An agreement between an interstate railroad company and a
shipper to limit the carrier's liability upon an interstate
shipment to a valuation stated in the bill of lading will not
relieve the carrier of its common law obligation to pay the actual
value in case of loss by its negligence if its schedule, filed with
the Interstate Commerce Commission, provide but one rate applicable
to the shipment. P.
255 U. S. 321.
Reid v. American Express Co., 241 U.
S. 544, distinguished. 178 App.Div. 783; 226 N.Y. 534,
affirmed.
This case was submitted in the first instance to the Supreme
Court of New York, Appellate Division, and
Page 255 U. S. 318
decided in favor of the defendant, the railroad company. The
court of appeals of the state reversed the decision and directed
the entry of the judgment for the plaintiff, which is here reviewed
by certiorari and affirmed. The case is stated in the opinion.
MR. JUSTICE CLARKE delivered the opinion of the Court.
On March 10, 1915, S. Ontra & Bro. delivered to the Pacific
Mail Steamship Company at Yokohama, Japan, 56 cases of "drawn work
goods and renaissance," consigned to their own order at New York,
and received a bill of lading for ocean transportation to San
Francisco and thence by the Southern Pacific Company and its
connections, by rail, to destination. The property was delivered to
the Southern Pacific Company and, without new billing, was carried
to a junction with the line of the petitioner, the Union Pacific
Railroad Company, and while in its custody was totally destroyed in
a collision. The respondent, successor in interest to the
consignor, claimed in this suit the right to recover the fair
invoice value of the goods, $17,449.01, and the petitioner conceded
his right to recover, but only to the amount of the agreed
valuation of $100 per package, $5,600, to which it contended he was
limited by the bill of lading. All of the facts are stipulated or
proved by undisputed evidence.
The Appellate Division -- First Department, New York Supreme
Court -- rendered judgment in favor of respondent for $5,600, with
interest and costs, but, on appeal to the Court of Appeals of that
state, the judgment of the Appellate Division was reversed, and an
order was entered that
Page 255 U. S. 319
a judgment should be rendered by the Supreme Court in favor of
respondent for $17,449.01, with interest and costs. The case is
brought here on certiorari.
On the face of the bill of lading received at Yokohama was the
notation: "Weight 26,404 lbs.; ocean weight rate, 50�; freight
$132.02. Rail, minimum carload weight 30,000 lbs., weight rate
$1.25. Freight $375.00." (Thus, the ocean and rail rates are
separately stated, and the latter is $1.25 per 100 pounds minimum
carload.)
On the back of the bill of lading were printed thirty-one
conditions, the thirteenth of which contained the provision
that:
"It is expressly agreed that the goods named in this bill of
lading are hereby valued at not exceeding $100 per package, . . .
and the liability of the companies therefor in case of the total
loss of all or any of the said goods from any cause shall not
exceed $100 per package."
The petitioner was an interstate common carrier by rail at the
time of the shipment involved, and as such had filed with the
Interstate Commerce Commission schedules of rates and regulations
under which the property was moving at the time it was destroyed.
By these schedules the carrier was bound, and to them it was
limited, in contracting for traffic.
Southern Railway v.
Prescott, 240 U. S. 632,
240 U.S. 638. The statute
expressly provided that it should not charge or demand or collect
or receive a greater or less or different compensation for the
transportation of property or for any service in connection
therewith than such as was specified in such schedules. (34 Stat.
587, § 6.)
In these schedules was included a rule, designated as Rule 9A,
which reads:
"Unless otherwise provided, when property is transported subject
to the provisions of the Western Classification, the acceptance and
use are required, respectively, of the 'uniform bill of lading,'
'straight' or 'order' as shown on pages 87 to 90, inclusive."
For the purposes of this case, only, it is admitted, and
Page 255 U. S. 320
accepted by this Court, that this Rule 9A permitted and required
that the property should be treated as moving east of San Francisco
under the uniform bill of lading, although in fact no other than
the Yokohama bill of lading was issued. This uniform bill of lading
contained, among other conditions, the following:
"The amount of any loss or damage for which any carrier is
liable shall be computed on the basis of the value of the property
(being the
bona fide invoice price, if any, to the
consignee, including the freight charges, if prepaid) at the place
and time of shipment under this bill of lading, unless a lower
value has been represented in writing by the shipper or has been
agreed upon or is determined by the classification or tariffs upon
which the rate is based, in any of which events such lower value
shall be the maximum amount to govern such computation whether or
not such loss or damage occurs from negligence."
Upon the facts thus stated, the petitioner contends that the
agreed valuation of $100 per package or case in the Yokohama bill
of lading is necessarily imported into the uniform bill of lading,
becomes the valuation "agreed upon" within the terms and conditions
quoted from that bill, and limits the respondent's recovery to that
amount, $5,600, regardless of the value of the property and of the
fact that it was lost by the carrier's negligence.
To this contention, it is replied by the respondent that it is
admitted by the petitioner that its filed and published schedules
contained but one rate applicable to the shipment as it was carried
east of San Francisco; that that rate, $1.25 per 100 pounds minimum
carload, was charged in the Yokohama bill of lading, and that,
since no choice of rates was given or could be given to the
shipper, any agreement, in form a valuation of the property, made
for the purpose of limiting the carrier's liability to less than
the real value thereof in case of loss by negligence was void and
without effect.
Page 255 U. S. 321
In many cases, from the decision in
Hart v. Pennsylvania
Railroad Co., 112 U. S. 331,
decided in 1884, to
Boston & Maine Railroad v. Piper,
246 U. S. 439,
decided in 1918, it has been declared to be the settled federal law
that, if a common carrier gives to a shipper the choice of two
rates, the lower of them conditioned upon his agreeing to a
stipulated valuation of his property in case of loss, even by the
carrier's negligence, if the shipper makes such a choice
understandingly and freely, and names his valuation, he cannot
thereafter recover more than the value which he thus places upon
his property.
As a matter of legal distinction, estoppel is made the basis of
this ruling -- that, having accepted the benefit of the lower rate,
in common honesty, the shipper may not repudiate the conditions on
which it was obtained -- but the rule and the effect of it are
clearly established.
The petitioner admits all this, but contends that it has never
been held by this Court that such choice of rates was essential to
the validity of valuation agreements, and, arguing that they should
be sustained unless shown to have been fraudulently or oppressively
obtained, it affirms the validity of the agreement in the Yokohama
bill of lading, and cites as a decisive authority
Reid v.
American Express Co., 241 U. S. 544.
With this contention we cannot agree.
This Court has consistently held the law to be that it is
against public policy to permit a common carrier to limit its
common law liability by contracting for exemption from the
consequences of its own negligence or that of its servants (
112 U. S. 112 U.S.
331,
112 U. S. 338,
and
246 U. S. 246 U.S.
439,
246 U. S. 444,
supra), and valuation agreements have been sustained only
on principles of estoppel and in carefully restricted cases where
choice of rates was given -- where "the rate was tied to the
release." Thus, in the
Hart case (p.
112 U. S.
343), it is said:
"The distinct ground of our decision in the case at bar is that,
where a contract of the kind, signed by the shipper, is
Page 255 U. S. 322
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 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."
And, in the
Piper case, it is said (p.
246 U. S.
444):
"In the previous decisions of this Court upon that subject, it
has been said that the limited valuation for which a recovery may
be had does not permit the carrier to defeat recovery because of
losses arising from its own negligence, but serves to fix the
amount of recovery upon an agreed valuation made in consideration
of the lower rate stipulated to be paid for the service."
The
Reid case,
supra, does not conflict with
these decisions, for, in that case, the bill of lading containing
the undervaluation, which was there sustained, expressly recited
that the freight was adjusted on the basis of the agreed value, and
that the carrier's liability should not exceed that sum "unless a
value in excess thereof be specially declared, and stated herein,
and extra freight as may be agreed on be paid." The bill of lading
was for ocean carriage only, London to New York, to which, of
course, the Interstate Commerce Act was not applicable (36 Stat.
544, § 1;
Armour Packing Co. v. United States,
209 U. S. 56,
209 U. S. 78;
Cosmopolitan Shipping Co. v. Hamburg-American Packet Co., 13 I.C.C.
266), and the carrier therefore was in a position to tender to,
and, by the quoted provision of the bill, did tender to, the
shipper the choice of paying a higher rate and being subject to
less restricted recovery in case of loss. The case was plainly
within the scope of the prior decisions of this Court upon the
subject.
Thus, this valuation rule, where choice is given to and
accepted
Page 255 U. S. 323
by a shipper, is in effect an exception to the common law rule
of liability of common carriers, and the latter rule remains in
full effect as to all cases not falling within the scope of such
exception. Having but one applicable published rate east of San
Francisco, the petitioner did not give, and could not lawfully have
given, the shipper a choice of rates, and therefore the stipulation
of value in the Yokohama bill of lading, even if treated as
imported into the uniform bill of lading, cannot bring the case
within the valuation exception, and the carrier's liability must be
determined by the rules of the common law. To allow the contention
of the petitioner would permit carriers to contract for partial
exemption from the results of their own negligence without giving
to shippers any compensating privilege. Obviously such agreements
could be made only with the ignorant, the unwary, or with persons
deliberately deceived. It results that the judgment of the Supreme
Court of the State of New York, entered upon the order of the Court
of Appeals of that state, must be
Affirmed.