George N. Pierce Co. v. Wells Fargo & Co.

WARD, Circuit Judge. The plaintiff, a manufacturer, brought this action at law to recover of the defendant, an express company, the [562] value of a car load of automobiles and appurtenances which it had delivered to the defendant to be carried from Buffalo to San Francisco. The defendant admitted its liability, and the trial judge directed the jury to find a verdict in favor of the plaintiff for $50, the agreed yalue of the shipment, with interest and costs. The plaintiff took out this writ of error to the judgment entered on the verdict on the ground that the jury should have been directed to find a verdict for the actual yalue of the shipment, which was over the sum of $15,000. The bill of lading under which the goods were carried provided: “ * * * Not shall said company he liable for any loss of or damage to said property in any event or for any cause whatever unless said loss or damage shall be proved to have been caused by or to have resulted from the fraud or gross negligence of said company or its servants; nor in any event shall said company be held liable beyond the sum of fifty dollars, at not exceeding which sum the said property is hereby valued, unless a different value is hereinabove stated. * * * ” ■ The goods were fully described in writing- with the additional statement, “Value asked and not declared.” The plaintiff had large experience in shipping its product both by railroad companies and by express companies. It was entirely familiar with .shipping receipts and; bills of lading and had books containing- the forms of various companies, including the defendant. It had been in the habit of putting valuations upon its express shipments, but changed its practice be-, fore the shipment in question was made. ' Its shipping clerk read the bill.of .lading.for this shipment, was asked by the defendant’s agent whether he wished to put a valuation on the goods, and declined to do so. '.He knew that, if he did so, the amount-of freight payable would be increased. The' plaintiff’s representative on the Pacific coast had got the rate for this particular shipment, and had advised the plaintiff what it would be. ' ■ Thus the agreement was deliberately made with full knowledge of all the facts. The parties dealt with each other on perfectly fair, open, and even ..terms. Although the valuation was obviously much below the real' value," the plaintiff thereby' got the benefit of" paying less freight and the defendant the benefit of limiting, not its liability, but the amount of its liability for negligence. [1,4] There is nothing "against public policy in the first clause above quoted. The federal courts recognize no difference between gross and-ordinary negligence. Railway Co. v. Arms, 91 U. S. 489, 23 L. Ed. 374. In all cases negligence is failure to exercise-the care appropriate to the circumstances of the particular case. Greater care is called for in transporting eggs than in transporting pig iron. Therefore the clause, though it exempts the defendant from its liability as insurer, which is lawful, does not exempt it from the consequences of its own fraud or negligence, which would be unlawful as against public policy. It remained liable for its negligence to the full amount agreed upon. Such a contract is valid in the federal courts. [2] The Supreme Court has definitely so decided in Hart v. Pennsylvania Railroad Co., 112 U. S. 331, 5 Sup. Ct. 151, 28 L. Ed. 717. In that case 12 race horses were valued at $200 each, one of which was worth $15,000 and the others from $3,000 to $3,500 each. Mr. Justice Blatchford said: [563] ‘‘Although the horses, being race horses, may, aside from the bill of lading, have been of greater real value than that specified in it, whatever passed between the parties before the bill of lading was signed was merged in the valuation it fixed; and it is not asserted that the plaintiff named any value, greater or less, otherwise than as he assented to the values named in the bill of lading by signing it. The presumption is conclusive that, if the liability had been assumed on a valuation as great as that now alleged, a higher rate of freight would have been charged. The rate of freight is Indissolubly bound up with the valuation. If the rate of freight named was the only one offered by the defendant, it was because it was a rate measured by the valuation expressed. If the valuation was fixed at that expressed, when the real value was larger, it was because the rate of freight named was measured by the low valuation. The plaintiff cannot claim a higher valuation on the agreed rate of freight. •‘It Is further contended by the plaintiff that the defendant was forbidden by public policy to fix a limit for its liability for a loss by negligence at an amount less than the actual loss by such negligence. As a minor proposition, a distinction is sought to be drawn between a case where a shipper, on requirement, states the value of the property, and a rate of freight is fixed accordingly, and the present case. It is said that, while in the former ease the shipper may be confined to tlie value he so fixed, in the event of a loss by negligence, the same rule does not apply to a case where the valuation inserted in the contract is not a valuation previously named by the shipper. But we see no sound reason for this distinction. The valuation named was ihe ‘agreed valuation,’ the one on which minds of the parties met, however it; came to be fixed, and the rate of freight was based on that valuation, and was fixed on condition that such was the valuation, and that the liability should go to that extent and no further. * * * “The limitation as to value has no tendency to exempt from liability for negligence. It does not induce want of care. It exacts from the carrier the measure of care due to the value agreed on. The carrier is hound to respond in that value for negligence. The compensation for carriage is based on that value. The shipper is estopped from saying that the value is greater. The articles have no greater value, for the purposes of the contract of transportation, between the parties to that contract. The carrier must respond for negligence up to that value. It is just and reasonable that such a contract, fairly entered into, and where there is no deceit practised on the shipper, should be upheld. There is no violation of public policy. On the contrary, it would be unjust and unreasonable, and would be repugnant to the soundest principles of fair dealing and of the freedom of contracting, and thus in conflict with the public policy, if a shipper should be allowed to reap the benefit of the contract if there is no loss, and to repudiate it in case of loss. * * * “The plaintiff did not, in the course of the trial, or by any request to instruct the jury, or by any exception to the charge, raise the point that he did not fully understand the terms of the bill of lading, or that; he was induced to sign it by any fraud or under any misapprehension. On the contrary, he offered and read in evidence the bill of lading, as evidence of the contract on which he sued. “The distinct ground of our decision in the case at bar is that where a contract of the kind, signed by the shipper, is fairly made, agreeing on the valuation of the property carried, with the rate of freight based on the condition that the carrier assumes liability only to the extent of the agreed valuation, even in case of loss or damage by the negligence of the carrier, the contract will he upheld as a proper and lawful mode of securing a due proportion between the amount for which the carrier may he responsible and the. freight he receives, and of protecting himself against extravagant and fanciful valuations. Squire v. New York Central R. R. Co., 98 Mass. 239, 245 [93 Am. Dec. 162], and cases there cited.” There can he no objection to a carrier’s using printed bills of lading which fix a value for all packages unless a greater value is stated by the shipper and more freight paid. If it could not do this, a negotia [564] tiott and a chaffering would be necessary as to the value of each article tendered for shipment whose freight depended at all upon value, before the document could be delivered. A satisfactory or profitable transaction of business would be impossible. In the present case, however, as in the Hart Case, the shipper gave his positive assent. The plaintiff in error relies upon Calderon v. Atlas Co., 170 U. S. 272, 18 Sup. Ct. 588, 42 L. Ed. 1033, and The Kensington, 183 U. S. 263, 22 Sup. Ct. 102, 46 L. Ed. 190. They are not applicable. In the Calderon Case the bill of lading, as construed by the Supreme Court, exempted the carrier from any liability whatever for packages over the value of $100 each. Mr. Justice Brown recognized the right of the' carrier to limit his liability: “Acting upon this view, it was held that the liability of the respondent was limited to $100 per package, following in this particular the rulings of this court in Railroad Company v. Fraloff, 100 U. S. 24, 27 [25 L. Ed. 531], and Hart v. Pennsylvania Railroad, 112 U. S. 331 [5 Sup. Ct. 151, 28 L. Ed. 717], and the principle announced in Magnin v. Dinsmore, 56 N. Y. 168; s. c., 62 N. Y. 35 [20 Am. Rep. 442]; s. c., 70 N. Y. 410 [26 Am. Rep. 608], Wescott v. Fargo, 61 N. Y. 542 [19 Am. Rep. 300], and Graves v. Lake Shore & Mich. Southern Railroad, 137 Mass. 33 [50 Am. Rep. 282], In this last case the rule obtaining in this court is adopted to its full extent by the Supreme Judicial Court of Massachusetts. In these eases it was held to be competent for carriers of passengers or goods, by specific regulations brought distinctly to the notice of the passenger or shipper, to agree upon the valuation of the property carried, with a rate of freight based on the condition that the carrier assumes liability only to the extent of the agreed valuation, even in case of loss or damage by the negligence of the carrier, and that such contracts will be upheld as a lawful method of securing a due proportion between the amount for which the carrier may be responsible and the freight he receives, and of protecting himself against extravagant and fanciful valuations. See. also, Ballou v. Earle, 17 R. I. 441 [22 Atl. 1113, 14 L. R. A. 433, 33 Am. St. Rep. 881]; Richmond & Danville Railroad v. Payne, 86 Va. 481 [10 S. E. 749, 6 L. R. A. 849]; J. J. Douglas Company v. Minnesota Transportation Co., 62 Minn. 288 [64 N. W. 899, 30 L. R. A. 860].” But he went on to say that the contract properly construed relieved the carrier of any liability whatever, which was, of course, void: “In this case the contract is one prepared by the respondent itself for the general purposes of its business. With every opportunity for a choice of language, it used a form of exprossio¡n which clearly indicated a desire to exempt itself altogether from liability for goods exceeding $100 in value per package, and it has no right to complain if the courts hold it to have intended what it so plainly expressed. If the language had been ambiguous, we might have given it the construction contended for, which probably conforms more nearly to the clause ordinarily inserted in such cases, but such language is too clear to admit of a doubt of the real meaning.” In the Kensington Case the limitation was held invalid because the alternative offered to the passenger of a higher valuation for a higher freight was that she should ship her baggage under a bill of lading. This would have brought it within the Harter act (Act Feb. 3, 1893, c. 105, 27 Stat. 445 [U. S. Comp. St. 1901, p. 2946]), which relieves the carrier from any liability for errors of navigation or management by its servants and so was. unfair. The words with which Mr. Justice White concluded his opinion show that the court did not intend to depart from its ruling in the Hart Case, supra: [565] “In view of the nature and duration of the voyage, of the circumstances which may be reasonably deemed to environ transatlantic cabin passengers, and the objects anuí purposes which it may also he justly assumed the persons who undertake such a voyage have in view, we think the arbitrary'limitation of 250 francs to each passenger, unaccompanied by any right to increase the amount by an adequate and reasonable proportional payment, was void. It is therefore unnecessary to decide whether the ticket delivered and received, under circumstances disclosed by the record, gave rise to a contract embracing the exception to the carrier’s liability, which were stated on the ticket. ¥e intimate no opinion on the subject.” [3] It is also suggested that the fixing of a value lower than the real value is in violation of section 10 of the interstate commerce act of February 4, 1887 (chapter 104, 24 Stat. 382), as amended (Act March 2, 1889, c. 382, § 2, 25 Stat. 857 [U. S. Comp. St. 1901, p. 3160]), but, being the same for all shippers, there can hardly be said to be any discrimination. This court is definitely committed to the proposition that a common carrier may by contract limit the amount of his liability for his negligence. Bachman v. Clyde Steamship Co., 152 Fed. 403, 81 C. C. A. 529; Hohl v. Norddeutscher Floyd, 175 Fed. 544, 99 C. C. A. 166. And we think it would be in the highest degree violative of public policy to permit a shipper who has pecuniarily benefited by the valuation he has deliberately agreed upon to repudiate his agreement and recover against the carrier on a higher valuation. The judgment is affirmed.