Merchants Storage Co v. Insurance Co of North America National Fire Ins Co v. Same Mutual Fire Ins Co v. Same Continental Ins Co v. Same Fire Ass v. Same Liverpool London Globe Ins Co v. Same Royal Ins Co v. Same

• Citation: 38 L.Ed. 195,151 U.S. 368,14 S.Ct. 367
• Decision Date: 22 January 1894
• Docket Number: COTTON-PRESS,Nos. 807-813,s. 807-813
• Parties: MERCHANTS'& STORAGE CO. v. INSURANCE CO. OF NORTH AMERICA. NATIONAL FIRE INS. CO. v. SAME. MUTUAL FIRE INS. CO. v. SAME. CONTINENTAL INS. CO. v. SAME. FIRE ASS'N v. SAME. LIVERPOOL & LONDON & GLOBE INS. CO. v. SAME. ROYAL INS. CO. v. SAME
• Court: United States Supreme Court

151 U.S. 368

14 S.Ct. 367

38 L.Ed. 195

MERCHANTS' COTTON-PRESS & STORAGE CO.

v INSURANCE CO.

OF NORTH AMERICA. NATIONAL FIRE INS. CO.

v. SAME.

MUTUAL FIRE INS. CO.

v. SAME.

CONTINENTAL INS. CO.

v. SAME.

FIRE ASS'N

v. SAME.

LIVERPOOL & LONDON & GLOBE INS. CO.

v. SAME.

ROYAL INS. CO.

v. SAME.

Nos. 807-813.

January 22, 1894.

[Syllabus from pages 368-369 intentionally omitted] T. B. Turley, Luke E. Wright, C. W. Metcalf, and S. P. Walker, for plaintiffs in error.

John M. Butler, Wm. H. Carroll, and Holmes Cummins, for defendants in error.

Mr. Justice JACKSON delivered the opinion of the court.

The writ of error in each of these seven causes, which were submitted together, presents the same federal questions, which are First, whether the supreme court of Tennessee erred in sustaining the action of the chancery court of Shelby county, of that state, denying the petition of several of the plaintiffs in error to remove the cause to the circuit court of the United States for the western district of Tennessee; and, secondly, in holding that certain alleged special rates, rebates, or drawbacks, allowed by Anthony J. Thomas and Charles E. Tracy, receivers of the Cairo, Vincennes & Chicago Railroad Company, through L. L. Fellows, their agent at Memphis, to Jones Bros. & Co., of that place, on cotton shipped over that line to various points in the east, were not in violation of the interstate commerce acts regulating commerce between states of the Union, and did not render the bills of lading issued by the railroad for cotton transported or to be transported so illegal as to invalidate the same, and prevent any recovery thereon against the carrier.

The questions thus presented grew out of the following state of facts: On November 17, 1887, about 14,000 bales of cotton in the West Navy-Yard compress of the Merchants' Cotton-Press & Storage Company (hereafter called the 'compress company') were destroyed by fire. The value of the cotton was about the sum of $700,000. Of the total number of bales thus destroyed, about 9,608 bales were covered by bills of lading issued by various transportation companies to the owners or consignees of the cotton. The bills of lading issued by the Cairo, Vincennes & Chicago Railroad Company (hereafter called the 'railroad company') covered 5,087 bales of the cotton destroyed, valued at $245,733.46.

In May, 1887, a contract had been entered into between the railroad company and its receivers, Anthony J. Thomas and Charles E. Tracy, on the one side, and the compress company on the other, by the terms of which the railroad company and its receivers agreed to give to the compress company all cotton to compress that the railroad company might have to transport out of Memphis in a compressed condition. The compress company, on its part, agreed to properly compress all such cotton, and also to insure the same for the benefit of the railroad company or owners, for a certain compensation to be paid weekly, which was intended to cover both the service for compressing the cotton and the insurance to be taken out thereon, in good and solvent companies, by the compress company. This insurance was to cover any loss while the cotton was under the control of the compress company, and until delivered to the railroad company. The contract further provided that the railroad company and its receivers constituted the compress company its agent to receive all cotton intended for transportation over the railroad company's line, and to sign receipts therefor, on the production of which bills of lading would be issued by the railroad company. This contract was to continue in force until August 31, 1896.

Under and in pursuance of this contract, cotton was delivered to the compress company, by the owners or their agents, for transportation over the line of the railroad company from Memphis to points east, to the extent of 5,087 bales, for which dray tickets or receipts were given by the compress company, and on the production of which the agent of the railroad company issued bills of lading to the several and respective owners or consignees of such cotton.

The railroad company had an all-rail line from Memphis, and also a partly water and partly rail line, the water line extending from Memphis to Cairo, Ill., at which point the railroad company's rail line commenced, and extended by means of its connection eastward.

The compress company had a similar arrangement for insuring cotton with other transportation lines, and in pursuance of its undertaking with the carriers it took out insurance on the cotton deposited with it for compression before being transported, aggregating the sum of $301,750, in 44 different fire insurance companies, corporations of various states of the Union and of foreign kingdoms. The amount of this insurance fell far short of the value of the cotton deposited with it for compression, and which was destroyed by the fire. In all of these policies of insurance taken out under and in pursuance of its contract with the carriers, the compress company was named as the assured; but in the body of each of the policies it was set forth and stated that the insurance on the cotton was for the benefit of the railroads, transportation lines, or owners. The insurance was to attach on receipt of the cotton by the compress company, and to terminate when the same was removed for transportation.

The various owners or consignees of the 5,087 bales of cotton covered by the bills of lading of the railroad company, with one or two exceptions, insured their interests in their respective lots of cotton in what is called in the litigation 'marine insurance companies.'

There was $301,750 of insurance thus taken out by the compress company for the benefit of the carriers, and at the same time there was a large amount of insurance taken out by the owners or consignees in the marine insurance companies on the bills of lading issued by the railroad company to the several owners of the cotton.

Soon after the destruction of the cotton various suits were commenced in the state courts by the owners of the cotton destroyed, and the rights of the parties were to some extent settled and adjusted in the cases of Lancaster Mills v. Merchants' Cotton-Press Co., 89 Tenn. 62, 14 S. W. 317, and Deming v. Storage Co., 90 Tenn. 306, 358, 17 S. W. 89.

In this last case the supreme court of Tennessee held that the marine insurance companies—most if not all of whom had paid the policies issued by them, covering the losses of the owners or the consignees of the cotton—were entitled to be subrogated to the rights of such owners or consignees, as against the railroad company under its various bills of lading, if that company was liable on such bills of lading. The supreme court further declared in that case that the compress company held the insurance in the 44 fire insurance companies taken out by it for the benefit and indemnity of the railroad company or companies which had issued bills of lading on the cotton destroyed, and that to the extent of its proper share or proportion of such fire insurance the railroad company was entitled to have the same collected for its protection and indemnity; but, in respect to the liability of the railroad company upon its bills of lading to these marine insurance companies, the court could make no decree or render any judgment, for the reason that the railroad company was not a party to that cause. It, however, declared the rights of the marine insurance companies, and the liability of the compress company and of the fire insurance companies, and left the former companies to their remedy by way of subrogation against the railroad company upon its bills of lading, to be settled and determined by some new proceeding; and it was ordered that $210,224.37 of the fire insurance fund be reserved for the indemnity of the railroad company, if that line should be sued, and its libility to the marine insurance companies should be established.

Accordingly, on August 7, 1891, after the decision of the supreme court of the state had been rendered in Deming v. Storage Co., 90 Tenn. 306, 17 S. W. 89, the Insurance Company of North America, for Philadelphia, a corporation by the laws of the state of Pennsylvania; the Atlantic Mutual Insurance Company, a corporation by the laws of the state of New York; the Providence Washington Insurance Company, a corporation by the laws of the state of Rhode Island,—on behalf of themselves and all other marine insurance companies standing in like position, who had paid their insurance to the owners of the cotton, filed their bill in the chancery court of Shelby county, Tenn., against the Delaware Mutual Safety Insurance Company, a corporation by the laws of Company, Limited, of London, resident Company, Limited, of London, resident of the United Kingdom of Great Britain and Ireland; the Phenix Insurance Company, a corporation by the laws of the state of New York; R. H. Deming and James H. Foster, partners as R. H. Deming & Co., residents of the state of Rhode Island; the British and Foreign Marine Insurance Company, Limited, of Liverpool, England, resident of the United Kingdom of Great Britain and Ireland; the Cairo, Vincennes & Chicago Line, of Illinois; Anthony J. Thomas and Charles E. Tracy, as receiver thereof, citizens of New York; the Merchants' Cotton-Press & Storage Company, a corporation, of Tennessee; S. R. Montgomery, Napoleon Hill, and Thomas H. Allen, Jr., as trustees, citizens of Tennessee, together with six other alien marine insurance companies, and William Watson and E. R. Wood, aliens, and 44 fire insurance companies of West Virginia, Pennsylvania, New York, Illinois, Louisiana, Wisconsin, Alabama, Connecticut, Ohio, Texas, Indiana, and of the United Kingdom of Great Britain and Ireland.

The bill, in the nature of a creditors' bill, after reciting the facts already presented, set out the various lots of cotton which the complainants and the other...