Court Opinion

ID: 3880072
Source: CourtListenerOpinion
Date Created: 2016-07-06 09:11:51.211515+00
Date Added: 2024-06-11T07:41:54.310023
License: Public Domain

This is an action for actual and punitive damages which the plaintiff seeks to recover by reason of the alleged breach of a contract for the proper transportation of herself as a passenger en route from Chadbourn in the State of North Carolina to Mullins in the State of South Carolina, a contract admittedly involving rights and obligations in interstate commerce.
Upon a jury trial, a verdict for both actual and punitive damages was returned over the protest of the defendants, particularly as to punitive damages, who have properly presented the contention that, for the breach of such a contract as the plaintiff had with the railroad company, the damages recoverable must be measured by the Federal decisions, which in interstate transactions, and all others for that matter, deny the imposition of punitive damages against a master or principal based upon the willful act of a servant or agent, unless the superior has either authorized or ratified the act of the inferior.
I concur in the affirmance of so much of the judgment as is based upon actual damages, but dissent from so much of it as is based upon punitive damages by reason of the alleged willful act of the servant of the railroad company, so far as the railroad company is concerned, upon the ground that the imposition of punitive damages under the circumstances cannot be sustained under the Federal decisions which are controlling in matters affecting interstate commerce.
In So. Express Co. v. Byers, 240 U.S. 612,36 S.Ct., 410, 60 L.Ed., 825, L.R.A., 1917-A, 197, the general principle is thus declared: "Manifestly the shipment was interstate commerce; and, under the settled doctrine established by our former opinions, rights and liabilities in connection therewith depend upon Acts of Congress, the bill of *Page 340 
lading and common-law principles accepted and enforced by the Federal Courts" — citing cases.
It is conceded that there is no Act of Congress or regulation of the Interstate Commerce Commission prescribing the nature of recoverable damages as a result of the breach of an interstate contract for the transportation of passengers; consequently, under the rule announced in the Byers case, just quoted, their nature must be ascertained by resort to "common-law principles accepted and ordered by the Federal Courts."
The question of the liability of a master or principal, in punitive damages for the willful act of a servant or agent, is elaborately discussed and definitely settled in the case ofLake Shore  M.S.R. Co. v. Prentice, 147 U.S. 101,13 S.Ct., 261, 263, 37 L.Ed., 97, where the Court said: "In this Court the doctrine is well settled that in actions of tort the jury, in addition to the sum awarded by way of compensation for the plaintiff's injury, may award exemplary, punitive, or vindictive damages, sometimes called 'smart money,' if the defendant has acted wantonly, or oppressively, or with such malice as implies a spirit of mischief or criminal indifference to civil obligations. But such guilty intention on the part of the defendant is required in order to charge him with exemplary or punitive damages. [Citing cases.] Exemplary or punitive damages, being awarded, not by way of compensation to the sufferer, but by way of punishment of the offender, and as a warning to others, can only be awarded against one who has participated in the offense. A principal, therefore, though of course liable to make compensation for injuries done by his agent within the scope of his employment, cannot be held liable for exemplary or punitive damages, merely by reason of wanton, oppressive, or malicious intent on the part of the agent."
The legal issue for determination is whether this rule of the Federal decisions is to be applied to the present case, or the South Carolina rule, established by its decisions, which *Page 341 
permits the recovery of punitive damages for the willful act of a servant or agent, regardless of the question of authorization or ratification of the act by the master or principal.
I think that there can be no possible controversy as to the correctness of the following propositions:
(1) The contract relation between the plaintiff and the railroad company, for transportation from a point in North Carolina to a point in South Carolina, involved a transaction of interstate commerce, and the obligations and rights thereunder must be determined, normally, by the applicable provisions of the Federal law, to which all State law, by statute or judicial decision, must be held subservient.
(2) This is especially true where the regulation of the particular matter in question has been assumed either by Act of Congress or by authorized action of the Interstate Commerce Commission.
(3) Where such regulation has not been so assumed, there may exist an open zone within which State law may operate, notwithstanding its effect upon interstate commerce, provided it be of an incidental nature, ordained under the police power of the State for the protection of its citizens, and does not attempt to alter the nature or extent of the obligations of the contracting parties.
In reference to the last and only possibly controvertible one of the three propositions advanced, the zone of operations of a State law is clearly defined in the case of Simpsonv. Warehouse Commission, 230 U.S. 352,33 S.Ct., 729, 57 L.Ed., 1511, 48 L.R.A. (N.S.), 1151, Ann. Cas., 1916-A, 18 (known as the Minnesota Rate Cases). The syllabus is as follows: "There remains to the States the exercise of the power appropriate to their territorial jurisdiction in making suitable provision for local needs. The State may provide local improvements, create and regulate local facilities, and adopt protective measures of a reasonable character in the interest of the health, safety, morals and welfare *Page 342 
of its people, although interstate commerce may incidentally or indirectly be involved."
In the opinion of the Court it is said: "Further, it is competent for a State to govern its internal commerce, to provide local improvements, to create and regulate local facilities, to adopt protective measures of a reasonable character in the interest of the health, safety, morals, and welfare of its people, although interstate commerce may incidentally or indirectly be involved. * * * State inspection laws and statutes designed to safeguard the inhabitants of a State from fraud and imposition are valid when reasonable in their requirements, and not in conflict with Federal rules. * * * And the legislation of the States, safeguarding life and property and promoting comfort and convenience within its jurisdiction, may extend incidentally to the operations of the carrier in the conduct of interstate business, provided it does not subject that business to unreasonable demands, and is not opposed to Federal legislation."
In Missouri, etc., R. Co. v. Harris, 234 U.S. 412,34 S. Ct., 790, 793, 58 L.Ed., 1377, L.R.A., 1915-E, 942, a Texas statute was sustained which allowed an attorney's fee of $20.00 in actions for claims of less than a specified amount. The Court said: "But the Texas statute now under consideration does not in anywise either enlarge or limit the responsibility of the carrier for the loss of property intrusted to it in transportation, and only incidentally affects the remedy for enforcing that responsibility. * * * The local statute, as already pointed out, does not at all affect the ground of recovery, or the measure of recovery; it deals only with a question of costs, respecting which Congress has not spoken."
The cases cited and quoted from in the leading opinion are entirely in accord with this proposition: Penn. R. Co. v.Hughes, 191 U.S. 477, 24 S.Ct., 132, 48 L.Ed., 268;Missouri, etc., R. Co. v. Larabee, 211 U.S. 612; AdamsExpress Co. v. Croninger, 226 U.S. 491, 33 S.Ct., 148, *Page 343 57 L.Ed., 314, 44 L.R.A. (N.S.), 257; Simpson v. Shepard,230 U.S. 352, 33 S.Ct., 729, 57 L.Ed., 1511, 48 L.R.A. (N.S.), 1151, Ann. Cas., 1916-A, 18.
The question then is presented whether or not the rule declared by the decisions of South Carolina is such an incidental matter, the exercise of the police power of the State, in aid of the security of a passenger, adding nothing to the nature or extent of the damages recoverable. To this question I do not think that there can be but one answer; that it does not come within the zone of the legitimate exercise of the State's regulation. It has not a suggestion of the regulation of the carrier's duty; it adds nothing to the security of a passenger; it changes the nature and extent of recoverable damages.
In W.U. Tel. Co. v. Showers, 112 Miss., 411,73 So., 276, 277, the action was for actual and punitive damages on account of the alleged negligent and willful conduct of the agents of the telegraph company in delaying the transmission and delivery of the interstate telegram. The trial Court authorized recovery, not only for actual damages, but for punitive damages and for mental anguish, if the jury believed that the delay in the transmission of the message was due to wantonness, willfulness, or gross negligence on the part of the agents of the company in handling the message. Upon appeal from a judgment in favor of the plaintiff, the Court held: "The Mississippi rule as to punitive damages was invoked in this case by the plaintiff, and the Mississippi rule allows damages against the master for the wanton, willful, or gross negligent conduct of a servant. Under the Federal rule the master is not liable for punitive damages unless he participates in the wanton or malicious act of his servant or agent or subsequently ratifies it. Lake Shore R.Co. v. Prentice, 147 U.S. 101, 13 S.Ct., 261,37 L.Ed., 97. Under the law as laid down in the case of Express Co.v. Byers [240 U.S. 612, 36 S.Ct., 410, 60 L.Ed., 825, L.R.A., 1917-A, 197], supra, the Federal rule as to punitive *Page 344 
damages applies; as the Court held in that case that the rules in force under the Federal statute are the rules of the common law `accepted and enforced by the Federal Courts.'"
The case of Express Company v. Byers, 240 U.S. 612,36 S.Ct., 410, 60 L.Ed., 825, L.R.A., 1917-A, 197, was an action for mental anguish damages arising out of the shipment of a coffin which was delayed to the mortification of the husband for whose wife the shipment was intended. Referring to this case, the Court in the Mississippi case, W.U. Tel. Co. v. Showers, 112 Miss., 411, 73 So., 276, 277, said: "The Court held, notwithstanding the State rule, that damages for mental anguish alone could not be recovered under the Federal law. In other words, this being a subject of interstate commerce, the Courts held that rights and liabilities of the parties must be determined by the Federal rule, and not by the statute or the common law of the State."
The Court in the Byers case said: "Manifestly the shipment was interstate commerce; and, under the settled doctrine established by our former opinions, rights and liabilities in connection therewith depend upon Acts of Congress, the bill of lading and common-law principles accepted and enforced by the Federal Courts." The Court proceeded to hold, citing half a page of authorities, that damages for mental anguish, in the absence of other injury, are not recoverable, that the trial Judge erred in refusing a request to charge according with this doctrine. It did not, of course, appear that there was a regulation by Act of Congress or by order of the Interstate Commerce Commission of the shipment of coffins; the decision was based upon the declaration that the shipment was interstate commerce, the regulation of which in all of its details, and especially in reference to the ground and extent of recovery in case of a breach of the obligations of the carrier, has been committed to the Federal authorities.
In Hall v. W.U. Tel. Co., 108 S.C. 502, 94 S.E., 870,871, following the Byers case, this Court held that a contract *Page 345 
for sending a telegram from one State to another was one involving interstate commerce, and was governed by the Federal law, which denied a recovery of damages for mental anguish. The Court said: "The Federal law governs and controls such contracts, and must control to the exclusion of all State laws which directly or indirectly affect the contract." Certainly a law, statute, or decision, which affects not only the character of, but the amount of recovery upon, an interstate contract, directly affects it.
Later in the case of Berg v. Tel. Co., 110 S.C. 169,96 S.E., 248, 250, the Court said:
"Having reached the conclusion that this is an interstate message, it is only necessary to cite the case of Hall v. W.U. Tel. Co., supra, to sustain the proposition that the Federal law does not recognize mental anguish as an element of damages in such cases." In reference to the issue of punitive damages, the Court said:
"The last question is whether there was error in directing a verdict as to punitive damages. The cases of Turmanv. Railway, 105 S.C. 287, 89 S.E., 655, and De Loach v.Railway, 106 S.C. 155, 90 S.E., 701, announce the rule in the Federal Courts that the master is not liable for the willfulness of the servant unless he had knowledge before the event, or afterwards ratified the wrongful act of the servant."
It is suggested that the Turman case does not support the contention of the appellant in this instance, for the reason that it is declared in the opinion of the Court that the contract under consideration was "dependent upon the Act of Congress regulating passes for employees' families." The Court said this: "But when the plaintiff rested with proof of willfulness on the part of the engineer, and imputed that to the corporation, the Federal law denies such an influence [imputation?]; and in the instant case the Federal law must control, for the contract of carriage was interstate, and was dependent upon the Act of Congress regulating passes for *Page 346 
employees' families." In view of the fact that Section 8563 Compiled Statutes contains nothing but a permission to the carrier to issue such passes, an exception to the general inhibition against passes, the Court could have meant nothing by that statement except to refer to such permission, which contains nothing relating to regulation. See, also, De Loachv. R. Co., 106 S.C. 155, 90 S.E., 701.
In Poor v. Tel. Co., 196 Mo. App. 557, 196 S.W. 28,29, the Court said: "Being therefore a common carrier within the meaning of the Interstate Commerce Statutes, and engaged in interstate commerce with respect to the particular message in controversy, the defendant telegraph company is subject to and governed by the Federal law as expounded and applied by the Federal Courts to the exclusion of all State laws and decisions."
In Jacobs v. Tel. Co., 196 Mo. App. 300, 196 S.W. 31, it was held that the liability of telegraph company for errors in interstate telegram must be determined in the light of Federal Statutes and decisions. See, also, Davis v. Tel. Co.,198 Mo. App. 692, 202 S.W. 292. To the same effect isNichols v. Tel. Co., 44 Nev., 148, 191 P., 573; Norris v.Tel. Co., 174 N.C. 92, 93 S.E., 465; Askew v. Tel. Co.,174 N.C. 261, 93 S.E., 773; Tel. Co. v. Schade,137 Tenn., 214, 192 S.W. 924; Durre v. Tel. Co., 165 Wis. 190,161 N.W., 755; Gibbs v. Tel. Co., 196 N.C. 516,146 S.E., 209.
In the Solan case, 169 U.S. 133, 18 S.Ct., 289,42 L.Ed., 688, the conflict was between a clause in a drover's contract, which purported to relieve the carrier from the consequences of a negligent injury to him, and a State statute, which negatived the efficacy of such a contract. It was not, as here, a conflict between a rule of the Federal decisions and a rule of the State decisions. It was properly held that, in the absence of Federal law upon the subject, the statute of the State had priority over a clause in the contract.
In the Hughes case, 191 U.S. 477, 24 S.Ct., 132, 136, *Page 347 48 L.Ed., 268, the decision in the Solan case was followed; the Court adding: "The State has a right to promote the welfare and safety of those within its jurisdiction by requiring common carriers to be responsible to the full measure of the loss resulting from their negligence, a contract to the contrary notwithstanding." It is quite another thing to hold the carrier liable for a species of damages, a doctrine repudiated by the Federal law, which has the force of a Federal statute. As the Court says in the Hughes case: "We can see no difference in the application of the principle based upon the manner in which the State requires this degree of care and responsibility, whether enacted into a statute or resulting from the rules of law enforced in the State Courts." A like rule should apply to the Federal decisions. To allow punitive damages in a case when the Supreme Court of the United States holds it is not permissible to allow them is as clearly against the rule there laid down as could be conceived.
In Charleston  W.C.R. Co. v. Varnville, 237 U.S. 597,35 S.Ct., 715, 716, 59 L.Ed., 1137, Ann. Cas., 1916-D, 333, the penalty statute of South Carolina applicable to nonpayment of claims within a certain time was held void as a burden upon interstate commerce. The Court there said: "It is suggested that the act is in aid of interstate commerce. The State law was not contrived in aid of the policy of Congress, but to enforce a State policy differently conceived; and the fine of $50.00 is enough to constitute a burden."
Certainly the unbridled license to a jury to impose a penalty of $15,000.00, the amount claimed in the complaint, cannot be considered less of a burden.
In Atlantic Coast Line v. Georgia, 234 U.S. 280,34 S. Ct., 829, 831, 58 L.Ed., 1312, the Court said: "The requirements of a State, of course, must not be arbitrary, or pass beyond the limits of a fair judgment as to what the exigency demands. * * *" *Page 348 
In So. R. Co. v. King, 217 U.S. 524, 30 S.Ct., 594,54 L.Ed., 868, and S.A.L.R. Co. v. Blackwell, 244 U.S. 310,37 S.Ct., 640, 61 L.Ed., 1160, L.R.A., 1917-F, 1184, it was held that the validity of a statute of Georgia regulating the speed of interstate trains is dependent upon its reasonableness; in each case the statute was held a burden upon interstate commerce, although neither Congress nor the Interstate Commerce Commission had undertaken to regulate the matter. Surely the Court would not hold a rule of damages reasonable which in case after case it had declared improper to enforce.
It cannot be conceived that the duty of a carrier to a passenger would be at all impressed upon the carrier or its performance improved by punishing the carrier for a wanton act of one of its agents which it had not authorized, did not participate in, did not ratify and specifically condemned. As the Court says in the Prentice case: "Exemplary or punitive damages, being awarded, not by way of compensation to the sufferer, but by way of punishment of the offender, and as a warning to others, can only be awarded against one who has participated in the offense."
I think, therefore, that there was sufficient evidence in the case to carry to the jury the question of actual damages as against both defendants, and the question of punitive damages against the servant, but not of punitive damages against the railroad company.