage by fire. This is the special contract through which exemption from liability is sought. The plaintiffs deny the validity of that stipulation, and thus the issue for our determination is presented.

It is now too well settled to admit of debate that the common-law liability of common carriers may be limited by special contract, even to the extent of denuding them of the character of insurers, except as against their own negligence, or that of their agents and servants; and the limitation may be, and is generally, embraced in the bill of lading delivered to the shippers at the time. It is not every such special contract, however, that is effective. To be valid, it must be fairly obtained, and just and reasonable. Under the English railway and canal traffic act of 1854, (17 & 18 Vict. c. 31, § 7,) such stipulations are called "conditions," and they can be upheld only when they "shall be adjudged * * * to be just and reasonable." The same criterion is uniformly applied in this country, and no limitations of the carrier's common-law liability, in whatever form made, will afford protection unless just and reasonable in the eyes of the law. Railroad Co. v. Lockwood, 17 Wall. 357; Hart v. Railroad Co., 112 U. S. 338, 5 Sup. Ct. Rep. 151; Marr v. Telegraph Co., 1 Pickle, 542, 3 S. W. Rep. 496; Transportation Co. v. Bloch, 2 Pickle, 397, 6 S. W. Rep. 881. Though such is the generally accepted test, the use of these words ("just and reasonable") will not always meet the requirements of investigation. What will be just and reasonable in one case may not be so in another. The justness and reasonableness of the condition or limitation must of necessity depend upon the peculiar facts and circumstances of every case, — the nature of the article to be conveyed, the hazard of the transportation, the surroundings of the parties at the time, and the mutual advantages given and received.

Referring to the burden and weight of proof, an eminent British author says: "The burden of proving the reasonableness of a condition lies upon the company. The most cogent evidence in favor of reasonableness is to show that the condition was not forced upon the customer, but that he had a fair alternative of getting rid of the condition, and yet agreed to it." Redman, Law Ry. Carr. (2d Ed.) p. 66; citing Lewis v. Railway Co., 47 Law J. Q. B. 131. In further treating on the same subject, the same writer, on page 71, says: "To enable a company to rely on an alternative contract offered to the customer, it must appear that such alternative was itself reasonable. A company cannot offer the choice of two unreasonable conditions, and then rely on the one actually chosen." Citing Lloyd v. Railway Co., 15 Ir. C. L. 37. To the same effect as the latter quotation is the Marr Case, decided by this court in 1886. There the telegraph company was shown to have had four different rates of charges, with as many different degrees of liability. They were all held to be unreasonable, and the fact that the customer choosing one rate had the option of taking any one of the other three was of no avail to the company, in an action for damages. Marr v. Telegraph Co., 1 Pickle, 545, 3 S. W. Rep. 496. The alternative must be both reasonable and bona fide. If either unreasonable or colorable only, it will be unavailing as a defense to the action against a carrier. A company standing before the public as a common carrier, and enjoying the advantages and franchises as such, must be ready to do the business of a common carrier, with the full measure of responsibility imposed by the common law; and it may at the same time offer to do the same business with a limited liability, the limitation resting upon a sufficient consideration. An offer or readiness to transport the goods of its customer with the one or the other degree of responsibility, at his option, is as little as can be required of any common carrier. Less than this does not present a bona fide and reasonable alternative. Reduction of freight charges is the usual consideration for the diminution of responsibility on the part of the company. One of the leading principles deducible from the English cases is stated by Mr. Redman in these words: "A condition is reasonable which reduces a company's liability to a minimum, if it is coupled with compensating advantages to the customer, (such as cheapness of carriage,) and the latter has the alternative of getting rid of the condition by paying a reasonably higher rate." Redman, Law Ry. Carr. p. 75, § 2. This language puts the law clearly, and meets our unqualified approval. It is reproduced as the law of the two countries in a recent American work. 2 Amer. & Eng. Cyclop. Law, 819.

These clauses, similar to the one before us, when based upon a sufficient consideration, have by the supreme court of the United States, and by this court, been held to be valid, and to protect the company from liability for loss by fire, caused otherwise than by the negligence of the company or its agents. York Co. v. Railroad Co., 3 Wall. 107; Dillard v. Railroad Co., 2 Lea, 288. In the latter case, the court said: "A lower rate of freight, or something equivalent, will be a sufficient consideration for the stipulation." 2 Lea, 293. In the former it is broadly intimated that a reduction of charges will be presumed to be the consideration for such a stipulation, the language of the court being: "* * * There is no evidence that a consideration was not given for the stipulation. The company, probably, had rates of charges proportioned to the risks they assumed from the nature of the goods carried, and the exemption of losses by fire must necessarily have affected the compensation demanded." 3 Wall. 113. In speaking of a stipulation for a limited liability in a railroad ticket, the New York court of appeals said: "Like all contracts, to render such an one valid, it is indispensable that it have some consideration, which it would not have if the passenger paid the full fare fixed by law. * * * If the service is reduced, the amount of the reward must be reduced in proportion; and, if the company is relieved from risk, it must make compensation for that relief by the reduction of fare or otherwise." Bissell v. Railroad Co., 25 N. Y. 442. The performance of an act which a party is under a legal obligation to perform does not constitute a good consideration for a promise. Add. Cont. § 4. Hence a mere agreement by a common carrier to transport goods furnishes no consideration for a stipulation for less than common-law liability. Lawson, Carr. § 212.

Having laid down the principles of law by which this case must be decided, we proceed to give them application to the facts disclosed on the trial. In doing this it is necessary to state the material facts not already recited. I. Bailey says: "Have been freight agent at Columbia for the L. & N. R. R. for about 9 years. I received the cotton in question from W. F. Embry, agent of plaintiffs. Nothing was said about accepting the bill of lading. No objection was made to the same. The regular rate on the bill of lading was one dollar a bale. The regular tariff rate for each 100 pounds is 37 cents, and, estimating a bale of cotton at 500 pounds, would make the cost of shipping between those points (Columbia and Nashville) $1.85 per bale. If this bill of lading had been declined, (the one the cotton was shipped under,) the shipper would have had to ship by the regular tariff rates, $1.85 per bale, without the fire clause. I do not know how long this form of bill of lading has been in use, but it has been in use for several years, and was acceptable to the shipping public, and no complaint had been made of it. I do not think there was any fire clause in the one used prior to this. At the time the cotton was shipped I had no other form of bill of lading to ship cotton under. I had no authority as freight agent to make any different contract, or to ship goods under any other bill of lading, than the one under which these goods were shipped. Nothing was said between Mr. Embry and myself about a special rate, but he took the bill of lading offered without objection, and shipped under this. I would not have shipped this cotton any other way. The rate of $1.00 a bale has been such about six years, under the bill of lading such as this cotton was shipped...