Case Name: Railroad v. Gilbert, Parkes & Co.
Court: Tennessee Supreme Court
Jurisdiction: Tennessee
Decision Date: 1890-01-30
Citations: 88 Tenn. 430
Docket Number: 
Parties: Railroad v. Gilbert, Parkes & Co.
Judges: 
Reporter: Tennessee Reports
Volume: 88
Pages: 430–463

Head Matter:
Railroad v. Gilbert, Parkes & Co.
(Nashville.
January 30, 1890.)
1. Common Carriers. Validity of contract limiting carrier's common law responsibility.
A common carrier may stipulate for limitation of or exemption from his common law responsibility for loss of freight occurring through other cause than his negligence (e. g., accidental fire), provided the contract is supported by a bona fide and not merely colorable consideration, and is fair and reasonable in itself in view of all the surrounding. circumstances, and the assent of the shipper thereto is fairly .obtained.
Cases cited and approved: Marr v. Telegraph Co., 85 Tenn., 542; Transportation Co. v. Bloch Brothers, 86 Tenn., 397; Dillard v. Railroad, 2 Lea, 288; 17 Wall., 357; 112 U. S., 338; 47 L. J., Q. B., 131; 15 Ir. C. L., 37; 3 Wall., 107; 25 N. Y., 442.
2. Same. Same. Reasonable alternative must be offered.
But the carrier must hold himself in readiness to ship with common law responsibility, and must offer to shippers a reasonable and bona fide alternative between that mode of shipment and the one with limited responsibility.
Cases cited and approved: Marr v. Telegraph Co., 85 Tenn., 545; 15 Ir. C. L., 37.
3. Case in Judgment.
Carrier received cotton for shipment from Columbia to Nashville, giving to shipper a bill of lading providing against liability for loss by fire. The cotton was destroyed by fire without the carrier’s negligence. Shipper sued the carrier for its value. Said fire clause was interposed as a defense. The proof was that $1 per bale — the freight rate named in said bill of lading — had been, for many years, the only rate for shipment of cotton between said points; that no change of rate had been made when the fire clause was inserted in the bills of lading; that the regular tariff rates between said points was thirty-seven cents per hundred pounds, which would make the cost of shipment of cotton $1.85 per bale; that cotton was not embraced in the list of articles that could be shipped at regular rates; that the carrier’s agent at Columbia had no authority to receive cotton for shipment upon any terms except those named in said bill of lading, though he might have obtained authority by wiring the home office.
Held: That said “ fire clause ” in the bill of lading is void.
PROM DAVIDSON.
Appeal in error from Circuit Court of Davidson County. W. K. McAlistek, J.
Baxtee Smith for Railroad.
Dickinson & FRAZER and Hill & GRAnbebry for Gilbert, Parkes & Co.

Opinion:
Caldwell, J.
On October 18, 1885, W. E. Embry, as agent of Gilbert, Parkes & Co., delivered seven bales of cotton to the Louisville and Hashville Railroad Company, at Columbia, Tenn., for shipment to his principals at Hashville.
Before its departui'e, and while yet in' the depot of the company at Columbia, the cotton was destroyed by fire.
Thereafter Gilbert, Parkes & Co. sued the railroad company for non-delivery. The action originated before a Justice of the Peace, from whose judgment there was • an appeal to the Circuit Court at Hashville. There the case was tried by his Honor, the Circuit Judge, without a jury, and judgment was rendered in favor of the plaintiffs for the agreed value of the cotton, interest, and costs.
The railroad company has prosecuted an appeal in error to this Court.
There is no controversy about the consignment, loss, and value of the cotton; nor is there any denial that the defendant company would be liable for the loss under the rules of the common law. These are all conceded.
But it is insisted in behalf of the company that its common law liability was limited by special contract, and that special contract is relied upon in bar of any recovery. The bill of lading under which the shipment was to be made' is produced in evidence. It contains a fire clause, which stipulates that the company shall not he liable for loss or damage by fire. This is the special contract through which exemption from responsibility is sought.
The plaintiffs deny the validity of that stipulation, and thus the issue for our determination is presented.
It is now too well settled to admit of debate that the common law liability of common • carriers may be limited by special contract, even to the extent of denuding them of the character of insurers, except as against their own negligence, or that of their agents and servants; and the limitation may be, and is generally, embraced in the bill of lading delivered to the shipper at the time.
It is not. every such, special contract, however, that is effective. To be valid it must he fairly obtained, and just and reasonable. Under the English Railway and Canal Traffic Act of 1854 (17 and 18 Vict., Ch. 31, See. 7) such stipulations are called "conditions," and they can be upheld only when they " -shall be adjudged to be just and reasonable."
The same criterion is uniformly applied in this country, and no limitation of The carrier's common law liability, in whatever form made, will afford protection unless just and reasonable in the eyes of j the law. Railroad Company v. Lockwood, 17 Wallace, 357; Hart v. Penn. R. R. Co., 112 U. S., 338; Marr v. Telegraph Co., 1 Pickle, 542; Transportation Co. v. Bloch Brothers, 2 Pickle, 397.
Though such is the generally accepted test, the use of these words' (jhst and reasonable) will not always meet the requirements of investigation. What will be just and reasonable in one case may not be so in. another. The justness and reasonableness of the condition or limitation must of necessity depend upon the peculiar facts and circumstances of every case — the nature of the article to be conveyed, the hazard of the transportation, the surroundings of the parties at the time, and the mutual advantages given and received.
Referring to the burden and weight of proof, an eminent British author says: " The burden of proving the reasonableness of a condition lies upon the company. The most cogent evidence in favor of reasonableness is to show that the condition was not forced upon the customer, but that he had a fair alternative of getting rid of the condition, and yet agreed to it." Redman's Law of Railway Carriers (2d Ed.), p. 66, citing Lewis v. Great Western Railroad Co., 47 L. J., Q. B., 131.
In further treating the same subject, the same writer, on page 71, says: " To enable a company to rely on an alternative contract offered to the customer, it must appear that such alternative was itself reasonable. A company cannot offer the choice of two unreasonable conditions, and then rely on the one actually chosen." Citing Lloyd v. Waterford and Limerick Railroad Co., 15 Ir. C. L., 37.
To the same effect as the latter quotation is the Marr case, decided by this Court in 1886.
There the telegraph company was shown to have had four different rates of charges, with as many different degrees of liability. They were all held to be unreasonable, and the fact that the customer choosing one rate had the option of taking any .one of the other three was of no avail to the company in an action for damages. Marr v. Western Union Telegraph Co., 1 Pickle, 545.
The alternative must be both reasonable and bona fide. If either unreasonable or colorable merely, it will be unavailing as a defense to an action against a carrier.
A company standing before the public as a common carrier, and enjoying advantages and franchises as such, must be ready to do the business of a common carrier with, the full measure of responsibility imposed by the common law; and it may at the same time offer to do the same business with a limited liability, the limitation resting upon a sufficient consideration. An offer, or readiness, to transport the goods of its customer with the ' one or the other degree' of responsibility, at his option, is as little as can be required of any common carrier. Less than this does not present a bona fide and reasonable alternative.
Reduction of freight charges is the usual consideration for the diminution of responsibility on the part of the company.
One of the leading principles deducible from the English cases is stated by Mr. Redman in thes^, words: "A condition is reasonable which reduces a company's liability to a minimum, if it is coupled with compensating advantages to the customer (such as cheapness of carriage), and the latter has the alternative of getting rid of the condition by paying a reasonably higher rate." Redman's Law of Railway Carriers, p. 75, Sec. 2.
This language puts the law clearly and meets our unqualified approval. It is reproduced, as the law of the two countries, in a recent American work — American and English Encyclopedia of Law, p. 819, Vol. II.
Eire clauses similar to that* before us, when based upon sufficient consideration, have, by the Supreme Court of the United States and by- this Court, been held to be valid, and to protect the company from liability for loss by fii'e caused, otherwise than by the negligence of the company or its agents. York Company v. Central Railroad, 3 Wallace, 107; Dillard Bros. v. Louisville and Nashville Railroad Company, 2 Lea, 288.
In the latter case the Court said: "A lower rate of freight, or something equivalent, will be a sufficient consideration for the stipulation." 2 Lea, 293. In the former it is broadly intimated that a reduction of charges will be presumed to be the consideration for such a stipulation, the language of the Court being, " there is no evidence that a consideration was not given for the stipulation. The company probably had rates of charges pi-bportioned to the risks they assumed from the nature of the goods carried, and the exception of losses by fire must necessarily have affected the compensation demanded." 3 Wall., 113.
In speaking of a stipulation for a limited liability in a railroad ticket, the New York Court of Appeals said: "Like all contracts, to render such a one valid it is indispensable that it have some consideration, which it would not have if the passenger paid the full fare fixed by law. If the service is reduced, the amount of the reward must be reduced in proportion; and if the company is relieved from risk, it must make compensation for that relief by the reduction of fare or otherwise." Bissell v. N. Y. C. R. R. Co., 25 N. Y., 442.
The performance of an act which a party is under a legal obligation to perform, does not constitute a good consideration for a promise. Addison on Contracts, Sec. 4. Hence a mere agreement by a common carrier to transport goods furnishes no consideration for a stipulation for less than the common law liability. Lawson on Carriers, Sec. 212.
Having laid down the • principles of law by which this case must be decided, we proceed to give them application to the facts disclosed on the trial. In doing this it is necessary to state the material facts not already recited.
J. Baily says: " Have been freight agent at Columbia for the Louisville and Nashville Railroad for about nine years. I received the cotton in question from W. E. Embry, agent of plaintiff. Nothing was said about accepting this bill of lading. No objection was made to the same. The regular rate on this bill of lading was $1 a bale. The regular tariff rate for each 100 pounds is 37 cents, and, estimating a bale of cotton at 500 pounds, would make the cost of shipping' between these points, Columbia to Nashville, $1.85 per bale. If this bill of lading had been declined (the one the cotton was shipped under), the shipper would have had to ship by the regular tariff rates, $1.85 per bale, without the fire clause. I do not know how long this form of bill of lading has been in use', but it had been in 'use for several years, and was acceptable to the shipping public, and no complaint liad been made of it. I do not think there was any fire clause in the one used prior to this. At the time the cotton was shipped I had no other form of bill of lading to ship cotton under. I had no authority, as freight agent, to make any different contract, or to ship goods under any other bill of lading than the one under which these goods were shipped. Nothing was said between Mr. Embry and myself about a special rate; but he took the bill of lading offered without objection, and shipped under this. I would not have shipped this cotton any other way. The rate of $1 a bale has been such about six years, under the bill of lading such as this cotton was shipped under. I have no bill of lading to issue where goods are shipped under tariff rates. No cotton has ever been shipped under tariff rates. Every shipper in Columbia knows that I have the tariff rates posted up in my office; have told W. E. Em-bry about the tariff rates, but do not remember when. The rate on cotton was the same before the insertion of the fire clause as it is now. If objection had been made about this bill of lading, I would have refused to receive the goods until I had authority from Mr.. Champe. A schedule, with the exemptions, was posted up in a conspicuous place in my office at Columbia, but the name, ' cotton,' did not appear in it, but it would have come under our losses; and had frequently talked with Mr. Embry, plaintiff's agent, about the two rates before this shipping."
B. E. Champe testified: "I am general freight-agent of the Louisville and Nashville Railroad, at Nashville. If Mr. Baily, our freight agent at Columbia, had informed me that Mr. Embry refused to ship his cotton under this bill of lading, in this case I would have instructed Mr. Baily to ship the said cotton by the regular rates of 37 cents per 100 pounds, which would have been done by telegraph. The only two rates we have are the rates under this bill of lading and the tariff rates. This bill of lading, as far as I know, has been in use a long number of years."
The foregoing is the whole of the testimony of these two witnesses. It is quoted at length to show the whole case as made by the defendant. It introduced no other witness.
Leonard Parkes, one of the plaintiffs, stated, in substance, that he had been a shipper over the Louisville and Nashville Railroad many years; that the Merchants' Exchange at Nashville protested against the introduction of the fire clause in the defendant's form for bills of lading, and gave the company notice of that protest, and that the rate from Columbia to Nashville was not reduced when the fire clause was inserted, but remained the same as before.
Under these facts, we agree with the learned Circuit Judge in holding that the company is liable for the value of the cotton.
. The special contract for exemption from liability for loss or damage by fire is, by this record, shown not to be just and reasonable. It was tbe primary duty of the company to bold itself in readiness to transport goods under tbe rules of the common law, with all the responsibility of a common carrier. This it did not do. Its agent was furnished with no form for bill of lading for such a shipment. More than that, he had no authority to receive the goods for. shipment with such responsibility attaching to the company. He says he had no authority to make any contract but the one he did make, and that he " would not have shipped this cotton any other way." He submitted no alternative to the plaintiffs, and had no authority from his principal to do so, and would not have done so if requested. True he says he would have asked for permission to ship under contract without fire clause if the bill of lading with it had been refused by the customer; and. Mr. Champe says he would have granted such permission. "What stronger proof could there be that the company was not offering, or ready, or even pretending to do business except upon the most restricted liability ? "Why the necessity of asking and granting permission to do a thing which the law requires it to be in constant readiness to do? This is the permission that should have been granted in the first instance. From the moment of his employment, the agent should certainly have been clothed with authority to do that which the law required him to do, and, after that, he could have been au thorized to do that which the law permitted him to do.
That he frequently talked with Embry " about the two rates," is an unimportant circumstance, as we see it. If he, at the same time, told Embry what he tells the Court — that he was authorized to issue but the one bill of lading, and that he would ship the cotton no other way — he would certainly not have made the case any better for the company; and if he withheld those additional facts, they remain facts in the case nevertheless, and cannot be rejected because not disclosed to the customer.
Again, no consideration for the fire clause passed to the shipper. The responsibility of the carrier is reduced to a minimum it is true, but there is no corresponding reduction in freight charges. There is no reciprocal concession of legal rights by carrier and shipper. The advantage' is all on one side. It is distinctly shown that the rate charged under the bill of lading in this case is the same that was charged before the insertion of the fire clause, and that no reduction was even pretended to be made on account of the introduction of such clause and the customer's assent thereto. The agreement to carry for a price which the company was accustomed to charge without the fire clause, is no consideration for the diminution of liability by the insertion of such clause. , ^
It -is said that it is bad faith on the part of plaintiffs to complain of this clause now, when they may have received the benefit of reduced rates in the past on account thereof. It is unnecessary to decide what force there might be in this suggestion if based upon the real facts of the case. The answer to it, upon this record, is that no such benefit has been enjoyed by the plaintiffs. It is true one of the plaintiffs says he has been the defendant's customer for many years, both before and since the introduction of the fire clause; but it is also true, as already seen, that the price charged has been the same all the time..
It is still further suggested that the shipping public at Columbia have acquiesced in this form of bill of lading for some years'without complaint. Such is the proof in the case; and this fact would go far toward establishing the justness and reasonableness of the exemption claimed if the company had all 'the while been ready to carry goods with or without the fire clause, and had accordingly given its customers a fair opportunity of electing for themselves which they would take. But acquiescence alone will not justify the limitation.
The words of Mr. Justice Bradley, in the Lockwood case, are pertinent at this point: "The carrier and his customer do not stand on a footing of equality. The latter is only one individual of a million. He cannot afford to higgle, or stand out and seek redress in the Courts. His business will not admit of such a course. He 'prefers rather to accept any bill of lading, or sign any paper the carrier presents; often, indeed, without knowing what the one or the other contains. In most cases he has no alternative but to do this or abandon his business." 17 Wallace, 379.
Erom the defendant's own showing, our conclusion is that the stipulation relied upon is invalid, and affords no protection whatever.
The second and last assignment of error relates alone to new facts disclosed in an affidavit produced on the motion for a new trial. As to this it is sufficient to say that such facts, if considered, could not possibly have changed the result, being alone with respect to matters transpiring subsequently to the shipment and loss of the cotton, and in nowise connected therewith.
Let the judgment he affirmed.