Case Name: Thomas W. Pearsall, Resp't, v. The Western Union Tel. Co., App'lt
Court: New York Court of Appeals
Jurisdiction: New York
Decision Date: 1891-01-22
Citations: 35 N.Y. St. Rep. 307
Docket Number: 
Parties: Thomas W. Pearsall, Resp’t, v. The Western Union Tel. Co., App’lt.
Judges: 
Reporter: New York State Reporter
Volume: 35
Pages: 307–315

Head Matter:
Thomas W. Pearsall, Resp’t, v. The Western Union Tel. Co., App’lt.
(Court of Appeals, Second Division,
Filed January 22, 1891.)
1. Negligence — Telegraph company — Liability of, for mistakes in message—Evidence.
Plaintiff, a member of the firm of T. W. Pearsall & Co., on the 31st July wrote on a sheet of blank paper the following message and delivered it to one of defendant’s operators at Great Neck, L. I. “ Great Neck, L. I., July 31st. T. W. Pearsall &• Co., Mills Building, New York city. Buy one thousand Western Union Telegraph. T. W. Pearsall.” The operator who received and transmitted it from Great Neck addressed it to T. W. Pearsall, Mills Building, N. Y. city, and it was left unopened until plaintiff returned the next day, and plaintiff brought action to recover damages, and proved" the above facts, held, that the court correctly-instructed the jury that the evidence made out aprima faeie case of negligence against the defendant.
2. Same—Regulations on blank.
While a telegraph company is not, unless it so expressly contracts, held, to warrant or insure the accurate transmission or prompt delivery of messages, it cannot by notice limit its liability for negligence, and the printed blank containing such notice was properly withheld by the court from the jury. (Bradley and Brown, JJ., dissenting.)
3. Same.
A shareholder in a corporation is not chargeable with constructive notice of resolutions adopted by the hoard of directors, or by provisions in the by-laws regulating the mode in which its business shall be transacted with, its customers.
4. Same—Measure of damages.
The measure of damages in such a case is the difference between the market value of the shares at the time when the dispatch should have been delivered and the sum paid for them in the market on the receipt of the message.
Appeal from a judgment of the general term of the supreme court of the first judicial department, which affirmed a judgment, entered on a verdict in favor of the plaintiff for $1,757.86 damages.
In July, 1884, the plaintiff was a member of the firm of T. W. Pearsall & Co., bankers and brokers, engaged in business at the Mills Building, Ho. 17 Broad street, in the city of New York. At about 8 o’clock in the forenoon of July 31, 1884, the plaintiff wrote on a sheet of blank paper and delivered to the telegraph operator at the station of the Long Island Railroad at Great Heck, the following telegram:
“ Great Neck, L. 1, July 31st.
“ T W. Pearsall & Co., Mills Building, New York Oily:
“Buy one thousand Western Union Telegraph.
“T. W. Pearsall.”
The message was not prepaid, but it was delivered at the office of T. W. Pearsall & Co. before ten o'clock in the forenoon of the same day, where the charge of twenty-five cents for its transmission was paid. The operator who received the message and transmitted it from Great Neck addressed it to “ T. W. Pearsall, Mills Building, New York City,” and it was so received by the receiving operator in New York, so written out on defendant’s blank form No. 1, sealed in an envelope and addressed, “ T. W. Pearsall, Mills Building, New York City.” The following is a copy of the message as transmitted from Great Neck and as delivered:
“ Form No. 1. The Western Union Telegraph Company.
“ This company. transmits and delivers messages only on conditions limiting its liability, which have been assented to by the sender of the following message. Errors can be guarded against only by repeating a message back to the sending station for comparison and the company will not hold itself liable for errors or delays in transmission or delivery of unrepeated. messages beyond the amount of tolls paid thereon, nor in any case where the claim is not presented in .writing within sixty days after sending the message. This is an unrepeated message, and is delivered, by request •of the sender under the conditions named above.
Thomas T. Eckert, Manager.
Norvin Green, President.
Received at the Western Union Building, 195 Broadway, New York, July 31,1884.
Dated Great Neck Depot, L. 1, 31.
■“ To T. W. Pearsall, Mills Buildings, N. Y.
“ Buy one thousand Western Union Telegraph.
“ T. W. Pearsall.”
No person connected with the office of T. W. Pearsall & Co. had authority to open telegrams addressed to the plaintiff individually, and this one remained unopened until about 10 o’clock A. M. of August 1st, when the plaintiff reached his office, opened and read the message. The result was that the shares ordered were not purchased July 31st, and on the morning of August 1st they had risen in the market so that they sold for $1700 more than they did on the morning of the day before, and the plaintiff then actually purchased that number of shares and paid the market rate.
This action was brought to recover the sum of $1,700. The defendant by its amended answer (5th subd.) admits that the mes sage was delivered at its office, at Great Neck, L. I., to a son of its agent, and by the letter of its general manager admits that the error in its transmission was that of the operator at Great Neck, but it alleges that at this time, and for a long time previously, the defendant was using a blank upon which messages were usually written which contained the following printed matter:
“ Form, No. 2.
“ The Western Union Telegraph Co.
“ All messages taken by this company are subject to the following terms:
“ To guard against mistakes or delays, the sender of a message should order it repeated; that is, telegraphed back to the originating office for comparison. For this one-half the regular rate is charged in addition. It is agreed between the sender' of the following message and this company, that said company shall not be liable for mistakes or delays in the transmission or delivery, or for non-delivery, of any unrepeated message, whether happening by negligence of its servants or otherwise, beyond the amount received for sending the same; nor for mistakes or delays in the transmission or delivery, or. for, non-delivery, of any repeated message beyond fifty times the sum received for sending the same, unless specially insured; nor in any case for delays arising from unavoidable interruption in the working of its lines, or for errors in cipher or obscure messages. And this' company is hereby made the agent of the sender, without liability, to forward any message over the lines of any other company then necessary to reach its destination.
“ Correctness in the transmission of messages to any point on the lines of this company can be insured by contract in writing, stating agreed amount of risk, and payment of premium thereon at the following rates, in addition to the usual charge for repeated messages, viz.: One per cent for any distance not exceeding 1,000 miles, and two per cent 'for any greater distance. No employee of the company is authorized to vary the foregoing.
“ No responsibility regarding messages attaches to this company until the same are presented and accepted at one of its transmitting offices, and if a message is sent to such office by one of the company’s messengers, he acts for that purpose as the agent of the sender.
_ “ Messages will be delivered free within the established free delivery limits of the terminal office; for delivery at a greater distance a special charge will be made to cover the cost of such delivery.
“ The company will not be liable for damages in any case where the claim is not presented in writing within sixty days after sending the message.
“ Thos. T. Eckert, General Manager.
“Norvin Green, President."
That plaintiff had notice of those terms and conditions.
Upon the trial the plaintiff testified: I am familiar with the general appearance of the blanks, with the printed heading, which the Western Union Telegraph Company furnishes to persons whose business it desires, and have been so for a good many years. I have frequently sent messages written on such blanks. Bundles of such papers are lying on the table in my office, ready of access to any one who desires to send a message by telegraph. There is quite a parcel of them there, always in full view. I have been in the habit of taking blanks from that pile and writing messages on them and sending them myself, and I had been previous to the time this message was written, ón the 31st of July, 1884. * * *•
“ Q. Did you ever, in point of fact, before sending this message, read any of this printed matter that is at the head of the blanks in your office ? A. No, sir.
“ Q. Had you in any way knowledge of the terms of those conditions? A. No, sir.”
On the trial the defendant offered in evidence blank form No. 2, and insisted that the plaintiff was bound by its terms, but the court rejected the offer, and ruled that the terms were not binding on the plaintiff. But two questions were submitted to the jury: (1.) Whether the defendant was negligent in transmitting the message. (2.) The amount of damages. The jury returned a verdict for $1,757.86, upon which a judgment was rendered, which was affirmed by the general term, from which the defendant appeals to this court.
Thomas G. Shearman, for resp’t; Burton N. Harrison, for app’lt.
Affirming 9 N. Y. State Rep., 132.

Opinion:
Follett, Ch. J.
This action was tried and a had at circuit, which was sustained at the general term, on the theory that the contract between the parties was the one implied by law when a telegraph company receives, without conditions, a message for transmission. Among other obligations implied in such a case, is the duty to accurately transmit and deliver to the addressee the message received, which in this case the defendant failed to do, as it admits, by reason of the mistake of the operator who received and undertook to send forward the communication. Under such a contract a telegraph company does not insure the accurate transmission and delivery of a dispatch, but undertakes to exercise due diligence to do so.
The question has several times arisen whether, in actions for damages against such corporation for failing to accurately or promptly deliver communications, a plaintiff makes out a prima facie case by proving the contract and its breach, or whether the plaintiff must go further and give evidence of some negligent act of omission or commission on the part of the corporation or of its agents.
Rittenhouse v. Independent Line of Tel., 1 Daly, 474; 44 N. Y., 263, was brought to recover damages for failing to correctly transmit a message, and it was held that a prima facie case was made out by showing that the communication delivered was not a copy of the one sent
In Baldwin v. The U. S. Tel. Co., 45 N. Y, 744, a dispatch was received for " Erie Darling," but as transmitted it was addressed to " E. R Cooley," and was not delivered to Darling for several days, and it was held that by proof of these facts a prima facie case was established.
In Breese v. The U. S. Tel. Co., 48 N. Y., 132, it was proved, that a message to purchase $700 in gold was changed to one to buy $7,000 in gold, and it was said, though not necessary for the decision of the case, that it was not prima facie proof of negligence.
The rule laid down in the first two cases has been followed by the courts of other states and is approved by the text writers. Whart. on ITeg., § 756; Gray Tel., § 26, 53, 54, 77; Abb. Tr. Ev., chap. 32; 2 Greenl. Ev., § 222a note; 2 Shear. & Red. Ueg., § 542 ; 2 Thomp. IT eg., 837 ; 3 Suth. Dam., 295.
The court correctly instructed the jury that the evidence made out a prima facie case of negligence against the defendant.
In the cases holding that telegraph companies are only liable when grossly negligent there were contracts exempting them from all liability, except to refund the tolls received, for negligently sending or delivering the communication. ' Without considering whether there is any legal distinction to be drawn between gross and ordinary negligence in such cases, it is sufficient to" say that these cases are not germain to the question in the case at bar.
At the time this message was received, the plaintiff was one of defendant's shareholders, and it was offered to be proved in defense of the action that the board of directors had adopted a resolution that it would not be liable for mistakes or delays in the transmission or delivery of unrepeated messages, and would not be liable for damages arising from delays in the transmission or delivery of a repeated message beyond an amount specified; and it was insisted that a shareholder was chargeable with notice of this resolution. The regulations were excluded and the defendant excepted. In this there was no error, for a shareholder in a corporation is not chargeable with constructive notice of resolutions adopted by the board of directors, or by provisions in the bylaws regulating the mode in which its business shall be transacted with its customers, and the plaintiff's rights arising out of defendant's contract to transmit the message were in no wise limited by its regulations or by-laws not brought to the plaintiff's knowledge. Hill v. Manchester & Salford Waterworks Co., 5 B. & Adol., 866; Rice v. Peninsular Club, 52 Mich., 87; Mor. Corp., 88 500, 500a.
The court instructed the jury that the plaintiff was entitled to recover the difference between the market value of the stock on the morning of July 31st, and the sum which he paid for it on the morning of the following day. It distinctly appeared on the face of the dispatch that it was an order to buy shares; and in such cases, the liability of the corporation not being limited by a special contract, the measure of damages is the difference between the market value of the shares at the time when the dispatch should have been delivered and the sum paid for them in the market on the receipt of the message. Rittenhouse v. Tel. Co., 44 N. Y., 263; Leonard v. Tel. Co., 41 id., 544; Squire v. W. U. Tel. Co., 98 Mass., 232; Western Union Tel. Co. v. Hall, 124 U. S., 444; U. S. Tel. Co. v. Wenger, 55 Pa. St., 261; 3 Suth. Dam., 307.
It is insisted in behalf of the defendant that the court erred in excluding from the consideration of the jury the conditions printed on Form 2. It is settled that a telegraph company incorporated under the general statutes of this state may, by contract, limit its liability for mistakes or delays in the transmission or delivery or for the non-delivery of messages caused by the negligence of its servants, if the negligence be not gross, to the amount received for sending the dispatch. Breese v. U. S. Tel. Co., 48 N. Y., 132; Kiley v. W. U. Tel. Co., 109 id., 236; 14 N. Y. State Rep., 816. But it has never been decided by the court of last resort that such a company can, by notice, limit its liability for such mistakes or delays.
Breese v. U. S. Tel. Co., 45 Barb., 274; 48 N. Y., 132, arose out of an erroneous transmission of a message written on a blank containing printed conditions, and it was held that a party by writing his dispatch on the blank assented to the printed terms and conditions. In discussing the question it was said; " They (telegraph companies) can thus limit their liability for mistake not occasioned by gross negligence or wilful misconduct and this they can do by notice brought home to the sender of the message or by special contract entered into with him." We think this remark cannot be. regarded as an adjudication that the common law liability of a telegraph company may be limited by a mere notice unless it is brought to the personal knowledge of the sender of the message and he is shown to have assented to it. In this state a common carrier may by an express contract with the shipper exempt itself from liability for loss or damage occasioned by the negligence of its servants. Wells v. N Y. C. R. R. Co., 24 N. Y., 181; Bissell v. N. Y. C. R. R. Co., 25 id., 442; Poucher v. N. Y. C. R. R. Co., 49 id., 263; Cragin N. Y. C. R. R. Co., 51 id., 61; Spinetti v. Atlas S. S. Co., 80 id., 71; Mynard v. Syr., B. & N. Y. R. R. Co., 71 id., 180; Wheeler on Carriers, 76, 86. But a common carrier cannot by notice limit its common law liability to safely carry and deliver goods without evidence of the shipper's assent to the limitation proposed. Hollister v. Nowlen, 19 Wend., 234; Cole v. Goodwin, id., 251; Clark v. Faxton, 21 id., 153; Camden, etc. Trans. Co. v. Belknap, id., 354; Dorr v. N. J. Steam Nav. Co., 11 N. Y., 485; Blossom v. Dodd, 43 id., 264.
Telegraph companies organized like the defendant under chap. 265 of the Laws of 1848, and the acts amendatory thereof and supplementary thereto, like companies incorporated for the carriage of goods and passengers, owe duties to the public. Such corporations, like railroads, may exercise the right of eminent domain and they are required to exercise due diligence to transmit with celerity and skill all messages delivered to them subject to such reasonable rules as may be adopted to protect their rights and facilitate the performance of their duties. They, like common carriers, have become necessary instrumentalities for conducting the business of the country and they owe the same duty to the public, and we think should be held to the same rule in respect to their right to limit their liability by notice. In this state the doctrine that the common law liability could not be limited without an express contract has been applied to individuals and firms acting as common carriers as well as to corporations.
In MacAndrew v. The Electric Tel. Co., 17 Com. B., 3, it was said that the common law liability of a telegraph company may be limited by notice, but the report of the case does not show whether the message was written on a blank with or without conditions. But in England it was held that carriers could by notice limit, their liability for the loss of goods even in cases of gross negligence, which resulted in statutes providing that their liability could not be limited except by an express contract. Section 6, chap. 68, 11 Geo. IV and 1 Wm. IV; § 7, chap. 31, 17 and 18 Vict.
In Clement v. Western Union Telegraph Co., 137 Mass., 463, a message not written upon one of the defendant's blanks was sent to its office for transmission. It was forwarded in due time, but was not delivered by the office at which it was received. In an action brought for the recovery of damages occasioned by the failure to deliver, it appeared that the plaintiff's agent, who sent the message, knew the terms and conditions on which the defendant by its rules provided that messages should be sent over its line as set forth in the blank then in use by it, and it was held that this knowledge of the plaintiff's agent was binding upon him, and that no recovery could be had. . .
In the case last cited a different rule was applied to telegraph companies from the one applied by the same court to express companies. In Grott v. Dinsmore" 111 Mass., 45, the plaintiff shipped goods by express, not taking, at the time, the usual receipt containing printed conditions limiting the liability of the company, with which the plaintiff was familiar, he having been m its employment and issued many such receipts. It was held that mere notice brought home to the owner of the goods, by which the carrier seeks to limit its common law liability, and the terms of which are not expressly assented to, were insufficient to defeat a claim for loss. The court said: " Nor does the knowledge of this regulation which the plaintiff had previously acquired while in defendant's employment subject him to the limitations imposed by the receipt." In Ellis v. American Tel. Co., 13 Allen, 226, the reasons are clearly and satisfactorily stated for the existence of the rule that telegraph companies are not, unless they so expressly contract, held to warrant or insure the accurate transmission or prompt delivery of messages, and are only liable for negligence. But we find no satisfactory reason in this, or in any case, for a rule that such companies may by notice limit their liability for negligence, nor do we see any in the nature of the business in which they are engaged. Carriers and telegraph companies are alike engaged in quasi public employments, and persons are from necessity compelled to employ the latter without more opportunity for choice and deliberation than when they se lect the former. As before shown, the liability on contract of earners of goods which is implied by law cannot be limited by notice, and it is difficult to see why telegraph companies should, be permitted to limit a much less onerous obligation by a mere notice.
The judgment should be affirmed, with costs.