Case Name: JOHN KISSENGER et al. v. THOMAS FITZGERALD et als., Receivers of the Norfolk and Southern Railway Company
Court: Supreme Court of North Carolina
Jurisdiction: North Carolina
Decision Date: 1910-03-31
Citations: 152 N.C. 247
Docket Number: 
Parties: JOHN KISSENGER et al. v. THOMAS FITZGERALD et als., Receivers of the Norfolk and Southern Railway Company.
Judges: BeowN, J., concurs in result.
Reporter: North Carolina Reports
Volume: 152
Pages: 247–253

Head Matter:
JOHN KISSENGER et al. v. THOMAS FITZGERALD et als., Receivers of the Norfolk and Southern Railway Company.
(Filed 31 March, 1910.)
1. Corporations — Receivers—Parties—Process.
An action against the receivers of a railroad company for injuries to a shipment of goods alleged to have been caused by the company’s negligence is, in effect, an action against the company.
2. Same — Order of Court.
When the complaint alleges a cause of action against an insolvent railroad company in the hands of receivers as defendants, and the summons has been issued against the receivers as defendants, and it appears that the cause had been prosecuted to final judgment against the corporation under an order obtained from the Federal Court on special petition that the plaintiff be allowed to do so, the fact that the name of the corporation does not appear in the summons is not of the substance and should not be allowed to affect the validity of the judgment.
3. Carriers of Goods — Bill of Lading — Restricting Liability — Live Stock — Valuable .Horse.
When under instructions from the shipper of a valuable race horse, who was unaware that there were several rate classifications of such animals, to ship by the usual classification, the agent of the railroad company made a freight rate in accordance with ordinary live-stock bill of lading which limited the recovery to a maximum amount of $100, but which restriction was not incorporated into the bill of lading used and of which nothing was said to the shipper, the question as to whether the recovery should be restricted to the maximum of $100 under the bill of lading customarily used for a shipment of live stock is not presented, as that character of bill of lading was neither used nor referred to; and, if otherwise, the restriction would be void under Stringfielcl v. li. R., ante, 125.
4. Same — Notice Implied.
The fact that the agent of a railroad company issuing a bill of lading for the shipment of a valuable race horse, knew that the animal was shipped for racing purposes, and had seen it “go round the race track,” is sufficient to put him upon notice that the value of the animal exceeded the average value of §100 contained as a restriction of its liability for damages in its ordinary live-stock bill of lading.
5. Carriers of Freight — Interstate Commerce — Discrimination— Knowledge of Shipper — Fraud.
One who ships a horse and pays the freight charged by the carrier’s agent in ignorance of the various classifications of freight rates on horses, and who does not know that the agent, in order to give the rate charged, had put a lower value upon the animal than its actual value, cannot be held guilty of “knowingly and willfully committing a fraud, and of a criminal offense against the United States statutes, in obtaining a preference, by reason that the rate of freight charged by the agent was less than the schedule of rates published by the carrier under the Federal statutes relating to interstate commerce.
6. Carriers of Freight — Interstate Commerce — Bill of Lading — Live Stock — Discriminative Rate — Valid Contract.
A rate of freight on an interstate shipment forbidden by the United States statutes as a discrimination, and which is set out in the bill of lading, does not render the contract of carriage void, but the forbidden rate may be set aside: Hence, when the stipulation in a bill of lading unlawfully restricts the recovery of a valuable horse to the average value of such animals, the shipper is not thereby prevented from recovering the actual damages' he has sustained by the carrier’s negligence in transporting the animal.
7. Same — Restricting Liability — State’s Policy — Void Stipulations.
And in such interstate shipments, there being no regulation by. Congress or the Interstate Commerce Commission affecting the Xiolicy of this State that common carriers may not' contract against loss or damage occasioned by their negligence, any stipulation in the bill of lading to that effect .cannot be enforced here.
Appeal from Ward, J., at Fall Term, 1909, of WASHINGTON.
Tbe suit was to recover damages for injuries to a certain borse, owned by plaintiffs and shipped over defendant road in June, 1908, from Roper, N. 0., to Norfolk, Ya. There was evidence tending to show that the horse, a race horse and valuable animal, was shipped over defendant road at the time stated, and was greatly injured by reason of negligence on the part of the railroad company or its agents having charge of the shipment.
The judge, among other things, charged the jury as follows: “If you find that when the plaintiffs shipped the horse defendant’s agent had known that the horse was a race horse, and was valuable, and that he was being shipped for the purpose of racing, and you find that plaintiffs knew nothing about the valuation in the classification, the plaintiffs would be entitled to recover damages sustained on account of the negligence of defendant, which would be the difference in value before and after he was hurt.” To this charge the defendants excepted.
And further: “That if tbe horse was injured while in the possession of the defendants, this fact alone is evidence of negligence. Proof of injury makes it a prima facie case of negligence to carry the case to the jury, and after having heard such evidence as the defendants offered tending to show how the injury occurred, it is for the jury to say whether it was due to the negligence of the defendant or to other causes for which the defendants are not responsible.” To this charge, the defendant excepted.
The jury rendered the following verdict:
“1. Was the plaintiff’s horse injured by the negligence of the Norfolk and Southern Eailway Company, as alleged in the complaint? Answer: TeS.
“2. "What damage, if any, has the plaintiff sustained by reason of such negligence? Answer: $850.”
Judgment on the verdict against the railroad company, and defendant excepted and appealed.
Ward & Grimes for plaintiff.
A. 0. Gaylord for defendant.

Opinion:
Homs, J.,
after stating the case: The injury complained of occurred in June, 1908, and in July following defendant company was placed in the hands of receivers in proceedings duly instituted in the Circuit Court of the United States for the Eastern District of North Carolina, and so remained at the time of action instituted and judgment entered; and it is claimed by defendants that no recovery should have been allowed against the company, because it was not named in the summons. The order of the Federal Court vested in the receivers the property and franchise of the Norfolk and Southern Eailway Company, and the statute of this State applicable, Bevisal, sec. 1224, provides:
"All the real and personal property of an insolvent corporation, wheresoever situated, and all its franchises, rights, privileges and effects shall, upon the appointment of a receiver, forthwith vest in him, and the corporation shall be divested of the title thereto"; and it would seem that under and by virtue of these provisions the receivers were properly námed as defendants in the summons.
Without deciding this question, however, an order of the Federal Court, on petition specially presented, permits plaintiff to prosecute to final judgment the said suit against the Norfolk and Southern Eailway Company. The complaint states a cause of action against the company, and on defense duly made, and after full inquiry, the verdict so establishes the validity of plain tiff's claim; and, this being true, we think tbe failure to formally name tbe company in tbe summons is not of tbe substance, and should be cured now by amendment, even if required.
We bave held in several cases tbat on claims of this character an action against receivers of an insolvent corporation was in' effect an action against tbe company. Grady v. R. R., 116 N. C., 952; Farris v. Receivers R. and, D. R. R., 115 N. C., 600.
It was chiefly urged for error on tbe argument before us tbat a recovery by plaintiff should be restricted to $100, a maximum valuation on a live-stock contract on file in tbe company's 'office at tbe time tbe shipment was made, and filed in tbe record as "Exhibit D." Even if such a restriction apqieared in tbe bill of lading, or as a stipulation in tbe contract of shipment, we bave held at tbe present term tbat on tbe facts relevant to this valuation it would not avail to limit a recovery for an injury due to tbe negligence of tbe company. Stringfield, v. R. R., ante, 125. But this question, as we view it, is in no way presented, for there is no restriction whatever in tbe bill of lading under which tbe horse was shipped, nor does it contain any reference to tbe classification which defendant contends should limit its liability. On tbe contrary, there was evidence on tbe part of plaintiff tbat be was not aware "tbat there were two or three rates on horses, and tbat be said nothing about tbe value of tbe horse at the time of shipment, and the agent did not ask about it." And, while tbe agent, as witness for defendant, testified tbat at the time of shipment be asked plaintiff what value be was going to place on tbe horse, and received tbe reply, "The usual valuation," be further made statement on cross-examination as follows:
"Mr. Roper bad never told me be was a race horse and never told me anything of bis value, and I knew nothing of bis value. I knew be was a race horse, and I bad seen him go round tbe track. I knew be was being sent off for tbe purpose of racing. At tbe time Mr. Roper said tbat be would ship him at the usual classification, I did not tell him what it was. I did not mention a $100 rate to him, nor did be (Roper) say anything about tbe value of the liorse to me."
Thus showing, not only tbe value was in no way restricted, but tbat tbe agent was aware of facts calculated to put a reasonably prudent person on notice tbat tbe animal shipped was much above tbe average in value.
While tbe position is not presented in tbe record, nor in tbe printed briefs, it was further contended for defendant on tbe oral argument tbat where it appeared tbat a horse or other property was shipped and freight paid on a lower valuation, to allow a recovery on tbe basis of a higher valuation would, in effect and by indirection, be giving a preference in freight rates, contrary to the provisions of chapter 3591, sec. 2, Laws of U. S.,-1906, 1st Session, Public Laws U. S., Yol. 34, Part I, pp. 584-587, requiring common carriers to publish a schedule of freight rates and make their charges accordingly; and for plaintiff to insist on such a recovery, after having ascertained the published rates at which his property had been in fact shipped, would make him guilty of a criminal offense, under section 10 of the Interstate Commerce. Act, as amended by act of 2 March, 1889, making it a fraud and misdemeanor for a shipper to obtain a preference in freight rates by "knowingly and willfully" making a shipment under "a false billing, false weighing, false representations of contents of a- package, etc., or by any other device or means, whether with or without the consent or cognizance of the carrier, its agents," etc. '
Just how a shipper, innocent at the time and entirely ignorant of any classification or difference in rating, who ships a horse and pays the freight charged by the agent, without being informed of the valuation made or without knowing that any special valuation was made, should be held guilty of "knowingly and willfully" committing a fraud and a criminal offense because he institutes an action for recovery for injuries done to the property by the carrier's negligence, and seeks to recover on the basis of its true value, we are utterly unable to perceive. To state the proposition is to answer it, and we would not have referred to it but for the fact that it was earnestly urged before-us, and a circular-letter purporting to be from the Interstate Commerce Commission .was exhibited which apparently gave it some countenance. See U. S. v. Mich. Central, 43 Fed., 26-30, where Blodgett, J., delivering the opinion, said: "If the agents and employees of a railroad, of whatever rank, make an unlawful contract, or if they knowingly aid and abet in the execution of' an unlawful contract which is made an offense under the interstate commerce act, they undoubtedly subject themselves to its penalties; but the proof, as in all criminal cases, must be clear and leave no reasonable ground for doubt as to their guilt and of their knowledge that they were engaged in consummating an illegal act."
Nor do we think the position can be at all sustained, that recovery is forbidden by the statute of 1896, because indirectly giving a preference in rating forbidden by the law. That statute, ch. 3591, Laws 1896, 1st Session, enacted chiefly for the purpose of preventing discrimination in freight rates, and affording further facilities for its discovery, among other things, in section 2, requires common carriers, subject to its provisions, to file and publish a schedule of freight rates, and forbids that any contract shall be entered into between a shipper and carrier containing an agreement for a freight charge lower than the published rates while the same are in force. In several decisions of the Supreme Court of the United States, construing this section and another not dissimilar, in acts of 2 March, 1889, ch. 382-25, Statutes U. S., 855, it has been held that, notwithstanding a contract between the shipper and carrier contained an agreement for a less sum than that of the. published rates, the carrier had a right to demand and collect according to the published rate, and to withhold the goods till such amount was paid, and this though the shipper may not have known that the agreement was for a less rate than that allowed by law. Texas Pacific Ry. v. Mugg, 202 U. S., 242; R. R. v. Heffler, 158 U. S., 98.
In R. R. v. Mugg, supra, the questions decided are thus stated by the reporter:
"1. One obtaining from a common carrier transportation of goods from one State to another at a rate specified in the bill •of lading, less than the schedule rates published and approved and in force at the time, whether he does or does not know the rate is less than schedule rate, is not entitled to recover the goods, or damages for their detention, upon tendering less than the published charges.
"2. Whatever may be the rate agreed upon, the carrier's lien •on the goods is, by force of the -interstate commerce law, the amount fixed by the published schedule of rates and charges, and this lien can be discharged, and the consignee become entitled to the goods, only by payment or tender of such amount."
It would seem from this and other similar cases, not that the contract of carnage was held void, but that the forbidden rate was set aside; and it may be that the carrier under the principle indicated might have demanded payment of a greater amount of freight, but there is nothing in these decisions, as we understand them, nor is there any recognized xorinciple which would sustain the iiosition that where there had been no agreement for a - lesser rate, and when it appeared that the shipper had not knowingly obtained or received any advantage in the contract of shipment, that such shipper or the party aggrieved could not recover damages for negligent injury to his property on the part of the carrier.
It is the settled policy of this State that common carriers may not contract against loss or. damage occasioned by their negligence; and it has been held by the Supreme Court of the United States that, unless and until there is some valid regulation by Congress or the Interstate Commerce Commission directly affecting tbe matter, a State has the right to establish such a policy and enforce it in reference to interstate shipments. Pa. Ry. v. Hughes, 191 U. S., 471. And, on the facts of this case, we are of opinion that thus far no such interfering stipulation has been shown, and that plaintiff's recovery must be sustained. Latta v. Chicago, etc., R. R., 172 Fed., 850.
The charge of his Honor as to the burden of proof, excepted to by defendant, is in accord with several decisions of this Court on that subject. Harper v. Express Co., 144 N. C., 639; Meredith v. R. R., 137 N. C., 479; Mitchell v. R. R., 124 N. C., 236.
We find no reversible error in the record, and the judgment is therefore affirmed.
No error.
BeowN, J., concurs in result.