Western Union Telegraph Co. v. Schriver

• Decision Date: 16 November 1905
• Docket Number: 2,156
• Citation: 141 F. 538
• Parties: WESTERN UNION TELEGRAPH CO. v. SCHRIVER et al.
• Court: U.S. Court of Appeals — Eighth Circuit

141 F. 538

WESTERN UNION TELEGRAPH CO. v. SCHRIVER et al.

No. 2,156

United States Court of Appeals, Eighth Circuit.

November 16, 1905

(Syllabus by the Court.)

A telegraph company owes no duty to the undisclosed principal of the addressee of a telegram to exercise reasonable care to receive and transmit authorized messages only, because injury to him cannot be reasonably anticipated as the consequence of the lack of such care, and because such injury is the effect of an independent intervening cause-- the act of the addressee.

The action for damages for such an injury is an action of tort for a false representation in the nature of a false warranty caused by the breach of the duty to exercise reasonable care to receive and transmit authorized messages only. It is not an action on a contract.

The telegraph company owes the duty to exercise ordinary care to receive and transmit genuine messages correctly to senders to addresses, and to those who appear in the telegrams to be beneficiaries thereof, because injury to them may be reasonably anticipated as the probable consequence of negligence. It owes a like duty to the undisclosed principals of senders, because the law charges it with knowledge that these principals are in privity with it, through contracts made by the senders, and injury to them from its negligence may be reasonably anticipated.

An injury that could not have been foreseen or reasonably anticipated as the probable consequence of negligence is not actionable.

An injury that is not the natural consequence of an act of negligence, and that would not have resulted from it but for the interposition of some new independent cause that could not have been anticipated, is not actionable.

A duty of care owing by the party who occasions the loss to him who suffers it is an indispensable element of actionable negligence. The breach of such a duty owing to others is immaterial.

One who makes a false representation owes no duty of care to tell the truth to those to whom he does not communicate it and to whom he does not anticipate that it will be conveyed, and a person of ordinary prudence and intelligence would not anticipate that it would conveyed, and such parties have no cause of action against him for injuries they sustain in reliance upon it.

The rule that, where one of two innocent parties must suffer from the fraud of a third, he who furnishes the means to commit it must bear the loss, is limited in its application to cases in which the party chargeable makes the third party his real or apparent agent, cases in which he provides the means intentionally, or for a dishonest purpose or negligently, and cases in which he derives a benefit from the fraud of the third party.

It does not govern the great majority of cases where one innocently for an honest purpose and with reasonable care, furnishes to a third party the means by which he perpetrates a fraud from which he who provides the means derives no benefit.

The absence of reported judgments and decisions sustaining an alleged liability under a given state of facts raises a strong presumption that no such liability exists.

H. D Estabrook, Asa F. Call, and Rush Taggart (George H. Fearons, Craig L. Wright, and John F. Dillon, on the brief), for plaintiff in error.

D. M. Kelleher (John A. Senneff, M. F. Healy, Thomas D. Healy, and Robert Healy, on the brief), for defendant in error.

Before SANBORN, Circuit Judge, and PHILIPS and CARLAND, District judges.

SANBORN Circuit Judge.

This is an action against the Western Union Telegraph Company for damages caused by its receipt and delivery of an unauthorized message. There was substantial evidence at the trail of these facts: Schriver Bros., the plaintiffs below, sold cattle to one Barnes for $8,972, and took his check for the purchase price upon the Bank of Denison for that amount. They refused to surrender the cattle without some assurance that the check would be paid. Barnes promised that he would have the Bank of Denison send a guaranty of payment of the check by telegraph. The plaintiffs directed him to have the message sent to the Commercial Bank of Britt. Barnes went to Denison and without authority from the bank telephoned to the defendant's operator in that town this message:

'Denison, Ia., March 14, 1902.

'To Commercial Bank, Britt, Iowa: We will honor Barnes' draft for eighty-nine hundred seventy-two dollars.

Bank of Denison.'

The operator at Denison ordinarily received by telephone messages to be sent by telegraph. Both the Bank of Denison and Barnes had sent messages in that way concerning the business of Barnes, and had arranged with the operator that such telegrams should be charged to Barnes. Sometimes the bank had telephoned messages of this nature in its own name and sometimes Barnes had telephoned them in the name of the bank, and there had been no repudiation of them, or objection to them by the bank, although many such messages had been sent before that of March 14, 1902, was received. This message was sent to Britt and delivered to the Commercial Bank. One of the plaintiffs saw it, and in reliance upon it delivered the cattle to Barnes. Neither the check which they took from Barnes nor the purchase price of the cattle was ever paid. The court charged the jury, over the objection and subject to the exception of the defendant, that, if the Commercial Bank of Brit was the agent of the plaintiffs to receive the message, they might recover the telegraph company the loss which they had sustained by their reliance upon the telegram, and there was a verdict and judgment in their favor.

May the undisclosed principal of the addressee of a message recover of the telegraph company the damages he sustains from the failure of its operator to exercise reasonable care to receive and transmit authorized messages only? A telegraph company is not liable for the lack of such care to one of whose interest in the telegram it has no notice, and who is neither the principal of the sender nor of the addressee. mcCormich v. Western Union Tel. Co., 25 C.C.A. 35, 79 F. 449, 38 L.R.A. 684; Morrow v. Western Union Tel. Co. (Ky.) 54 S.W. 853; Western Union Telegraph Co. v. Kirkpatrick, 76 Tex. 217, 218, 13 S.W. 70, 18 Am.St.Rep. 37; Western Union Tel. Co. v. Carter, 85 Tex. 580, 22 S.W. 961, 34 Am.St.Rep. 826.

The undisclosed principal of the sender of a message may recover for negligence in its transmission or delivery, because the company makes a contract with the sender which that knowledge of the law it may not deny notifies it inures to the benefit of any undisclosed principal whom the sender may have. But neither the sender nor his principal can recover for negligence of the company in the receipt or transmission of a message which the sender forges or fraudulently signs without authority, because the contract of transmission is voidable for the fraud of the sender, and neither he nor his principal can take advantage of his wrong. A telegraph company owes the duty to exercise reasonable care to receive and transmit authorized messages only to the addressee of messages, and to those persons who, the telegrams inform it, have a beneficial interest in the dispatches it transmits. It owes this duty to these parties because injury to them is the natural and probable consequence of its want of care, and effect which it may reasonably anticipate from its notice of the fact that they are interested in the messages. But does it owe this duty to the undisclosed principal of an addressee of a message of whose interest it has no notice?

Reference has been made to the statues of Iowa (Code Iowa, 1897, Secs 2163, 2162, 2161, 2164), but they give no direct or inferential reply to this question (Bank of Havelock v. Western Union Telegraph Company, 141 F. 522), and it must be answered by a consideration and application of the general principles and rules of the law. The arguments at the bar and in the briefs have traversed a wide field, and it is indispensable to a judicious consideration and a just decision of the issue in hand that before entering upon its discussion the true foundation and the real nature of the cause of action presented and the rules of law which must govern it shall be clearly in mind. The cause of action is for the false representation that the Bank of Denison signed the message. It is not an action for deceit, because the intent to deceive or knowledge of the falsehood or a reckless misrepresentation in ignorance of the fact is indispensable to an action of deceit. Union Pac. Ry. Co. v. Barnes, 64 F. 80, 83, 12 C.C.A. 48, 51; Kahl v. Love, 37 N.J. Law, 5, 6, 7; Polhill v. Walter, 3 Barn. & Adolph. 114, 124. There was no such intent, knowledge, or recklessness in this case. The operator did not intend to deceive any one. He did not know that Barnes was not authorized to send the message in the name of the bank. He undoubtedly believed that he had this authority, and not without some reason; for he had repeatedly sent messages in its name, and no repudiation by the bank or other objection had been made. His only fault was his failure to make inquiry or to notify the addressee regarding the questionable authority of Barnes in the light of facts and circumstances which might naturally have aroused the suspicion of a person or ordinary prudence and intelligence in a like situation and have suggested an investigation of that authority. Western Union Tel. Co. v. Totten, 141 F. 533. The action is not founded upon a false warranty or upon any contract. Conceding, without deciding, that the addressee and the apparent beneficiary of a genuine message honestly sent may recover in an action upon the contract for a failure to transmit or to deliver it speedily and correctly, the only basis of...