Intercourse between the states by telegraph is interstate
commerce.
Telegraph Co. v: Texas, 105 U.
S. 460;
Western Un. Tel. Co. v. Pendleton,
122 U. S. 347.
While a state statute which imposes positive duties and
regulates the performance of business of a telegraph company is
void as a direct regulation of interstate commerce, as decided in
Western Un. Tel. Co. v. Pendleton, 122 U.
S. 347, a statute which imposes no additional
Page 218 U. S. 407
duty but gives sanction only to an inherent duty and declares,
as to a public service, the public policy of the state, does not
entail any burden on interstate commerce and is not void under the
commerce clause of the Constitution of the United States.
Public service corporations are subject to police regulation,
and while the police power is not unlimited, it does include
provisions, in pursuance of the public policy of the state, against
such a corporation's limiting its liability for its own negligence,
and a statute to that effect does not deprive the public service
corporation affected thereby of its property without due process of
law.
A classification of telegraph companies in a statute prohibiting
limitation of liability is reasonable, and does not deny equal
protection of the law to telegraph companies because it does not
apply to common carriers.
The statute of Michigan of 1893, fixing the liability of
telegraph companies for nondelivery of messages at the damages
sustained by the sender, is not, as applied to interstate messages,
unconstitutional as a burden on, or regulation of, interstate
commerce or as depriving telegraph companies of their property
without due process of law or denying them the equal protection of
the laws.
The common law does not become a part of the law of a its own
vigor but is adopted by constitutional provision, statute or
decision; it expresses the policy of the state for the time being
only, and is subject to be changed by the power that adopted it. It
has no efficacy that the statute changing it does not possess.
Whether a prohibition affecting interstate commerce as construed
by the highest court of a state rests on the common law liability
or on a statute of that state makes no difference in determining
its validity under the Constitution of the United States.
151 Mich. 425 affirmed.
This is an action for damages for failure to deliver a telegram
given to the telegraph company at Detroit, Michigan, to be
delivered at Kansas City, Missouri.
On the 15th of August, 1904, the milling company was offered
10,000 bushels of wheat of a certain kind at $1.01 a bushel for
immediate acceptance. The telegram in controversy was sent to
accept the offer. It was promptly transmitted by the company to its
relay station at Chicago within a minute or two after it was filed
at Detroit. What became of it afterwards is not shown; it
Page 218 U. S. 408
was not delivered. On the face of the telegram were the
following words: "Send the following message, without repeating,
subject to the terms and conditions printed on the back hereof,
which are hereby agreed to." One of the conditions referred to was
this: "It is agreed . . . that the said company shall not be liable
. . . for nondelivery of any unrepeated messages beyond the amount
received for the same." Fifty times the amount received for the
message was fixed as the damages for nondelivery in case of its
repetition, and there was a provision for insurance upon the
payment of a premium.
The case was tried to a jury, and the milling company gave
evidence of the above facts and of its damages. The telegraph
company offered no evidence. The telegraph company asked certain
instructions, which to understand, the statute of the state in
regard to telegrams must be given. It is entitled
"An Act to Prescribe the Duties of Telegraph Companies
Incorporated, Whether within or without This state, Relative to the
Transmission of Messages, and to Provide for the Recovery of
Damages for Negligence in the Nonperformance of Such Duties."
Laws of 1893, No. 195, p. 312. Section 1 of the act provides as
follows:
"SEC. 1. The people of the State of Michigan enact that it shall
be the duty of all telegraph companies incorporated either within
or without this state, doing business within this state, to receive
dispatches from and for other telegraph companies' lines, and from
and for any individual, and on payment of the usual charges for
individuals for transmitting dispatches, as established by the
rules and regulations of such telegraph company, to transmit the
same with impartiality and in good faith. Such telegraph companies
shall be liable for any mistakes, errors, or delays in the
transmission
Page 218 U. S. 409
or delivery, or for the nondelivery of any repeated or
nonrepeated message, in damages to the amount which such person or
persons may sustain by reason of the mistakes, errors, or delays in
the transmission or delivery due to the negligence of said company,
or for the nondelivery of any such dispatch due to the negligence
of such telegraph company or its agents, to be recovered with the
costs of suit by the person or persons sustaining such damage."
As to the statute, the telegraph company requested the court to
instruct the jury (1) that it did not prohibit a contract like the
one made by the parties; (2) the milling company must recover on
the contract or not at all; (3) the message was interstate
commerce, and the statute cannot be held to apply to it. If the
statute be held to be prohibitory, it is void as an attempted
regulation of interstate commerce in violation of the interstate
commerce clause of the Constitution of the United States.
The court refused the instructions, and expressed in its charge
to the jury a view antagonistic to the propositions of law
expressed in them. A verdict was rendered for the milling company
in the sum of $960. The telegraph company moved for a new trial,
repeating the propositions expressed in the instructions, and added
the further ground that the statute, when construed as prohibiting
contracts between persons
sui juris, is in violation of
the Fourteenth Amendment to the Constitution of the United States.
Judgment was entered on the verdict, which was affirmed by the
supreme court of the state by a divided court.
Page 218 U. S. 413
MR. JUSTICE McKENNA, after stating the case as above, delivered
the opinion of the Court.
Intercourse between the states by the telegraph is interstate
commerce.
Telegraph Co. v. Texas, 105 U.
S. 460,
105 U. S. 464;
Western Union Tel. Co. v. Pendleton, 122 U.
S. 347,
122 U. S. 356.
So considering, one division of the Supreme Court of Michigan was
of the opinion that the statute of the state in regard to telegraph
messages, if not limited to those which were delivered within the
state, would be unconstitutional. In arriving at that conclusion,
it was considered whether the common law of the state prohibited
the stipulation against liability for negligence, and it was asked,
if it did not,
"can a statute of a state deny to one engaged in interstate
commerce the right which he theretofore possessed of making a
contract limiting his liability? "
Page 218 U. S. 414
The first question was answered in the negative, on the
authority of the
Western Union Telegraph Co. v. Carew, 15
Mich. 525, and subsequent cases. The second question was also
answered in the negative, as we have seen. It was in effect said
that if the first question could be answered in the affirmative,
the case would be determined by the local law, and there would be
no power of revision in this Court, citing
Delmas v.
Ins. Co., 14 Wall. 661, and
Penn. R. Co. v.
Hughes, 191 U. S. 477.
This presents the seeming paradox that a prohibition against a
limitation of liability, if prescribed by the common law, would be
valid, and that a like prohibition prescribed by a statute would
not be. It is not clear whether it is meant to be said that in the
first instance there would be, and in the second instance there
would not be, a proper limitation of the liberty of contract and a
valid interference with interstate commerce.
The other division of the court, on the other hand, expressed
the view that "the legislature intended its action to be
coextensive with its authority to act, and that the statute should
be given the broadest possible application," and held to cover
state and interstate messages, and "to forbid a limitation of
liability" for negligence, and "to make void the stipulation
contained in the contract." The power of the legislature to pass it
was asserted, and that it did not burden interstate commerce. "The
contract," it was said, "was made in the state, is single, involves
in its performance service of defendant within and without this
state for a single charge." The service was not performed, and for
the breach of the common law and contract duty the milling company
has brought suit, it was said, and that the telegraph company seeks
to avoid liability by the stipulation on the back of the message.
To this defense it was answered:
"By the law of the state, the stipulation is of no force or
effect. The court so declared. It is contended here
Page 218 U. S. 415
that, in so doing, the court was in error. It will be well to
have in mind the effect of the statute as it was applied by the
trial court. Undoubtedly it was the application of a local law to
the contract. But the local law does not attempt to state, measure,
or define any duty of defendant, or to establish, define, or fix
the consequences of its miscarriage. The liability of defendant is
established without reference to the statute. It is when it asks to
be discharged therefrom by giving effect to the stipulation that
the local law becomes, if at all, effective. These considerations
answer those objections which are based upon the notion that the
local law has been given extraterritorial effect, and they require,
also, that this case and
Western Union Tel. Co. v.
Pendleton, 122 U. S. 347, shall be
distinguished."
Western Union Tel. Co. v. Pendleton, 122 U.
S. 347, leaves nothing to be said upon the principles
relating to interstate telegraphic messages and the limitations
upon the states of power to regulate them. A statute of Indiana was
adjudged invalid which prescribed that dispatches should be
transmitted in the order of their delivery, whether intended for
delivery within or without the state,
"under penalty, in case of failure to transmit or if postponed
out of such order, of $100, to be recovered by the person whose
dispatch is neglected or postponed."
The statute was construed by the supreme court of the state to
apply to dispatches not delivered in the state, even against the
practice of the companies, authorized by the laws of another state.
The message was delivered to the telegraph company in Indiana,
addressed to the care of a person in Ottumwa, Iowa, who lived over
a mile from the telegraph station, and not within the delivery
district. These facts were set up in the answer, and that, in
accordance with the custom and usage of the office, and in order to
facilitate the delivery of the message, a copy of the telegram
was
Page 218 U. S. 416
promptly placed in the post office, properly addressed, and
delivered the following morning. And it was averred that this was
in accordance with the laws of Iowa. A demurrer was sustained to
the answer, and judgment entered for the plaintiff for the sum of
$100. It was affirmed by the supreme court; it was reversed by this
Court on the ground that the statute was a regulation of interstate
commerce. Of the correctness of that conclusion there cannot be any
controversy, but there is a manifest difference between the statute
of Indiana and the statute of Michigan, and their purposes and
effects. The former imposed affirmative duties and regulated the
performance of the business of the telegraph company. It besides
ignored the requirements or regulations of another state, made its
laws paramount to the laws of another state, gave an action for
damages against the permission of such laws for acts done within
its jurisdiction. Such a statute was plainly a regulation of
interstate commerce, and exhibited in a conspicuous degree the
evils of such interference by a state and the necessity of one
uniform plan of regulation. The statute of Michigan has no such
objectionable qualities. It imposes no additional duty. It gives
sanction only to an inherent duty. It declares that, in the
performance of a service public in its nature, it is a policy of
the state that there shall be no contract against negligence. The
prohibition of the statute therefore entails no burden. It permits
no release from that duty in the public service which men in their
intercourse must observe -- the duty of observing the degree of
care and vigilance which the circumstances justly demand to avoid
injury to another.
We have seen that one division of the supreme court of the state
was of the view that, if the prohibition rested on the common law,
its validity could not be questioned. We cannot concede such effect
to the common law and deny it to a statute. Both are rules of
conduct proceeding
Page 218 U. S. 417
from the supreme power of the state. That one is unwritten and
the other written can make no difference in their validity or
effect. The common law did not become a part of the laws of the
states of its own vigor. It has been adopted by constitutional
provision, by statute or decision, and, we may say in passing, is
not the same in all particulars in all the states. But, however
adopted, it expresses the policy of the state for the time being
only, and is subject to change by the power that adopted it. How,
then, can it have an efficacy that the statute changing it does not
possess?
It is to the laws, whether part of the common law or found in
the statutes of the state, that we look for the validity and extent
of a contract between persons. They constitute its obligation. How
far this principle is limited by the commerce clause of the
Constitution of the United States may be illustrated by several
cases cognate to the one at bar.
In
Chicago &c. Railway v. Solan, 169 U.
S. 133, a statute was considered which prohibited any
railway company from limiting its liability as a common carrier.
Solan sued the company to recover $10,000 damages received by him
in Iowa from the derailing, by the company's negligence, of a car
in which he was traveling under a written contract by which the
company agreed to carry him, with cattle, from Rock Valley to
Chicago. It was stipulated in the contract that the company should
in no event be liable to the owner or person in charge of such
stock for any injury to his person in any amount exceeding $500.
The company alleged that the stipulation was part of the
consideration for the transportation, that it related exclusively
to interstate commerce, that it was valid at common law, and that
the statute of Iowa was void and unconstitutional, "as being an
attempt to regulate and limit contracts relating to interstate
commerce." The contentions were rejected. The Court said (p.
169 U. S.
137):
Page 218 U. S. 418
"Railroad corporations, like all other corporations and persons
doing business within the territorial jurisdiction of a state, are
subject to its law. . . . The rules prescribed for the construction
of railroads, and for their management and operation, designed to
protect persons and property otherwise endangered by their use, are
strictly within the scope of the local law. They are not in
themselves regulations of interstate commerce, although they
control, in some degree, the conduct and the liability of those
engaged in such commerce. So long as Congress has not legislated
upon the particular subject, they are rather to be regarded as
legislation in aid of such commerce, and as a rightful exercise of
the police power of the state to regulate the relative rights and
duties of all persons and corporations within its limits."
It was further said:
"The statute now in question, so far as it concerns liability
for injuries happening within the State of Iowa -- which is the
only matter presented for decision in this case -- clearly comes
within the same principles. It is in no just sense a regulation of
commerce. It does not undertake to impose any tax upon the company
or to restrict the persons or things to be carried, or to regulate
the rate of tolls, fares, or freight. Its whole object and effect
are to make it more sure that railroad companies shall perform the
duty resting upon them by virtue of their employment as common
carriers to use the utmost care and diligence in the transportation
of passengers and goods."
Pennsylvania R. Co. v. Hughes, 191 U.
S. 477, may be cited as pertinent. It determined the
validity of the common law of Pennsylvania, which prohibited the
common carrier from limiting his liability for his own negligence,
though the property was shipped from New York to a town in
Pennsylvania under a bill of lading which contained a clause
limiting the carrier's liability to a stipulated
Page 218 U. S. 419
value in consideration of the rate paid, the shipper having been
offered a bill of lading without such limitation on payment of a
higher rate. The court quoted at length from the
Solan
case, and concluded as follows:
"We can see no difference in the application of the principle
based upon the manner in which the state requires this degree of
care and responsibility, whether enacted into a statute or
resulting from the rules of law enforced in the state courts. The
state has a right to promote the welfare and safety of those within
its jurisdiction by requiring common carriers to be responsible to
the full measure of the loss resulting from their negligence, a
contract to the contrary notwithstanding."
There is a difference between that case and this -- indeed, some
contrast. In that case, a contract was made in New York which
limited the liability of the carrier, the limitation being in
accordance with the laws of that state; it was disregarded in
Pennsylvania, where the Act of negligence occurred, and the law of
the latter enforced. In this case, the contract limiting liability
was made in Michigan, the negligent act occurred in another state,
and yet the limitation, it is insisted, is void. In other words, in
that case, the law of the state was disregarded; in this case, it
is sought to be enforced. These, however, are but incidental
contrasts, in no way affecting the basic principle of the cases,
which was that the laws passed upon were exercises of the police
power of the states in aid of interstate commerce, and, although
incidentally affecting it, did not burden it.
Western Union Tel. Co. v. James, 162 U.
S. 650, is a strong example of the same distinctions. A
statute of Georgia which required telegraph companies having wires
wholly or partly within the state to receive dispatches, transmit,
and deliver them with due diligence under the penalty of $100, was
sustained as a valid exercise of the power of the state in relation
to messages by telegraph
Page 218 U. S. 420
from points outside of and directed to some point within the
state. It will be observed that this case in some particulars
exhibits a contrast to
W. U. Tel. Co. v. Pendleton, supra,
and yet they are entirely reconcilable, having a common principle.
In the latter case, the law passed on clearly transcended the power
of the state, because it directly regulated interstate commerce, as
we have already shown. In the
James case, the power of the
state was exercised in aid of commerce. In the latter case, prior
cases were reviewed, and the principle determining the validity of
the respective statutes was declared to be whether they could be
"fully carried out and obeyed without in any manner affecting the
conduct of the company with regard to the performance of its duties
in other states." It was said that a statute of that kind, as it
would not "unfavorably affect or embarrass" the telegraph company
in the course of its employment, should be held valid "until
Congress speaks upon the subject." And it was observed that
"it is the duty of a telegraph company which receives a message
for transmission, directed to an individual at one of its stations,
to deliver that message to the person to whom it is addressed with
reasonable diligence and in good faith. That is a part of its
contract, implied by taking the message and receiving payment
therefor."
And there can be liability to the sender of the message as well
as to him who is to receive it. The telegraph company in the case
at bar surely owed the obligation to the milling company to not
only transmit the message, but to deliver it. For the failure of
the latter, it sought to limit its responsibility -- to make the
measure of its default not the full and natural consequence of the
breach of its obligation, but the mere price of the service,
relieving itself, to some extent, even from the performance of its
duty -- a duty, we may say, if performed or omitted, may have
consequence beyond the damage in the particular instance. This the
statute of the state, expressing the policy of the state,
Page 218 U. S. 421
declares shall not be. For the reasons stated, we think that
this may be done, and that it is not an illegal interference with
interstate commerce.
Another contention is made. It is urged that the statute as
construed violates the Fourteenth Amendment of the Constitution of
the United States in that it abridges the privileges and immunities
between citizens of the United States and deprives the telegraph
company and the persons with whom it does business of their liberty
and property without due process of law. The basis of this
contention is the liberty of the telegraph company to make
contracts. It is rather late in the day to make that contention.
The regulation of public service corporations is too well
established, both as to power and the extent of the power, to call
for any discussion. It is true such power is not unlimited, nor is
the police power of the state, but the cases we have cited
demonstrate that the statute of Michigan is not in excess of such
powers.
Lastly, it is said that the statute deprives the telegraph
company and the persons with whom it does business of the equal
protection of the laws. This is sought to be sustained on the
ground that express companies and other common carriers may by
contract limit their liability. The argument to sustain the
contention is in effect that which we have considered. If an unjust
discrimination is intended to be asserted,
Orient Ins. Co. v.
Daggs, 172 U. S. 557, is
an answer.
Judgment affirmed.
MR. JUSTICE Holmes dissents.
