Fairmont Coal Co. v. Jones & Adams Co.

JENKINS, Circuit Judge, after stating the facts, delivered the opinion of the court. The relation created by the contract in question, as between the parties thereto, was that of principal and agent, principal and factor, bailor [713] •and bailee. The common-law duty of the bailee with respect to the thing bailed is to exercise a reasonable degree of care and skill for its preservation. He is not liable for loss or injury to the thing bailed, occurring either by vis major, or from unforeseen and unexpected causes not naturally to be expected, and which could not be guarded against by reasonable foresight. He is not an insurer. It is, of course, competent for the bailee to enlarge his common-law liability, and where he has expressly undertaken, by contract express or implied, to assume the character of insurer, he is liable for the destruction of the thing bailed, although occurring from an unforeseen cause which he could not control. Sturm v. Boker, 150 U. S. 312, 14 Sup. Ct. 99, 37 L. Ed. 1093. The bailee here is therefore liable, if liable at all, because of the stipulations of the contract. In the construction of that contract it is to be remembered that, if its terms merely declare the liability which the law upon the facts would impose, the obligation of the bailee is neither increased nor changed, for, as Story observes, the general rule in the construction of special contracts of this kind is not to expound the contract unfavorably to .the bailee beyond the obvious scope of its terms. Story, Bailm. § 35. Thus Blackstone states that a bailee “who undertakes specially to keep the goods safely and securely” obligates himself to the ordinary diligence which the common law demands (2 Bl. Comm. 452); otherwise, however, if the term of the. contract is to do that absolutely which the law does not require to be done. Of this class are many of the cases cited by the plaintiff in error. Direct Navigation Company v. Davidson (Tex. Civ. App.) 74 S. W. 790; Harmony v. Bingham, 12 N. Y. 99, 62 Am. Dec. 142; Coal Company v. Richter, 31 W. Va. 858, 8 S. E. 609; Reinstein v. Watts, 84 Me. 139, 24 Atl. 719; Tindall v. McCarthy, 44 S. C. 487, 22 S. E. 734. These cases are wanting in the element of agency, and merely emphasize the rule, so that the question resolves itself to this: Did the defendant in error by the stipulation of the contract become an insurer of this coal against all possible contingencies? In what respect, if at all, was its common-law liability enlarged? The solution of these questions rests upon the proper construction of the fifth paragraph of the contract, read in the light of the situation disclosed by the other clauses of the contract. That paragraph is as follows: “Fifth. The first party shall insure all cargoes of coal consigned to the second party, and deliver the same safely alongside second party’s docks, and said second party shall thereupon be responsible to said first party for all coal, after such delivery alongside its docks, and shall insure all such coal upon receipt of the same at its own expense, and shall also pay any taxes that may be thereafter levied upon the same; and also guarantee to the first party weights as per bills of lading, but said bills of lading shall be accompanied by manifests showing initial, number and contents of each car, evidencing the coal covered by such bills of lading. These charges shall be considered as part of the cost of storing and handling.” The agreement made the defendant in error the selling agent of the plaintiff in error at Ashland and Duluth. The coal was to remain the property of the bailor until sold and delivered by the ■bailee, and until the proceeds were accounted for. Then, and then [714] only, would the bailee have any right in the accounts arising from the sale, or any right of action against the purchaser. The bailee guarantied the collection of the accounts. The coal could only be sold at such prices as the bailor should from time to time direct. The bailee should not handle bituminous coal on its own account, .or any consigned by others. It should advance the necessary freights from Lake Erie ports, deducting the amount from sales made. The bailor allowed the bailee 15 cents per net ton for loading coal from the vessel, and 17 cents per net ton for reloading unscreened, and 25 cents per net ton for screening and reloading coal. Such allowance was to be considered an equivalent for all dock rents, taxes, insurance, and guaranty of weights by the bailee. The bailee was to receive a commission of 5 per cent, for selling screenings, and 4 per cent, for other grades of coal, based upon the selling price, as authorized from time to time by the bailor; and the bailee was debarred from making any concessions of its commission, or of the storage or handling charges, to secure trade, whereby all cutting of prices was prevented. It is difficult to conceive of a contract which could be drawn more certainly to deprive the bailee of all discretion, or to continue the bailor in uncontrolled authority over the thing bailed. In the conditions established by the contract there is nothing to lead us to suppose that the bailee designed to enlarge its common-law liability, except as may be spelled out by the precise language of this fifth paragraph. By that the bailor insured the consignments of coal while in transit from its mines to the lake ports for shipment, and on the voyage through the lakes to the port of delivery, and undertook to deliver the cargoes safely alongside the dock at Duluth and the dock at Ashland; and thereupon, says the contract, the bailee shall “be responsible to said first party for all coal after such delivery alongside its docks.” So that, in the last analysis, the question turns upon the proper meaning to be given to the word “responsible,” as employed in the contract. Does it mean liable as insurer, or does it mean that the responsibility of the bailee shall begin when the vessel containing the coal is safely alongside the dock? We think that the latter, in view of the conditions of the contract, is the natural and correct meaning to be given to the term. The bailor was to insure its coal up to that time. After that time; in consideration of the commission allowed, the bailee was to insure. The term “responsible” is employed in connection with the subject of insurance. The time of delivery to the bailee — the time when the obligation to insure commenced — was the time of the arrival of the vessel safely alongside the dock. That marked tl?e.time when the duty of the bailorended and the duty of the bailee began. If the bailee assumed the character of an insurer, and became absolutely responsible to the bailor for the return of the coal or its proceeds, why should the contract provide that the former should insure the coal? This clause means to us that the bailor recognized the contingencies of loss attaching to its continued ownership of the coal; that it must bear the loss occurring through fire, and sought to protect itself in that respect, but at the expense of the bailee. The same observa [715] tion would apply with reference to the provision for the payment of taxes. The intent of the parties, as we read this contract, was that the liability of each is to be measured by the law of the land, except as to those matters expressly mentioned, with respect to which that liability was enlarged. This reading is strengthened by a provision of the first clause which, although connected with, and possibly limited to, the subject of the delivery and receipt of coal, may well be held to characterize the general intent as to the duty of .each, in the absence, at least, of any express provision enlarging the common-law liability. That clause is as follows: “Both parties in entering into this agreement realize the uncertainty of absolute deliveries growing out of strikes, casualties or other causes beyond the control of either party, and it is hereby mutually acknowledged that the intent of this agreement is not to bind either party as to- failure to perform or modified performance by reason of matters beyond the control of the party in default, but that the coal shall be shipped and accepted by the second party as per delivery specified so far as the labor and the physical conditions at the respective plants and the ability of the carriers will permit.” The loss concededly occurred by unforeseen accident, and without default or negligence on the part of the bailee. Its liability as insurer is not established by any express term of the contract. We do not think that it can be fairly implied. Nor is there anything in the surrounding conditions which would warrant a construction to work out liability as insurer. The judgment is affirmed.