Muelder v. Western Greyhound Lines

• Court: California Court of Appeals
• Citation: 87 Cal.Rptr. 297,8 Cal.App.3d 319
• Parties: Wallace R. MUELDER, Plaintiff and Respondent, v. WESTERN GREYHOUND LINES, etc., et al., Defendants and Appellants. Civ. 9437.
• Decision Date: 28 May 1970

Page 297

87 Cal.Rptr. 297 8 Cal.App.3d 319 Wallace R. MUELDER, Plaintiff and Respondent,
v.
WESTERN GREYHOUND LINES, etc., et al., Defendants and Appellants. Civ. 9437. Court of Appeal, Fourth District, Division 2, California. May 28, 1970.
As Modified on Denial of Rehearing June 17, 1970.
Hearing Denied July 22, 1970.

Page 298

[8 Cal.App.3d 321] Donald S. Gillespie, and Wm. A. Flory, San Bernardino, for defendants and appellants.

Lonergan, Jordan & Gresham, by Allen B. Gresham, San Bernardino, for plaintiff and respondent.

OPINION

TAMURA, Associate Justice.

Plaintiff sued to recover damages for the loss of a briefcase and its contents which defendant had undertaken to transport from Indio to San Bernardino. Following a nonjury trial the court found that the loss occurred through defendant's gross negligence, assessed damages in the sum of $7,637.70 for the actual value of the briefcase and its contents, and entered judgment for plaintiff accordingly. Defendant appeals from the judgment.

Defendant's sole contention is that under the applicable tariff schedule and sections 2200 and 2205 of the Civil Code, plaintiff's

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recovery should have been limited to $50. ¹ The findings of gross negligence and the value of the lost items are unchallenged.

[8 Cal.App.3d 322] Plaintiff, a professor of education, attended a meeting at the Coachella Unified School District in his capacity as special consultant to the district. Upon his departure, he inadvertently left in the school district superintendent's office a briefcase containing technical studies and reports, diaries, and miscellaneous correspondence. Plaintiff made arrangements with the superintendent to ship the briefcase to San Bernardino by defendant Greyhound Lines. The superintendent packaged the briefcase, took it to defendant's bus depot in Indio and deposited it with the terminal manager for shipment to San Bernardino. He paid the express charge and was given a receipt.

When plaintiff went to defendant's San Bernardino bus depot to claim the package, it could not be found despite a thorough search of the terminal. Ultimately the police found the briefcase, sans contents, in a rooming house near the San Bernardino Bus Terminal. There was evidence that at defendant's terminals baggage and packages were left unattended for long periods of time in places readily accessible to the public.

The applicable tariff ('Local, Interdivision and Joint Express Tariff No. Z-14-B,' ²) contained the following pertinent rules: It permitted shipments of 100 pounds or less at a valuation not exceeding $50 without additional charge but required an 'excess value' charge for 'release value' or 'declared value' in excess of $50; ³ a shipment exceeding $200 'in declared [8 Cal.App.3d 323] or

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released value' could not be accepted; and Rule 14(e) pertaining to the carrier's liability provided:

'In consideration of the rate charged for carrying said property, which is dependent upon the value thereof and is based upon a released valuation of not exceeding fifty ($50.00) dollars for any shipment of 100 pounds or less, unless a greater value is declared at the time of shipment, the carriers parties to this tariff, shall not be liable in any event for more than fifty ($50.00) dollars for any shipment of one hundred (100) pounds or less, unless a greater value is declared by the shipper at the time of shipment and excess value charges paid. In no event shall the carriers be liable for more than the actual damages sustained.'

The receipt ('Greyhound Busbill') was labeled 'Shipper's Receipt'. The following statement appeared in fine print on the edge of the receipt:

'(NOT NEGOTIABLE) SUBJECT TO TARIFF REGULATIONS LIABILITY: The carrier will not pay over $50.00 for any shipment of 100 pounds or less, or 50cents per pound actual weight for any shipment in excess of 100 pounds, unless a greater value is declared and charges for such greater value paid. Maximum valuation any one shipment is limited by tariff.'

The school district superintendent testified he had no knowledge of the tariff provisions, saw no signs posted at the Indio terminal informing the public of its provisions, and did not read or sign the shipper's receipt. He further testified that when he deposited the package he told the terminal manager it was a briefcase containing books and papers but that the latter made no inquiry concerning value.

Defendant contends that, assuming the loss occurred through its gross negligence, its liability was nevertheless limited, as a matter of law, to the 'released value' ($50) set by the rate schedule. The contention is grounded on the following proposition: The tariff rules limiting its liability were implied terms of the contract of shipment by operation of law and whether or not plaintiff had knowledge of those rules was legally inconsequential. Plaintiff counters that knowledge of the rules was an essential condition of his valid assent to the 'released value' fixed by the tariff as the limit of the carrier's liability, at least where, as in the present case, loss occurred through gross negligence.

From the analysis which follows, we have concluded that the trial court impliedly found that plaintiff had no notice, actual or constructive, of the [8 Cal.App.3d 324] tariff rules limiting defendant's liability and that, hence, recovery for the actual value of the lost items must be sustained.

The law in this state on the issue posed by this appeal is unclear. There have been no cases on the subject in California since the Supreme Court decided Hischemoeller v. Nat. Ice, etc., Storage Co. (1956) 46 Cal.2d 318, 294 P.2d 433, which, though it involved limitations on the liability of a public warehouseman, cast some doubt on the continued vitality of several older decisions dealing with the effect to be given contractual arrangements and tariff regulations limiting a common carrier's liability for loss or damage to shipments. In view of the paucity and uncertainty of the law on the subject in this state, we believe it will be helpful preliminarily to review the common law and, because of the impact it has had on the development of the law in the intrastate field, the federal law on limitations on a common carrier's liability. We shall then proceed to a discussion of the pre-Hischemoeller California decisions, an analysis of Hischemoeller, and a determination of the effect of that decision.

I

At common law common carriers were insurers against all losses of articles accepted for shipment except those resulting from Acts of God or public enemy. (Bohannan v. Hammond (1871) 42 Cal. 227, 229; Fairchild v. California Stage Company (1859) 13 Cal. 599, 602; Prosser, Law of Torts (3d ed.) p. 184.) A contractual

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stipulation or tariff having for its object the exemption of a common carrier from liability for its negligence was void as against public policy. (Union Pac. R. Co. v. Burke (1921) 255 U.S. 317, 41 S.Ct. 283, 284, 65 L.Ed. 656; Hart. v. Pennsylvania R. Co. (1884) 112 U.S. 331, 338--341, 28 L.Ed. 717, 5 S.Ct. 151); 6A Corbin, Contracts (1962), pp. 592--593; see Rest., Contracts, § 575.) But it was permissible for the parties, by a fair and reasonable 'special contract,' to provide for exemption from liability for accidental loss or damage, not occasioned by the carrier's negligence or fraud. (See Franklin v. Southern Pac. Co. (1928) 203 Cal. 680, 686, 265 P. 936; American Fruit Distributors of California v. Hines (1921) 55 Cal.App. 377, 386, 203 P. 821.)

The common law recognized a distinction between a contract exempting a carrier from liability for negligence and one whereby, in consideration of a lesser rate, a shipper agreed to a valuation by which the carrier's liability was to be measured in the event of loss or damage to the shipment; such contracts, where the value so fixed was reasonable and the agreement was freely and fairly entered into by the shipper, were not deemed to be subject to the common law prohibition against contracts exempting a [8 Cal.App.3d 325] carrier from liability for negligence. (Adams Express Co. v. Croninger (1913) 226 U.S. 491, 509--510, 33 S.Ct. 148, 153, 57 L.Ed. 314; Hart v. Pennsylvania R. Co., Supra, 112 U.S. 331, 340--341, 5 S.Ct. 151, 155--156, 28 L.Ed. 717.) However, a choice of rates with an opportunity to purchase greater protection by paying a higher rate was essential to the validity of such arrangements. (Union Pac. R. Co. v. Burke, Supra, 255 U.S. 317, 321--323, 41 S.Ct. 283, 284, 65 L.Ed. 656; Toyo Kisen Kabushiki Kaisha v. Willits & Co. (9th Cir. 1927) 17 F.2d 762, 764; Franklin v. Southern Pac. Co., Supra, 203 Cal. 680, 689, 265 P. 936; 6 A Corbin, Contracts, supra, p. 595.)

Such agreed value contracts were sustained on the theory that by assenting to a fixed value in consideration of a lower rate, the shipper was 'estopped' from claiming a higher value in event of loss; the courts reasoned that a shipper ought not to be 'allowed to reap the benefit of the contract if there is no loss, and to repudiate it in case of loss.' (Hart v. Pennsylvania R. Co., Supra, 112 U.S. 331, 341, 5 S.Ct. 151, 156, 28 L.Ed. 717.)

II

Relying upon the rationable of the common law decisions sustaining agreed valuation contracts, the United States Supreme Court upheld fixed value limitations on liability in tariff schedules filed under the Interstate Commerce Act. (Adams Express Co. v. Croninger, Supra, 226 U.S. 491, 512, 33 S.Ct. 148, 154, 57 L.Ed. 314.) Shippers were held to be bound by such limitations even though they had no actual knowledge of the tariff rules; knowledge was presumed from terms of the shipping documents and the published tariff. (American Ry. Express Co. v. Lindenburg (1923) 260 U.S. 584, 591--592, 43 S.Ct. 206, 209, 67 L.Ed. 414; Kansas City Southern Railway Co. v. Carl (1913) 227 U.S. 639, 652, 33 S.Ct. 391, 395, 57 L.Ed. 683; Adams Express Co. v. Croninger, Supra, 226 U.S. p. 509, 33 S.Ct....