Griswold v. Illinois Central Railway Co.

Given, J. A rebearing was granted in tbis case, and it is again submitted with further arguments. Tbe facts disclosed by tbe pleadings, which are material to be considered, are sufficiently stated in tbe former opinion (53 N. W. Rep. 295), and are as follows: “On tbe thirtieth day of April, 1890, tbe plaintiff Griswold owned a two and one half story elevator building, warehouse and corncrib attached, together with engine and boiler connections and feed mill therein, all of which were situated on tbe depot grounds of defendant, immediately north of its track, in tbe village of Winthrop. In tbe morning of tbe day named, tbe property described was totally destroyed by fire, which was kindled by sparks and cinders from a locomotive engine of defendant while passing on its track. Tbe sparks and cinders escaped from tbe engine in consequence of defects in its construction and appliances, and in consequence of tbe negligent manner in which it was operated. Tbe property destroyed was of tbe — 267 — value of six thousand dollars, and was, at the time, insured by the plaintiffs the Iowa State Insurance Company, the Commercial Union Assurance Company, Limited, the St. Paul German Insurance Company,, and the Farmers’ Fire Insurance Company in the sum of. one thousand dollars each, or for the aggregate-amount of four thousand dollars. After the property was destroyed, each insurance company paid the-amount of loss for which it was responsible, and, claiming that by reason of such ■ payments they became subrogated to the rights of Griswold to the-extent of the amounts 'so paid, they join him in demanding judgment against defendant for the value-of the property destroyed. Griswold occupied the-premises on which the property stood, by virtue of a lease to him from defendant, which contained the following provisions: ‘And the lessee, in consideration of the premises, hereby covenants and agrees with the-lessor, its successors and assigns, to pay the said lessor, as rent for said premises, the sum of one dollar, to be-paid at the time and in the manner following, to wit, on the delivery of this lease; and .the lessee further-covenants and agrees with the lessor that he will, from the date of this indenture, put to use and maintain a. good, substantial elevator, coal sheds, and lumber yard on the above described premises; and further agrees to-protect and save harmless said lessor from all liability for damage by fire, which, in the operation of the-lessor’s railroad, or from cars or engines lawfully on its-tracks, may accidentally or negligently be communicated to any property or structure on said described premises. And the said lessee hereby agrees to ship all grain,, coal, and lumber he can control by the Illinois Central Railroad. And the said lessee further covenants and agrees with the said lessor that he will transact the-business for which said buildings are erected and designed at fair and reasonable rates, and in a prompt — 268 — and careful manner, so that neither the company nor the public will be prejudiced by reason of the said lessee dealing unfairly or negligently in their behalf, or in the transaction of the business connected with the grain, coal, and lumber, building so erected as aforesaid.’ The defendant claims that plaintiffs are not entitled to recover, for the reason that Griswold undertook, by the terms of the lease, to protect and save it harmless from such losses as that in question. The ground of the demurrer is as follows: ‘The petition and answer show that the action is commenced by the owner and insurer of an elevator built upon defendant’s land alongside of its track, for the purpose of handling grain, and that said elevator was burned through the negligence of defendant, its agents and employees. The plaintiffs, therefore, say it is against public policy, and contrary to the statutes of Iowa, for the defendant to attempt to restrict by contract its liability for the negligence of its agents, employees and servants; and that said defense, so far as it is based upon exemptions from liability by reason of this contract of lease, is not good, as such contract of exemption is void.’ No special claims are made in behalf of the insurance companies; therefore, their interests and that of G-riswold, for the purposes of this appeal, will be treated as governed by the same rules.” I. It will be seen, from the statement of the case, that the controlling question is whether that clause in the lease whereby plaintiff Griswold agrees to protect and save harmless the defendant from all liability for damages by fire negligently communicated to the property on the leased premises in the operation of the railroad is void, as against public policy.. The right to so contract as to fire accidentally communicated is not questioned, but only the right to so contract as to fire negligently communicated. Public policy is variable,— the very reverse of that which is the policy of the — 269 — public at one time may become public policy at another; hence, no fixed rule can be given by which to determine what is public policy. The authorities all agree that a contract is not void, as against public policy, unless it is injurious to the interests oí the public, or contravenes some established interest of society. Public policy has been aptly described as “ an unruly horse, and, when once you get astride, you never know where it will carry you.” It was said by Wilmot, C. J.: “ It is the duty of all courts to keep their eyes steadily upon the interests of the public, -■even in the determination of commutative justice, and when they find an action is founded upon a claim injurious to the public, and which has a bad tendency, to give no countenance or assistance in foro civili.” Other courts have said: “We may take it as well settled that in the law of contracts the first purpose of the courts is to look to the welfare of the public, and, if the enforcement of the agreement would be inimical to its interest, no relief could be granted to the party injured, and even though it might result beneficially to the party who made and violated the agreement. The common law will not permit individuals to oblige themselves by a contract either to do, or not to do, anything, when the thing to be done or omitted is in any degree elearly injurious to the public.” Again, it is said: “ It must not be forgotten that you are not to extend arbitrarily those rules which say that a given contract is void as being against public policy, because, if there is one thing more than another which public ■policy requires, it is that men of full age and competent understanding shall have the utmost liberty of contracting, and that their contracts, when entered into fairly and voluntarily, shall be held sacred, and shall be enforced by courts of justice. Therefore, you have this paramount public policy to consider, that you are not likely to interfere with this freedom of contract.” 3 Am. and — 270 — Eng. Encyclopedia of Law, p. 875, note 8; Boardman v. Thompson, 25 Iowa, 501. Aided by these definitions .and cautions, we proceed again to inquire whether the •clause of the agreement in question, if carried into effect, would be injurious to any interest of the public, •or, in other words, whether the public has any interest in this provision of the contract. The conclusion of ■the former opinion is “ that the provision, if effectual, would cause the defendant to disregard and neglect a •duty which it owes to the public, and thereby violate an obligation imposed upon it by law.” This conclusion rests, in part at least, upon holding that sections 1289 and 1308 of the Code are applicable to the question under consideration, and that the defendant -owed it as a duty to the public to operate its road with -care with respect to plaintiff’s property. The discussion ■on rehearing leads us to inquire whether, under the law and facts, it is correct to say that the defendant owed any duty to the public with respect to the plaintiff’s property. The former opinion holds correctly ■that the liability of railroad corporations, under section 1289, for negligently setting out fires, is absolute, and that the obligation on the part of the. railroad companies to exercise care is towards the public; but the ■question remains whether that section applies to cases like this, or, in other words, whether it established any interest in the public, or imposed any duty upon the •defendant towards the public, in respect of the property •of the plaintiff. The defendant owed no duty to the public to exercise care with respect to its own buildings ■situate on its right of way, and incurred no liability for their negligent burning, unless the fire spread beyond its own premises. The operation of a railway increases the danger from fire to property situated on the premises of its owner, where he ■ has the right -.to have it, and hence the provision of section 1289 — 271 — making the corporation operating the railway absolutely liable for all damages by fire that is negligently set out or caused by the operation of the railway. As to such property the railway company owes to the public the duty of care, and the public has an interest in the performance of that duty. Therefore, a contract that exempts from that duty to the public would be injurious to the public interests, and against public policy. The plaintiff Griswold's buildings were not upon his own premises, nor where he had a right to have them, independent of the defendant; they were upon the right of way, where they could only be by its permission. ■ In granting the permission, and in placing the buildings there, both parties knew of the increased hazard of the location from fire communicated either through accident or negligence in the operation of the road. They knew that the defendant corporation could only act through its officers, agents, and employees, and that these might be negligent in the performance of their duties. The plaintiff had an insurable interest, and could, as he did, protect himself, in part at least, against loss by either accident or negligence. The defendant had no insurable interest, and could only protect itself from the hazard by refusing consent, or by contracting for indemnity, as it did. Plaintiff Griswold contracted with his coplaintiffs, the insurance companies, for indemnity against loss by fire, whether caused by accident or negligence. The fire occurred through neglect, and the insurance companies, as they were bound to do, paid the insurance. Those contracts, like this, were-for indemnity against liability by fire, whether caused by accident or negligence. Many losses by fire occur through the negligence of the insured or his family, and recovery is had, unless the negligence was willful. While these policies are not before us, we may assume, we think, that, under them, — 272 — the plaintiff Griswold would have been entitled to recover, even though the loss had occurred through his own negligence, unless it was willful. The public had no interest in these contracts of insurance between the plaintiffs; nor were they against public policy, because the companies agreed to indemnify the assured against loss caused by his own negligence. This is not a question whether, under section 1289, the defendant would be liable to Griswold for negligently communicating fire to this property in the absence of a contract to the contrary, but it is whether the public has any interest that this contract contravenes. It seems to us now quite clear that, as these buildings could only be placed upon the defendant’s right of way by its consent, and were so placed upon the premises, and on the conditions expressed in the lease, the public had no interest therein, under said section 1289 or otherwise, that would be injured by giving effect to the agreement in question. Much as the public may have been interested in the convenience of such a place of business, it had no interest as to who should carry the hazard incident to that property being located as it was. The fact that the defendant acquired this right of way in the exercise of the right of eminent domain did not preclude it from granting or withholding permission to the plaintiff to build thereon, nor the parties from contracting as to which should bear the hazard incident to the location. II. It is contended that the defendant entered into this contract in its capacity as a common carrier, and therefore we must apply to the consideration of the question section 1308, providing, in effect, that carriers of persons or property can not exempt themselves from liability by contract which would exist had no contract been made. It is undoubtedly true that the ultimate purpose of the defendant in entering into this contract was the promotion of its business as a — 273 — •common carrier. But the contract is not for the carriage of persons or property. That the ultimate purpose was to increase its business as a carrier does not .make this a contract for carriage any more than would ■be the employment of workmen in its shops, warehouses, or elsewhere, apart from the operation of the road. Upon further consideration we are of the opinion that this contract was not made by the defendant in its capacity as a common carrier, and that the provision of section 1308 is not applicable. Johnson’s Adm’x v. Railway Co., 11 S. E. Rep. (Va.) 829, and ■other cases involving contracts of exemption from liability for causing injuries to, or death of, persons, ■are not applicable. The public has an interest in the life and safety of every human being, and every such contract is clearly injurious to public interest, but not ■always so as to property. III. In the lease the plaintiff Griswold agrees ■“that he will transact the business for which said ■buildings are erected and designed at fair and reasonable rates, and in a prompt and careful manner, so that neither the company nor the public will be prejudiced by reason of the said lessee dealing unfairly or negligently in their behalf, or in the transaction of the ■business connected with the grain, coal, and lumber building so erected as aforesaid.” While it is evident "the parties contemplated a place for dealing with the public, in the maintenance and management of which ■the public might be interested, neither that interest nor Mr. Griswold’s agreement gave the public any interest as to who should bear the hazard of the loss of the buildings by fire. The plaintiff indemnified himself against the loss, in part at least, by insurance, and the insurance companies have paid him, as they were bound to -do. Surely, public policy does not demand that the defendant shall now reimburse these insurance companies for the payments they were bound to make by — 274 — their own contract, and which the defendant has never-promised to repay. As to the claim of the plaintiff Griswold to recover the excess of the loss over the-amount of insurance, public policy answers, You must stand by your contract. After a careful review of the case, we reach the conclusion that the public-had no interest in the clause of the contract in question, that its enforcement works no injury to any interest of the public, and that the judgment of the-district court should be affirmed.