Source: https://supreme.justia.com/cases/federal/us/139/79/
Timestamp: 2019-04-25 03:54:18+00:00

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Justia › US Law › US Case Law › US Supreme Court › Volume 139 › Chicago, St.L. & N.O. R. Co. v. Pullman Co.
(1) The fire having "originated from a cause unknown," the losses were, within the meaning of the contract, "occasioned by accident or casualty."
(2) The collection of the insurance money did not affect or impair the right of the sleeping car company to recover the amount of the loss according to the contract with the railroad company. Upon payment of the loss, or to the extent of any payment by them on account of the loss, the insurance companies were subrogated to the rights of the insured, and could in its name or in their joint names, maintain an action against the railroad company for indemnity, if the latter was liable to the insured for the loss of the cars -- this because the liability of the railroad company was, in legal effect, first and principal, and that of the insurer secondary, not in order of time but in order of ultimate liability.
(3) The contract was not void as being in general restraint of trade or against public policy. The contract is to be interpreted in view of the condition implied by law that the sleeping car company should furnish cars not only adequate and safe but sufficient in number for the use of the public traveling over the lines of the railroad company. Such condition was not and could not have been dispensed with. Whether the agreement is so far divisible that the stipulation giving the sleeping car company exclusive rights and binding the railroad company not to make similar contracts with other parties during the stipulated term could be separated from the other provisions, quaere.
(4) The railroad company was responsible for the loss of the Louisiana because it was in active service under the contract, and was in the possession and under the exclusive control of the railroad company for the purpose simply of being cleansed and resupplied for another trip whenever the railroad company chose to put it into service.
(5) The railroad company was not liable for the loss of the Great Northern, because that car at the time of the fire was in the exclusive possession of the sleeping car company and, when burned, was not subject to be used by, nor under the supervision of, the railroad company.
This action was brought by the Pullman Southern Car Company to recover from the Chicago, St. Louis & New Orleans Railroad Company the damages alleged to have been sustained on account of the destruction by fire of two of the plaintiff's sleeping cars, the Great Northern and the Louisiana, while on the premises of the defendant. There was a verdict and judgment for the sum of $19,000, with interest from September 20, 1886, the date of judicial demand at the rate of 5 percent per annum until paid, with costs. The assignments of error relate entirely to instructions given on behalf of the plaintiff, and to the refusal to give instructions asked by the defendant.
"excepting repairs and renewals provided for in article sixth of this agreement, and such as are made necessary by accident or casualty, it being understood that the railway company shall repair all damages to said cars of every kind occasioned by accident or casualty during the continuance of this contract, except that the Pullman Company assumes all responsibility for any loss or damage occurring to said cars arising from defective heating apparatus or lights furnished by it."
"three cents per car per mile for every mile run by said cars upon the road of the railway company or upon the roads of other companies, by direction of the officers of the railway company, while in service under this contract,"
"to insure their safety, rendering bills monthly to the Pullman Company for repairs to cars, and charging for the same only the actual cost of material and labor expended on such repairs, with an addition of ten percent to cover general expenses, all settlements and payments for mileage and repairs to be made monthly between said companies."
"except such repairs as are rendered necessary by accident or casualty, and such as are provided for in article sixth of this agreement, which shall be made by the railway company, as hereinbefore mentioned."
"that the cars now [then] running on said railroad, and which should form part of the cars and equipments to be furnished under this contract, together with such additional cars and equipments as may hereafter be assigned to the railway company, shall be appraised,"
etc. 12. The taxes upon all cars furnished to the defendant by the plaintiff were to be paid equally by the parties.
It was in proof that at the time of the fire, the cars Great Northern and Louisiana were insured for the plaintiff; that before the commencement of this action, the insurance companies paid to it, in full settlement of the loss and damage, the sum of $19,000, and that this action is prosecuted under a written agreement between the plaintiff and the insurance companies that it should be conducted jointly by their counsel, and the amount recovered by suit, settlement, or compromise equally divided between them.
as a paint ship, enclosing the same with partitions and keeping it locked with the keys in possession of its own employees. The place so fitted up was known as the "Pullman Repair Shop." The employees of the defendant had no right of access to it. Although the tracks of the defendant extended into this repair shop, there were folding doors across them that were closed by an iron bar on the inside. The plaintiff paid nothing for the use of this shop. The watchman over the whole premises was maintained by the defendant. With the permission and consent of the defendant, the plaintiff on one or two occasions repaired and varnished in that shop cars assigned by it to other railroads and not covered by the agreement in question.
repair shop. It is in evidence that at various times during the existence of the contract sued on, the plaintiff took some of the ten cars furnished under it to shops in St. Louis, Missouri, and Pullman, Illinois, entirely off the line of the defendant's road, in order to be repaired so as to bring them up to the designated standard.
The question of negligence was left to the jury, which was instructed that the plaintiff could not recover if the fire was caused by its negligence.
1. The jury were instructed at the request of the plaintiff, that a damage or destruction by fire is a casualty or accident, within the meaning of the contract. This the defendant contends was error. We do not think so. The fire that destroyed the Great Northern and the Louisiana originated, as we have seen, from a cause unknown. An accident or casualty, according to common understanding, proceeds from an unknown cause or is an unusual effect of a known cause. Either may be properly said to occur by chance and unexpectedly. Webster's Dict.; Imperial Dict. It was no doubt used in that sense by the parties to the contract in question. They manifestly contemplated that the railroad company should assume all responsibility for the loss of drawing room or sleeping cars while in use or subject to be used by it, with the single exception, distinctly made, of loss or damage occurring "from defective heating apparatus or lights furnished" by the Pullman Company, which assumed all responsibility for loss or damage to its cars resulting from either of the latter causes. This exception in respect to defective heating apparatus and lights furnished by the plaintiff -- necessarily referring to loss or damage by fire caused in either of those modes -- renders it clear that the railroad company assumed responsibility for the loss of cars used or subject to be used by it under the contract whenever such loss was by fire occurring from a cause unknown -- that is, accidentally or from casualty.
paid by the insurer, the insured is entitled to the residue."
"Notwithstanding such payment, an action will lie by the insured against the railroad company. The insurance is to be treated as a mere indemnity, and the insured and insurer regarded as one person; therefore payment by the insurer before suit brought cannot affect the right of action."
"The general rule of law (and it is obvious justice) is that where there is a contract of indemnity -- it matters not whether it is a marine policy, or a policy against fire on land, or any other contract of indemnity -- and a loss happens, anything which reduces or diminishes that loss reduces or diminishes the amount which the indemnifier is bound to pay, and if the indemnifier has already paid it, then, if anything which diminishes the loss comes into the hands of the person to whom he has paid it, it becomes an equity that the person who has already paid the full indemnity is entitled to be recouped, by having that amount back."
this litigation. The action was well brought in the name of the plaintiff, pursuant to its agreement with the insurance companies.
3. It is assigned for error that the court refused to instruct the jury that the agreement sued on was void as against public policy because of the exclusive rights given to the plaintiff for the term of fifteen years in respect to drawing room and sleeping cars furnished by it to the defendant, supplemented by the stipulation that the defendant would not "contract with any other party to run the said class of cars on and over said lines of road during said period of fifteen years," and because the law will not permit individuals to oblige themselves by a contract when the thing to be done or omitted is injurious to the public. Oregon Steam Nav. Co. v. Winsor, 20 Wall. 64, 87 U. S. 66; Chappel v. Brockway, 21 Wend. 157, 159. Such a contract, it is argued, is in general restraint of trade. The authorities cited in support of this contention have no application to such a contract as the one before us. The defendant was under a duty, arising from the public nature of its employment, to furnish for the use of passengers on its lines such accommodations as were reasonably required by the existing conditions of passenger traffic. Its duty as a carrier of passengers was to make suitable provisions for their comfort and safety. Instead of furnishing its own drawing room and sleeping cars, as it might have done, it employed the plaintiff, whose special business was to provide cars of that character, to supply as many as were necessary to meet the requirements of travel. It thus used the instrumentality of another corporation in order that it might properly discharge its duty to the public. So long as the defendant's lines were supplied with the requisite number of drawing room and sleeping cars, it was a matter of indifference to the public who owned them. Express Cases, 117 U. S. 1, 117 U. S. 24-25. We cannot perceive that such a contract is at all in restraint of trade. The plaintiff was at liberty, so far as that contract was concerned, to make similar arrangements for the accommodation of passengers on all other railroads in the country, even those that are rivals or competitors in business with the defendant.
It is, however, a fundamental condition in all such contracts that their provisions must not be injurious to the public. As said by this Court in Cherokee Nation v. Kansas Railway Co., 135 U. S. 641, a railroad is a public highway, established primarily for the convenience of the people and to subserve public ends. A railroad corporation cannot, therefore, without the sanction of the government creating it, make any agreement that militates against the public convenience or that will defeat the public objects for which it was established. If the contract in suit was liable to objection upon these grounds, a different question would be presented for our determination. But we are of opinion that public policy did not forbid the railroad company from employing the Pullman Southern Car Company to supply drawing room and sleeping cars to be used by its passengers, and, as a means of inducing the plaintiff to perform this public service and to incur the expense and hazard incident thereto, from giving it an exclusive right to furnish cars for that purpose. The defendant did not by such an agreement abandon the duty it owed to the public, for the cars so furnished, while in its possession and use, became, as between it and its passengers, its own cars, subject to such regulations as it might properly establish for the comfort and safety of passengers on its trains. Pennsylvania Company v. Roy, 102 U. S. 451, 102 U. S. 457. And the contract is to be interpreted in view of the condition, implied by law, that the plaintiff should furnish cars not only adequate and safe but sufficient in number for the use of the public desiring to travel over the defendant's roads. These conditions exist independently of the particular clause giving the railroad company the option to terminate the agreement at the end of five or eight or eleven years. Being imposed by law as necessary to the public interests, they could not be dispensed with by agreement of the parties. The designation of particular periods of time at the end of either of which the defendant might, of right and upon notice, terminate the agreement, did not tie its hands so that it could not continuously discharge its duty to the public in respect to the adequacy or safety of cars in which it conveyed passengers.
The stipulation, therefore, that the plaintiff, not being in default, should have the exclusive right for fifteen years to furnish drawing room and sleeping cars for the defendant's use, and that the defendant should not during that period contract for cars of that kind with any other party, rightly construed, is not unreasonable, and, properly performed, will promote the convenience of the public in that it enables the defendant to have on its lines at all times, and as the requirements of travel demand, drawing room and sleeping cars for use by passengers. It is a stipulation that does not interfere in any degree with its right and duty to disregard the contract whenever the plaintiff fails in furnishing cars that are adequately safe and sufficient in number for the travel on defendant's lines. The suggestion that the agreement is void upon grounds of public policy or because it is in general restraint of trade cannot, for the reasons stated, be sustained.
Besides, it is not clear that the agreement is so far indivisible that the stipulation giving the plaintiff the exclusive rights in question, and binding the defendant not to make similar contracts with other parties for drawing room and sleeping cars to be used on its lines, cannot be separated from the other provisions. If that stipulation were held to be void upon the grounds suggested, we should be inclined to hold that as between the parties, the provision making the railroad company liable for loss or damage arising from casualty or accident to the plaintiff's cars while in the possession of and subject to use by the defendant remained in force. Erie Railway Co. v. Union Locomotive & Express Co., 35 N.J.Law 246.
another trip when the defendant chose to put them into actual service. That was the situation at the time of the loss by fire of the Louisiana. It had a few hours before come from active service on the defendant's road, and but for its destruction would have been put upon the road for another trip in the afternoon of the very day of the fire. Such a case is plainly embraced by both the letter and spirit of the contract. A peremptory instruction to find for the plaintiff in respect to the Louisiana would not have been erroneous.
"That if the jury believe from the evidence that the defendant company, by arrangement with the plaintiff company, in the year 1879, set apart at their depot in the City of New Orleans a certain portion of said depot for the exclusive use and benefit of plaintiff as a repair shop, wherein the cars of the plaintiff mentioned in the contract sued on were to be repaired by the plaintiff at its own expense, and the said space was enclosed, fastened, and locked, and the keys thereof were kept by the plaintiff or its agents so that access thereto by the defendant or its agents was only such access as was necessary to enable the defendant company to take possession of repaired cars when tendered for service by the plaintiff, and that at the time of the fire, on the 27th of May, 1882, the car Great Northern was in the said repair shop, and had been there for a period exceeding six months for the purpose of being repaired, and that at the time of the fire, said car had not been tendered for service as a car completely repaired and equipped for service to the defendant, although ready to be tendered, then the jury must find that the defendant is not liable for the loss of the said car Great Northern or for any damage thereto by fire aforesaid."
"Unless the jury further find that the said car had been withdrawn from the dominion of the contract, and it was held, according to the understanding of both parties, for some other purpose -- that is, for some other purpose that those of the contract. "
"It was undoubtedly competent for the parties to this action to have withdrawn their cars from the dominion of the contract, but to constitute such a withdrawal, there must be the intent of the plaintiff to retain them for some purpose other than to continue their use under the contract, and if the jury find that there was a placing of the cars in the separate room or apartment with the intent on the part of the plaintiff to use them independently of the contract, and not under it, then the defendant would not be liable for their destruction. If, on the other hand, the jury find that though there was a placing of the cars in the separate room or apartment, but with the intent to continue to use them under the contract, and to hold them so placed merely for the purpose of repair under the contract, and the defendant shared this intent, then the defendant would be responsible for their destruction by fire. In determining this question, the jury will consider all the facts and circumstances established, including the fact that the cars remained on the tracks of the defendant, and will further consider whether the defendant is shown to have any relations to these cars except under the contract."
"That if the jury believe that the two cars, Louisiana and Great Northern, were destroyed by fire at the depot of the defendant company while the said cars were not in actual use and service by the defendant company, then they must find a verdict for the defendant."
"I refuse that instruction, provided you find that they were being repaired under the contract. That's the test which the court gives you all the way through -- whether these cars, according to the meaning of the parties, were or were not under the contract, the contract providing for repairing as well as running."
"the said contract covers the said cars while standing on the tracks of the defendant in the yards, and under the sheds used for storing cars while not in transit,"
yards and under the sheds use for storing cars while not in transit, but while held for transit or repair on defendant's tracks under the contract."
Northern, and an instruction to the jury to that effect would not have been improper.
The judgment is reversed, and the cause remanded for a new trial in conformity with this opinion.
MR. JUSTICE BLATCHFORD, did not sit in this case or take any part in its decision.

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