1. A state statute making the initial railroad carrier liable to
the shipper for the default of its connecting carrier is not
lacking in due process of law if the first carrier is allowed
subrogation against the second, whether the subrogation be founded
on statute, common law, or equitable considerations. P.
260 U. S.
37.
2. A statute imposing on common carriers the duty of seasonably
considering and settling claims for loss or damage of freight,
under pain of being required to pay 7% on the recovery and
reasonable attorney's fees, to be fixed by the court, in any case
where the claimant recovers judgment for more than has been
tendered him by the carrier is not
per se objectionable
under the equal protection or due process clauses of the Fourteenth
Amendment. P.
260 U. S.
38.
3. Such statutes are to be judged by their application in the
particular case; where the result is fair and reasonable, they will
be sustained;
aliter, where it is so arbitrary, unequal,
and oppressive as to shock the sense of fairness inspiring the
Fourteenth Amendment. P.
260 U. S.
43.
4. In this case, involving numerous claims for loss or injury to
hogs while in the carrier's custody, the amount of which the
carrier
Page 260 U. S. 36
might have ascertained and so protected itself by a tender, and
where the trial lasted four days, an attorney's fee of $200 for
service in the trial court, and 7% interest on $800 ultimately
recovered, was not an excessive penalty. P.
260 U. S. 45.
Chicago, Milwaukee & St. Paul R. Co. v. Polt,
232 U. S. 165,
distinguished.
5. But imposition on the carrier of an additional attorney's fee
of $100, fixed under the statute upon the basis of the service
rendered, time and labor bestowed, and recovery secured by the
claimant's attorney in resisting an appeal by which the carrier
obtained a large reduction of an excessive judgment, was
unconstitutional. P.
260 U. S.
46.
105 Neb. 151 reversed in part and affirmed in part.
Error to a judgment of the Supreme Court of Nebraska affirming
with reductions a judgment for damages, interest, and attorney's
fees and taxing a further attorney's fee for services in that court
in an action against a railroad company for loss and injury of
livestock freight.
MR. CHIEF JUSTICE taft delivered the opinion of the Court.
In this case, the constitutional validity of two statutes of
Nebraska is questioned, the first subjecting the initial railroad
of two connecting roads receiving freight to liability for safe
delivery by the other, and the second making every common carrier
liable for a reasonable attorney's fee in the court of first
instance and on appeal, for collection from it of every claim for
damage or loss to property shipped, not adjusted within 60 days for
intrastate shipments.
The Nye-Schneider-Fowler Company, defendant in error, is a
corporation of Nebraska at Fremont, Nebraska,
Page 260 U. S. 37
engaged in the business of bringing hogs in the state and
shipping them to South Omaha for sale in the stockyards there. It
brought this suit against the plaintiff in error, a common carrier,
to recover damages in the sum of $2,097.21 and $900 attorney's
fees, for loss or injury to hogs shipped in 105 intrastate
shipments, averring due presentation of such claims and the refusal
of the company to pay any amount whatever on them. The jury
returned a verdict of $802.27, with interest at 7%, as provided in
the statute. On motion, the court fixed the reasonable attorney's
fees in the suit at $600 as part of the costs, and judgment for
verdict and costs was accordingly entered. By the supreme court of
the state, to which the defendant company appealed the cause, a
remittitur was required and consented to for $209.01 on the amount
recovered for loss and damage, and the fee of $600 taxed as costs
was reduced to $200, but the Supreme Court taxed the plaintiff in
error with an attorney's fee of $100 for services in the supreme
court, and judgment was entered accordingly. The questions made
involved separate statutes, and we shall take them up in order.
First. Section 6058 of the Revised Statutes of Nebraska provides
as follows:
"Any railroad company receiving freight for transportation shall
be entitled to the same rights and be subject to the same
liabilities as common carriers. Whenever two or more railroads are
connected together, the company owning either of such roads,
receiving freight to be transported to any place on the line of
either of the roads so connected shall be liable as common carriers
for the delivery of such freight, to the consignee of the freight,
in the same order in which such freight was shipped."
It is objected that this imposes on one railroad liability for
the default of another without providing reimbursement by that
other, and so deprives the one of its property
Page 260 U. S. 38
without due process of law. But the Supreme Court of Nebraska
has declared in this case that, in such a case, under the statute,
the initial carrier has a right of reimbursement under the general
principle of subrogation. This conclusion is sound, and is
supported by
Texas & Pacific Railroad Co. v. Eastin,
100 Tex. 556, and the general principle involved finds support in
Fisher v. Milwaukee Ry., 173 Wis. 57,
Arnold v.
Green, 116 N.Y. 566,
Syracuse Lighting Co. v. Maryland
Casualty Co., 226 N.Y. 25, and
Holmes v. Balcom, 84
Me. 226. Counsel for the plaintiff in error contends that the
legislature has granted no such right of subrogation in this
statute; that it is not a right, but purely a matter of equity
under the circumstances. We cannot follow this distinction. We have
here a construction of this statute by the supreme court of the
state in which that tribunal holds that, under all the
circumstances to which this statute can apply, subrogation does
exist. The initial carrier is therefore certainly protected within
the jurisdiction within which the statute operates, and, as no
doubt can arise as to the enjoyment of the right, it is immaterial
whether it was originally founded on the common law or was
developed in the broader justice of equity jurisprudence.
Second. Authority for taxing of attorney's fees as part of the
costs in such cases is founded in c. 134, Laws of Nebraska 1919,
amending § 6063, Revised Statutes 1913, which reads as follows:
"Every claim for loss or damage to property in any manner, or
overcharge for freight for which any common carrier in the State of
Nebraska may be liable, shall be adjusted and paid by the common
carrier delivering such freight at the place of destination within
sixty days, in cases of shipment or shipments wholly within the
state, and within ninety days in cases of shipment or shipments
between points without and points within the state, after
Page 260 U. S. 39
such claim, stating the amount and nature thereof accompanied by
the bill of lading or duplicate bill of lading or shipping receipt
showing amount paid for or on account of said shipment, which shall
be returned to the complainant when the claim is rejected or the
time limit has expired, shall have been filed with the agent, or
the common carrier at the point of destination of such shipment, or
at the point where damages in any other manner may be caused by any
common carrier. In the event such claim, which shall have been
filed as above provided, within ninety days from the date of the
delivery of the freight in regard to which damages are claimed, is
not adjusted and paid within the time herein limited, such common
carrier shall be liable for interest thereon at seven percent per
annum from the date of filing of such claim, and shall also be
liable for a reasonable attorney's fee to be fixed by the court,
all to be recovered by the consignee or consignor, or real party in
interest, in any court of competent jurisdiction, and in the event
an appeal be taken and the plaintiff shall succeed, such plaintiff
shall be entitled to recover an additional attorney fee to be fixed
by such court or courts: Provided, in bringing suit for the
recovery of any claim for loss or damage as herein provided if
consignee or consignor, or real party in interest, shall fail to
recover a judgment in excess of the amount that may have been
tendered in an offer of settlement of such claim by the common
carrier liable hereunder, then such consignee or consignor, or real
party in interest, shall not recover the interest penalty or
attorney's fee herein provided."
The supreme court of the state has held that provision for
attorney's fees in this section is in the nature of reimbursement
of costs, and not a penalty.
Smith v. Railway Co., 99 Neb.
719;
Marsh v. Railway Co., 103 Neb. 654. But this does not
meet the objection pressed on us.
Page 260 U. S. 40
These are costs imposed on the defeated defendant in the
litigation, but not on the defeated plaintiff. This is an
inequality, and the question is whether it is a just discrimination
and one which the legislature may make and not take the defeated
defendant's property without due process or deny it the equal
protection of the law. We have considered in our more recent
decisions the constitutional validity of inequalities of this
general character as between claimants and common carriers created
by state legislation, and it may perhaps be worthwhile to review
the decisions to see what general rule runs through them with a
view of applying it to the case before us.
In the first of these cases,
Gulf, Colorado & Santa Fe
Ry. Co. v. Ellis, 165 U. S. 150, a
defendant railroad company attacked a statute of Texas under which
it had been required to pay an attorney's fee to the plaintiff. The
statute provided that any person having a claim for personal
services, for overcharges for freight, or for claims for stock
killed if it did not exceed $50, which was duly presented and not
settled in 30 days, might, if he recovered the full amount in a
suit, recover also an attorney's fee not exceeding $10 if he had an
attorney. This Court, three Judges dissenting, held that the
statute denied the equal protection of the laws to railroads
because it was only a penalty to compel them to pay their debts,
and that to single them out as a group of general debtors was not
just classification.
In
Atchison, Topeka & Santa Fe R. Co. v. Matthews,
174 U. S. 96, a
statute relating to the liability of railroads for damages for fire
caused by their negligent operation, allowed the plaintiff if he
recovered a reasonable attorney's fee. This was held a valid
classification of defendants because it was a police measure to
prevent fire likely to be caused by operation of railroads, and the
attorney's fee stimulated care to prevent it.
In
Seaboard Air Line v. Seegers, 207 U. S.
73, a state statute imposed a penalty of $50 on all
common carriers
Page 260 U. S. 41
for failure to adjust damage claims within 40 days if, in the
subsequent litigation, the plaintiff recovered the full amount
claimed. The statute was sustained in a case where the claim was
$1.75. It was held not to be a statute imposing a penalty merely
for the nonpayment of debts or against railroad corporations alone,
as in the
Ellis case, but one based solely upon the nature
of the business peculiarly within the knowledge of the carrier, who
could determine the loss more accurately and with less delay than
the plaintiff. It was said that the design was to secure a
reasonably prompt settlement of proper claims, and especially small
claims which most need such penal provisions to protect them.
In
St. Louis, Iron Mountain & Southern Ry. Co. v.
Wynne, 224 U. S. 354, a
state statute required railroad companies to pay claims for
livestock killed or injured by their trains within 30 days after
notice, with a penalty for failure to do so of double damages and
attorney's fee if claimant recovered what he sued for. The
plaintiff had made a claim for $500 for the killing of two horses
by the defendant's train. On refusal, suit was brought for $400,
and recovery had for that amount. It was held that to apply the
statute, as the state court did, to a case in which plaintiff had
demanded more than he sued for made an arbitrary exercise of power
and deprived defendant of its property without due process of
law.
In
Kansas City Southern Ry. v. Anderson, 233 U.
S. 325, the same statute which was held invalid in the
Wynne case was again before the court for consideration as
applied to a case where plaintiff had not demanded more than he
sued for and recovered, and the validity of the statute was
upheld.
In
Yazoo & Mississippi Valley R. Co. v. Jackson Vinegar
Co., 226 U. S. 217, the
statute required every common carrier to settle claims for lost or
damaged
Page 260 U. S. 42
freight within 60 days and made it liable for $25 damages in
each case in addition to the actual damages, but limited the
penalty to claims of less than $200. The claim was $4.76, and there
was a recovery of the claim and penalty. Such a statute was held a
reasonable incentive to the prompt settlement without suit of just
demands of a class admitting of special legislative treatment. It
was objected to the statute that it intended the assessment of a
penalty whether the recovery was less than the claim or not. But
the court refused to consider the objection on the ground that it
sufficed to hold that, as applied to cases like those before it,
the statute was valid, and that it would not deal with imaginary
cases or speculate on what application the state court would make
of the statute in another class of cases.
In
Chicago, Milwaukee & St. Paul Ry. Co. v. Polt,
232 U. S. 165, the
state statute made a railroad company absolutely responsible for
loss of property destroyed by fire communicated from its
locomotives, and provided that, unless it paid or offered to pay
the full amount of the damage within 60 days from notice, the owner
should have double damages unless he recovered less than the amount
offered by the company before suit. The plaintiff demanded and sued
for $833.30. The company offered $500. The verdict was for $780.
The court said that the rudiments of fair play required by the
Fourteenth Amendment were wanting when a defendant in such a case
was compelled to guess rightly what a jury would find or pay double
if that tribunal added a cent to the amount tendered, though the
tender was futile because of an excessive demand.
In
Missouri, Kansas & Texas Ry. Co. v. Cade,
233 U. S. 642, a
statute regulating the presentation and collection of claims for
personal service, material furnished, overcharges for freight, for
lost or damaged freight or for stock killed or injured against any
person or corporation
Page 260 U. S. 43
less than $200 in amount, required that they be settled in 30
days, and, if not, the person injured could bring suit, and, if he
recovered the full amount of his claim, he should be entitled in
addition to the amount and costs, to a reasonable attorney's fee,
not exceeding $20. It was held that the attorney's fee here was
manifestly only costs of suit, and that, as the statute applied to
everyone, and any person might be plaintiff or defendant, the mere
distinction between the costs to be taxed against the plaintiff and
those against the defendant did not deny the equal protection of
the laws because the plaintiff usually had the burden in the case,
and, as the outlay for an attorney's fee was a necessary
consequence of the litigation, it was reasonable to impose it upon
the party whose refusal to pay the just claim rendered the
litigation necessary.
In
Atchison Ry. v. Vosburg, 238 U. S.
56, a statute requiring prompt furnishing cars by
carriers and prompt loading by shippers, and which imposed the same
penalty per car upon delinquents of either group but which added
attorney's fee to the penalty imposed on the carriers in case of
recovery by a shipper, was held to deny to the carriers the equal
protection of the laws because, in such a case, there was no ground
for putting the carriers in a different class from the shippers and
imposing a special burden on them when they were both in
identically the same situation.
The general rule to be gathered from this extended review of the
cases is that common carriers engaged in the public business of
transportation may be grouped in a special class to secure the
proper discharge of their functions, and to meet their liability
for injuries inflicted upon the property of members of the public
in their performance, that the seasonable payment of just claims
against them for faulty performance of their functions is a part of
their duty, and that a reasonable penalty may be imposed on them
for failure promptly to consider and
Page 260 U. S. 44
pay such claims, in order to discourage delays by them. This
penalty or stimulus may be in the form of attorney's fees. But it
is also apparent from these cases that such penalties or fees must
be moderate, and reasonably sufficient to accomplish their
legitimate object, and that the imposition of penalties or
conditions that are plainly arbitrary and oppressive and "violate
the rudiments of fair play" insisted on in the Fourteenth Amendment
will be held to infringe it. In this scrutiny of the particular
operation of a statute of this kind, we have sustained it in its
application to one set of facts by the state court and held it
invalid when applied to another. In some of the cases in which the
statutes are sustained, there is a fixed penalty or a limited
attorney's fee. In others, the attorney's fee is merely required to
be reasonable and fixed by the court. In some, there is a limit in
the amount of the claims to which the statute applies, and in
others not. In some statutes held valid, the penalty or fee is
allowed only on condition that the full amount claimed be
recovered; in others, that the amount sued for be recovered. In the
one case, the statute imposed no condition upon the imposition of a
penalty that the full amount claimed or sued for should be
recovered, but the court refused to consider the validity of the
penalty from that standpoint because the facts did not require it.
In another case, the requirement that a tender of the amount
recovered could only save double damages was held invalid because
requiring a guess as to the verdict of the jury.
It is obvious that it is not practical to draw a line of
distinction between these cases based on a difference of particular
limitations in the statute and the different facts in particular
cases. The court has not intended to establish one, but only to
follow the general rule that when, in their actual operation in the
cases before it, such statutes work an arbitrary, unequal, and
oppressive result for
Page 260 U. S. 45
the carrier which shocks the sense of fairness the Fourteenth
Amendment was intended to satisfy in respect of state legislation,
they will not be sustained.
Coming now to the case before us, we find that the statute
affects all common carriers, that it imposes on them the duty of
considering and settling claims for loss of and damage to freight
within 60 days, and provides that, if they do not so settle them
and in a subsequent suit more is recovered than the amount
tendered, the amount found due shall carry 7% interest from the
presentation of the claim as a penalty, and reasonable attorney's
fees. If an appeal be taken and the plaintiff succeed, an
additional attorney's fee may be included. The statute is confined
to freight claims. It does not place a limit on them, but as we
have seen, the cases do not require this. The statute does require
a tender but, in this case, the claims were wholly rejected. No
tender of any amount was even attempted. The claims numbered 105
when presented and sued on. They were reduced to 72. The trial
lasted four days.
It is said here as it was said in the
Polt case, in 232
U.S.
232 U. S. 165,
that the company cannot be subjected to a penalty for not guessing
rightly the verdict of a jury. But the cases are very different.
There, the penalty was double damages for a failure to guess
rightly as to the jury's view of damages from a fire to a house
when the extent of the damage was not peculiarly within the
company's knowledge. Here, the damages were for hogs injured during
the custody of the carrier and whose value was determined by weight
and market price, and not difficult of ascertainment after a
bona fide effort, and there was no effort at a tender at
all. Here, the penalty is only 7% interest on the actual recovery
and reasonable attorney's fees as costs. The amount of the
attorney's fee -- $200 for a case involving the preparation for
trial of 72 different claims and a four-day trial -- does not shock
one's sense of fairness.
Page 260 U. S. 46
It is further separately assigned for error that the supreme
court imposed upon plaintiff in error an attorney's fee of $100
when it won the case on appeal by reducing the amount recovered in
the trial court. The original § 6063, Revised Statutes of Nebraska,
only provided for an attorney's fee to be fixed by the court, but
c. 134, Laws of Nebraska 1919, added the words,
"and in the event an appeal be taken and the plaintiff shall
succeed, such plaintiff shall be entitled to recover an additional
attorney fee to be fixed by such court or courts."
This might have been construed to mean that the plaintiff could
only have an attorney's fee in the appellate court or courts if he
maintained the judgment he had obtained in the court of first
instance. But the supreme court of the state, and that controls our
view, has evidently interpreted the words "the plaintiff shall
succeed" to mean success in securing a judgment for more than the
amount tendered, if any, and it is in light of this interpretation
that we must consider the reasonableness of the statute and the
validity of the fee fixed in this case.
The evident theory of the amendment of § 6063, as thus
interpreted, is that the burden of the litigation both in the trial
and appellate court could be avoided by reasonable assiduity of the
defendant carrier in availing itself of its peculiar sources of
knowledge, ascertaining the actual damage, and making a genuine
tender of what it believes to be due, and if the ultimate recovery
is not more than the tender, that the claimant shall have neither
interest nor attorney's fee. Under the circumstances, does the
statute thus construed work a fair result? Here is an excessive
claim of $2,000 reduced to $800 by a trial in one court, with an
attorney's fee fixed at $600, and then an appeal by which the claim
is reduced to $600, and the fee to $200. It is said that there were
105 claims, reduced by the litigation to 72, and that claimant
might have brought a separate suit on each, and so had an
attorney's
Page 260 U. S. 47
fee in each claim on which it recovered anything, making a
larger aggregate of fees than it has secured. But we do not think
this consideration can play any part in the case as it is. The
complainant doubtless united the claims for its own convenience and
to save its own time and that of its counsel.
Then it is said the fee in the Supreme Court is left to the
discretion of that court, which can be trusted to do the fair
thing, as a chancellor often does, by dividing the costs on an
equitable basis. But the difficulty with this view is that the
construction which the supreme court has given the statute does not
reserve to itself this power. It says that in such a statute the
fee must be reasonable in that it is to be based on a consideration
of the value of the attorney's service to the claimant and the
amount of time and labor expended by him, bearing a fair proportion
to the amount of the judgment recovered. These are the usual and
proper elements in fixing compensation for a lawyer's service. In
other words, the supreme court, if any amount over the tender is
recovered by its judgment, must fix a fee compensating the
attorneys for the claimant for their work on the appeal, however
excessive the recovery below and however much reduced on the
appeal, if more than the original tender. Thus, what we have here
is a requirement that the carrier shall pay the attorneys of the
claimant full compensation for their labors in resisting its
successful effort on appeal to reduce an unjust and excessive claim
against it. This we do not think is fair play. Penalties imposed on
one party for the privilege of appeal to the courts, deterring him
from vindication of his rights, have been held invalid under the
Fourteenth Amendment.
Missouri Pacific Railway Co. v.
Tucker, 230 U. S. 340.
While the present case does not involve any such penalties as were
there imposed, we think the principle applies to the facts of this
case. We hold that so much of the statute as imposed an
attorney's
Page 260 U. S. 48
fee upon the carrier in this case in the supreme court was
invalid. The judgment of the supreme court is to this extent
reversed and in other respects affirmed. The costs in this Court
will be taxed one-third to the defendant in error, and two-thirds
to the plaintiff in error.