Under the Carmack Amendment an interstate carrier comes under
liability not only for its own default, but also for loss and
damage upon the line of any connecting carrier.
Atlantic Coast
Line v. Riverside Mills, 219 U. S. 186.
Under the Carmack Amendment, a stipulation for limitation of
liability, if unauthorized as to the initial carrier, is
ineffective also as to a connecting carrier, and if valid as to the
initial carrier, is valid as to a connecting carrier.
The Carmack Amendment does not forbid a limitation of liability
in case of loss or damage to a valuation agreed upon for the
purpose of determining which of two alternative lawful rates shall
apply to a particular shipment.
The Carmack Amendment manifested the purpose of Congress to
bring contracts for interstate shipments under one uniform rule or
law, and therefore withdraw them from the influence of state
regulation.
Adams Express Co. v. Croninger, 226 U.
S. 491.
An agreement to release a carrier for part of a loss of an
interstate shipment due to negligence is no more valid than one for
complete exemption, neither is such a contract any more valid
because it rests on consideration than if it were without
consideration; but a declared value by the shipper for the purpose
of determining the applicable rate based upon valuation is not an
exemption from either statutory or common law liability.
Under the Act to Regulate Commerce, a carrier who has filed rate
sheets which show two rates based upon valuation is legally bound
to charge the applicable rate.
A shipper who declares either voluntarily or on request the
value of the article shipped so as to obtain the lower of several
rates based on valuation is estopped upon plain principles of
justice from recovering any greater amount.
A shipper who has declared a value to get the lower of two rates
cannot be allowed to introduce evidence
aliunde so as to
recover a larger amount as the true value; it would encourage
undervaluations and result in illegal preferences and
discrimination.
Page 227 U. S. 640
Where the duly filed tariff sheets show different rates based on
valuation, the shipper must take notice of the applicable rate, and
actual want of knowledge is no excuse; his knowledge is
conclusively presumed.
A carrier cannot contract with a particular shipper for an
unusual service unless he make and publish a rate for such service
equally for all.
Chicago & Alton Ry. v. Kirby,
225 U. S. 155.
An administrative rule of the Interstate Commerce Commission is
that valuation and rate are dependent each upon the other.
In this case, the valuation agreement of the contract was
expressed in usual form, was conclusive on the shipper, and does
not offend the Carmack Amendment.
91 Ark. 97, 121 S.W. 932, reversed.
Action by the holder of a bill of lading issued by the Chicago,
Rock Island & Pacific Railway for two boxes and one barrel
containing "household goods," received at Lawton, in what was then
the Indian Territory, a station on the line of the railway company,
for transportation to Gentry, Arkansas, a station on the line of
railway of plaintiff in error. One of the boxes was never
delivered, and the shipper sued to recover its value.
The defense was that the plaintiff had, in order to obtain the
lower of two freight rates, shipped the boxes under an agreement
that the goods, in case of a loss, should be valued at $5 per
hundredweight, and that it, as a succeeding carrier in the route,
was entitled to the benefit of that limitation of value. The total
weight of the two boxes and barrel was 400 pounds, and the weight
of the box lost was not over 200 pounds. The limitation of
liability was in the form of a release signed by the shipper, and
was delivered to the primary carrier on receipt of the bill of
lading.
The relevant parts of the bill of lading were in these
words:
"Lawton, 10-8-1907"
"Received from J. M. Carl, in apparent good order, by the
Chicago, Rock Island & Pacific Railway Company,
Page 227 U. S. 641
the following described packages marked and numbered as per
margin, subject to the conditions and regulations of the published
tariff of said company, to be transported over the line of this
railroad to _____ and delivered, after payment of freight, in like
good order to the next carrier (if the same are to be forwarded
beyond the line of this company's road), to be carried to the place
of destination, it being especially agreed that the responsibility
of this company shall cease at this company's depot at which the
same are to be delivered to such carrier; but this company
guarantees that the rates of freight for the transportation of said
packages from the place of shipment to _____ shall not exceed ___
per ___ and charges advanced by this company, subject to the
following conditions:"
"
* * * *"
"It is further especially agreed that for all loss or damage
occurring in the transit of said packages the legal remedy shall be
against the particular carrier or forwarder only in whose custody
may be actually at the happening thereof, it being understood that
the Chicago, Rock Island & Pacific Railway Company assumes no
other responsibility for their safe carriage or safety than may be
incurred on its own road."
"
* * * *"
-------------------------------------------------------------------
Consignee: Destination:
J.M. Carl. Gentry, Ark.
-------------------------------------------------------------------
Description of Articles
-------------------------------------------------------------------
Weights Stamp
No. Subject to correction
2 Bx. H.H. goods. Paid to apply $3.85
1 Brl. H.H. goods. 400
O.R. Val. 5.00 cwt. 127016
-------------------------------------------------------------------
"R. F. Prettyman,
Agent"
Page 227 U. S. 642
The legend "O. R. Val. 5.00 cwt." on the bill of lading is an
abbreviation for "Owner's released valuation $5 per hundredweight,"
and was intended to connect with the contract of release, which was
in these words:
"Lawton Station, 10, 8, 1907."
"In consideration of the price (special rates on carloads and
first-class rates on less quantities) at which the Chicago, Rock
Island & Pacific Railway Company hereby agrees to transport a
quantity of household goods, furniture, or emigrants' movables --
including livestock, if any in the car -- from Lawton, O.T. station
to Gentry, Arkansas, station, the same being consigned to J. M.
Carl. I, _____ _____, the consignor, hereby release the said
company, and all other railroad and transportation companies over
whose lines the above property may pass to destination, from all
liability from any loss or damage said property may sustain in
excess of $5 per 100 lbs., and I hereby guarantee all charges for
freight on connection lines to destination."
"J. M. Carl, Consignor."
"N.B. -- When household goods, etc., are shipped at rate based
on valuation of $5 per hundred pounds, agents will require the
owner or consignor to sign this agreement, and when signed, same
must be kept on file at forwarding station. Agent must then note on
Way Bill, 'Released to valuation of $5 per hundred pounds.'"
The suit was started before a state justice of the peace, and
the pleadings were informal. There was a judgment for $75, which
was the uncontradicted full value of the goods lost. The case was
taken to the circuit court for Benton County, where there was a
verdict and a judgment for the same amount. This judgment was, upon
a writ of error, affirmed in the supreme court of the state, the
case being reported in 91 Ark. 97, 121 S.W. 932.
Page 227 U. S. 643
The uncontradicted evidence was that two boxes and a barrel
containing household goods were delivered to the initial carrier,
and that the plaintiff in error received same, but delivered only
one of the boxes and the barrel, and that the value of the box lost
was $75; that there were two rates in effect upon household goods
shipped from Lawton to Gentry, one based upon a released valuation
of $5 per hundredweight, and a higher rate upon such articles not
so released, and that the latter rate was 78 cents per hundred
pounds higher than the released valuation rate, and that these two
rates "were evidenced by tariffs duly filed with the Interstate
Commerce Commission and published according to law."
The defendant in error testified, over objection, that though he
could read and write, and had signed the release set out above, and
had received the bill of lading, he had neither read them nor asked
any questions about them, and had not been given any information as
to the contents of either document, and had no knowledge of the
existence of the two rates. He was also allowed to testify that, if
he had known of the difference between the two rates, and the
effect of accepting the lower, he would have paid the higher rate.
There was no evidence tending to show any misrepresentation made by
the company, or of any deceit, or fraud, or concealment, unless it
be inferred from the fact that the company made no explanation of
the rates or the contents of either the bill of lading or the
release. The shipper merely said that the bill of lading was handed
to him with the release, which he was asked to sign. Exceptions
were taken to the rulings upon evidence and to certain parts of the
charge, and for the refusal of the court to grant certain
requests.
Page 227 U. S. 646
MR. JUSTICE LURTON, after making the foregoing statement,
delivered the opinion of the Court.
The supreme court of the state declined to consider or pass upon
any of the questions made in that court for reversal except the
single question as to whether the plaintiff in error, as the final
carrier in the route, was entitled to the benefit of the
stipulation in the release signed by the shipper, releasing the
Chicago, Rock Island & Pacific Railway, the primary
carrier,
"and all other railroad and
Page 227 U. S. 647
transportation companies over whose lines the above property may
pass to destination, from any loss or damage the property may
sustain in excess of five dollars per hundredweight."
The court, after saying that the plaintiff in error
"relies for a reversal on the clause in the contract with the
initial carrier limiting the liability as to value in case of loss
. . . as a stipulation for its benefit as well as for the benefit
of the initial carrier, and bases this contention on our decisions
to that effect,"
in answer to this contention, said:
"But, in making their contention, they have not taken into
consideration the effect of the Hepburn Amendment to the Interstate
Commerce Act, which became effective on June 29th, 1906, a date
prior to the time the contract in question was made."
The provisions of the twentieth section of that act were then
set out, and the court proceeded by saying:
"The undisputed evidence shows that the initial carrier received
the property for transportation from a point in one state to a
point in another state, and the presumption, in the absence of
evidence to the contrary, was, as will be seen from our decisions
hereinafter referred to, that the goods were lost through the
negligence of appellant, the last carrier."
"The section of the Hepburn Act above quoted makes the carrier
liable"
"for any loss, damage, or injury to such property caused by it,
. . . and no contract, receipt, rule, or regulation shall exempt
such common carrier, railroad, or transportation company from the
liability hereby imposed."
"The express terms of the act make the carrier liable for any
loss caused by it, and provide that no contract shall exempt it
from the liability imposed. It is manifest that the act renders
invalid all stipulations designed to limit liability for losses
caused by the carrier. Public
Page 227 U. S. 648
policy forbids that a public carrier should by contract exempt
itself from the consequences of its own negligence. For the same
reason, a statute may prohibit it from making stipulations in a
contract which provide for such partial exemption."
"If the initial carrier is prohibited from making a contract
limiting its own liability, it is obvious that it should not make a
contract limiting the liability of its connecting carriers, for the
section of the Hepburn Act under discussion provides that the
carrier issuing the bill of lading may recover from the connecting
carrier on whose line the loss occurs the amount of the loss it may
be required to pay the owner."
As the shipment was interstate, the contract was controlled by
the twentieth section of the Act of Congress of June 29, 1906. The
initial carrier, under that provision of the Interstate Commerce
Act, as an interstate carrier, holding itself out to receive
shipments from a point upon its own line in one state to a point in
another state upon the line of a succeeding and connecting carrier,
came under liability not only for its default, but also for loss or
damage upon the line of a connecting carrier in the route.
Atlantic Coast Line v. Riverside Mills, 219 U.
S. 186. Any stipulation in its own receipt was
ineffective insofar as it was not authorized by the section of the
act referred to, whether intended for its own benefit or that of
the succeeding carrier. It is also true that any limitation of
liability contained in its contract which would be valid in its own
behalf would likewise inure to the benefit of its connecting
carrier. The liability of any carrier in the route over which the
articles were routed, for loss or damage, is that imposed by the
act as measured by the original contract of shipment so far as it
is valid under the act. This provision of the Interstate Commerce
Act has been so fully considered and decided that we need not go
further into to the matter.
Adams Express Co. v.
Croninger,
Page 227 U. S. 649
226 U. S. 491;
Chicago &c. Ry. v. Latta, 226 U.
S. 519;
Chicago &c. Ry. v. Miller,
226 U. S. 513.
That provision, under the opinions above cited, does not forbid a
limitation of liability in case of loss or damage to a valuation
agreed upon for the purpose of determining which of two alternative
lawful rates shall apply to a particular shipment.
But it is said that, upon the face of the contract of limitation
here involved, it is an exemption from liability for negligence
forbidden by the Carmack Amendment, and that the judgment should
therefore be affirmed.
That amendment undoubtedly manifested the purpose of Congress to
bring contracts for interstate shipments under on uniform rule or
law, and therefore withdraw them from the influence of state
regulation.
Adams Express Co. v. Croninger, above cited.
Every such initial carrier is required "to issue a receipt or bill
of lading therefor" when it receives property for transportation
from one state to another. Such initial carrier is made liable to
the holder of such receipt for any loss or damage "caused by it,"
or by any connecting carrier in the route to whom it shall make
delivery. It is then declared that no contract, receipt, rule, or
regulation shall "exempt" such a common carrier "from the liability
hereby imposed."
In speaking of the "liability" imposed by the provision referred
to, we said, in the
Croninger case that
"the statutory liability, aside from responsibility for the
default of a connecting carrier in the route, is not beyond the
liability imposed by the common law as that body of law applicable
to carriers has been interpreted by this Court as well as many
courts of the states."
Referring to the exemption forbidden by the same clause, we said
that that was "a statutory declaration that a contract of exemption
from liability for negligence is against public policy and void."
Citing
Bernard v. Adams Express Co., 205 Mass. 254, 259,
and
Greenwald v. Barrett, 199 N.Y. 170, 175, and other
cases.
Page 227 U. S. 650
Is the contract here involved one for exemption from liability
for negligence, and therefore forbidden? An agreement to release
such a carrier for part of a loss due to negligence is no more
valid than one whereby there is complete exemption. Neither is such
a contract any more valid because it rests upon a consideration
than if it was without consideration. A declared value by the
shipper for the purpose of determining the applicable rate, when
the rates are based upon valuation, is not an exemption from any
part of its statutory or common law liability. The right of the
carrier to base rates upon value has been always regarded as just
and reasonable. The principle that the compensation should bear a
reasonable relation to the risk and responsibility assumed is the
settled rule of the common law. Thus, in
Gibbon v.
Paynton, 4 Burr. 2298, it was said by Lord Mansfield: "His
warranty and insurance is in respect of the reward he is to
receive, and the reward ought to be in proportion to the risk." In
the leading case of
Hart v. Pennsylvania Railroad,
112 U. S. 331, the
right of the carrier to adjust the rate to the valuation which the
shipper places upon the thing to be transported is the very basis
upon which a limitation of liability in case of loss or damage is
rested. This is an administrative principle in ratemaking
recognized as reasonable by the Interstate Commerce Commission, and
is the basis upon which many tariffs filed with the Commission are
made. Matter of Released Rates, 13 I.C.C. 550.
It follows, therefore, that, when the carrier has filed rate
sheets which show two rates based upon valuation upon a particular
class of traffic, it is legally bound to apply that rate which
corresponds to the valuation. If the shipper desires the lower
rate, he should disclose the valuation, for, in the absence of
knowledge, the carrier has a right to assume that the higher of the
rates based upon value applies. In no other way can it protect
itself in its
Page 227 U. S. 651
right to be compensated in proportion to its insurance risk. But
when a shipper delivers a package for shipment and declares a
value, either upon request or voluntarily, and the carrier makes a
rate accordingly, the shipper is estopped, upon plain principles of
justice, from recovering, in case of loss or damage, any greater
amount. The same principle applies if the value be declared in the
form of a contract. If such a valuation be made in good faith, for
the purpose of obtaining the lower rate applicable to a shipment of
the declared value, there is no exemption from carrier liability
due to negligence forbidden by the statute when the shipper is
limited to a recovery of the value so declared. The ground upon
which such a declared or agreed value is upheld is that of
estoppel. Thus, in
Hart v. Pennsylvania Railroad,
112 U. S. 331,
112 U. S.
340-341, it is stated:
"As a general rule and in the absence of fraud or imposition, a
common carrier is answerable for the loss of a package of goods
though he is ignorant of its contents, and though its contents are
ever so valuable, if he does not make a special acceptance. This is
reasonable, because he can always guard himself by a special
acceptance, or by insisting on being informed of the nature and
value of the articles before receiving them. If the shipper is
guilty of fraud or imposition by misrepresenting the nature or
value of the articles, he destroys his claim to indemnity, because
he has attempted to deprive the carrier of the right to be
compensated in proportion to the value of the articles and the
consequent risk assumed, and what he has done has tended to lessen
the vigilance the carrier would otherwise have bestowed."
In summing up the view of the court in the same case. it was
said (p.
112 U. S.
343):
"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
Page 227 U. S. 652
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 be upheld as a proper and lawful
mode 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."
The valuation declared or agreed upon as evidenced by the
contract of shipment upon which the published tariff rate is
applied must be conclusive in an action to recover for loss or
damage a greater sum. In saying this, we lay on one side, as not
here involved, every question which might arise when it is shown
that the carrier intentionally connived with the shipper to give
him an illegal rate, thereby causing a discrimination or preference
forbidden by the positive terms of the Act of Congress and made
punishable as a crime. To permit such a declared valuation to be
overthrown by evidence
aliunde the contract, for the
purpose of enabling the shipper to obtain a recovery in a suit for
loss or damage in excess of the maximum valuation thus fixed, would
both encourage and reward undervaluations, and bring about
preferences and discriminations forbidden by the law. Such a result
would neither be just nor conducive to sound morals or wise
policies. The valuation the shipper declares determines the legal
rate where there are two rates based upon valuation. He must take
notice of the rate applicable, and actual want of knowledge is no
excuse. The rate, when made out and filed, is notice, and its
effect is not lost, although it is not actually posted in the
station.
Texas & Pacific Railway v. Mugg, 202 U.
S. 242;
Chicago & A. Railway v. Kirby,
225 U. S. 155.
It would open a wide door to fraud and destroy the uniform
operation of the published tariff rate sheets. When there are two
published rates, based upon difference in value, the legal rate
automatically attaches itself to
Page 227 U. S. 653
the declared or agreed value. Neither the intentional nor
accidental misstatement of the applicable published rate will bind
the carrier or shipper. The lawful rate is that which the carrier
must exact and that which the shipper must pay. The shipper's
knowledge of the lawful rate is conclusively presumed, and the
carrier may not be required to surrender the goods carried upon the
payment of the rate paid, if that was less than the lawful rate,
until the full legal rate has been paid.
Texas & Pacific
Railway v. Mugg, supra. Nor is the carrier liable for damages
resulting from a mistake in quoting a rate less than the full
published rate.
Illinois Central Railroad v. Henderson Elevator
Company, 226 U. S. 441. Nor
can a carrier legally contract with a particular shipper for an
unusual service unless he make and publish a rate for such service
equally open to all.
Chicago & Alton Railway v. Kirby,
supra.
That the valuation and the rate are dependent each upon the
other is an administrative rule applied in reparation proceedings
by the Interstate Commerce Commission. Southern Cotton Oil Co. v.
Southern Railway Co., 19 I.C.C. 79; Miller & Lux v. Southern
Pacific Company, 20 I.C.C. 129.
In
Hart v. Penn. R. Co. supra, parol evidence that the
horses shipped were of a far greater value than the valuation
agreed upon was rejected as incompetent. "The presumption is
conclusive," said the Court,
"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."
The difference between two rates upon the same commodity, based
upon valuation, is presumably no more than sufficient to protect
the carrier against the greater amount of risk he assumes by reason
of the difference in value. When the higher rate is no more than to
reasonably insure
Page 227 U. S. 654
the carrier against the larger responsibility, a real choice of
rate is offered, and the shipper has no reasonable excuse for
undervaluation. If the margin between the rates is unreasonably
beyond protection against the larger risk, the shipper may be
induced to misrepresent the value to escape the unreasonably high
rate upon the real value. This would result in permitting the
shipper to obtain a rate to which he is not entitled, and in the
carrier's escaping from a portion of its statutory liability. Both
the adjustment of rates upon the class of articles, based upon
difference in valuation, as well as the acceptance of stipulations
in the carrier's bill of lading which affect the liability declared
by the Carmack Amendment, are administrative duties of the
Commission. To the extent that such limitations of liability are
not forbidden by law, they become, when filed, a part of the
rate.
In the instant case, we must assume that the difference between
the rates upon household goods of loss value than five dollars per
hundredweight and the rate upon the same class of goods of a higher
value has been fixed upon this principle. We must, for the purpose
of this case, accept the high and low rate as reasonable. If the
present rates upon such goods, as shown in the tariffs filed, are
inadequate to protect the carrier, a remedy can be had by an order
of the Interstate Commerce Commission readjusting the rates to meet
the requirements of justice, alike to shipper and carrier.
Coming now to the application of the principles we have
indicated, we are at once confronted with the suggestion that the
contract in this case is not one of valuation. Upon the side of the
shipper, the pregnant words are that he thereby "releases the said
company from all liability for any loss or damage said property may
sustain in excess of $5 per 100 lbs." At the foot and below the
signature of the consignor is a notation addressed to the company's
agent, stating in substance that, when household
Page 227 U. S. 655
goods are shipped at the rate based on a valuation of $5 per 100
lbs., the agent will require the owner or consignor to "sign this
agreement," and then note on the bill of lading, -- "Released to
valuation of $5 per hundred." This was done, showing that the agent
understood that the household goods were shipped upon a valuation
of five dollars per hundred pounds. The tariff sheets filed with
the Commission showed two rates on household goods, one "when
released to five dollars per hundred and a higher rate when not so
released." The rate endorsed on the bill of lading and paid by the
shipper was the lower rate so prescribed by the rate sheets. The
lawful rate when valued at more than five dollars per hundred was
twenty percent higher than the rate under which the consignor's
household goods were shipped. In the light of the published tariffs
and of the rate applied to this shipment, the two papers, read
together, plainly mean that the household goods included in the two
boxes and one barrel were valued, for the purpose of coming under
the lower rate at five dollars per hundred.
The phrase "hereby releases," etc., is said to indicate not a
valuation, but a release from liability for a part of the value.
The words are somewhat misleading. Yet contracts for the limitation
of loss to an agreed valuation are largely in this form. The
Commission, which has the rate sheets of hundreds of railroads
including stipulations as to value, treats the topic under the
title "Released Rates." 13 I.C.C. 550. The phrase has, we may take
notice, come to be a term applied to contractors of shipment
containing in one form or another an agreement to adjust a loss or
damage upon the basis of an agreed or declared value. It is
difficult not to see, when we read the bill of lading and the
release, with its note, in the light of the filed rate sheets and
the rate paid upon this shipment, corresponding to the lower of two
rates upon household goods, that the consignor and the carrier
mutually understood
Page 227 U. S. 656
that these boxes and barrels Contained household goods of the
average value per hundredweight of five dollars. The defendant in
error must be presumed to have known that he was obtaining a rate
based upon a valuation of five dollars per hundredweight, as
provided by the published tariff. This valuation was conclusive,
and no evidence tending to show an undervaluation was
admissible.
It has been suggested that a rate of five dollars per hundred
pounds upon household goods indiscriminately is arbitrary, and has
no reasonable relation to the actual value. This objection goes to
the classification made in the filed tariff sheets. They place two
rates upon household goods valued over and under five dollars per
hundred pounds. This basis has not been regarded by the Commission
as either arbitrary or unreasonable. In the opinion styled "In the
matter of Released Rates" cited above, the Commission, among other
things, said:
"The practice of basing rates upon the condition that the
carrier shall not be responsible for losses due to causes beyond
its control has received legal sanction. Similarly we find no
impropriety in a graduation of rates in accordance with the actual
values of specific commodities. Household goods, for example,
differ widely in value, and it is fair to all that the man who
ships goods of low value should receive the benefit of a lower rate
than the man who ships more expensive goods. Ratemaking upon this
principle is in every respect legitimate."
Our conclusion is that the shipping contract does not upon its
face offend against the statute, and the judgment must, for the
errors indicated, be reversed, and the case remanded for further
proceedings not inconsistent with this opinion.
MR. JUSTICE HUGHES and MR. JUSTICE PITNEY dissent.
