Adams Express Co. v. Berry & Whitmore Co. ( 1910 )

Mr. Justice Robb

delivered the opinion of the Court:

In view of the court’s charge, the verdict of the jury must have been based upon the finding that the brooch was embezzled or converted by the appellant through its agents, and not merely lost. If, therefore, this question of conversion was submitted to the jury under proper instructions by the court, and was based upon competent evidence, said finding will be conclusive of the fact of conversion. Hence our first inquiry is directed to this point.

We will first consider the competency of the testimony of appellee’s attorney to the effect that an agent of appellant stated to him, when said agent called to talk over a settlement of the claim, that the package had been embezzled by'one of appellant’s employees. A review of the circumstances surrounding this statement demonstrates its admissibility. Appellant does not deny that its agent called upon appellee’s attorney at the time and for the purpose stated, that he was authorized so to do, or that he made the statement accredited to him. When the agent made said call, he did so as the avowed representative of appellant to negotiate for a settlement of the claim in question. His acts, so far as within the course of his employment and the actual or apparent scope of his authority, were the acts of his principal. As to the admissions of an agent, while they may never be used to prove the agency, they are binding on the principal, once the relation of principal and agent is established, so far as within the agent’s employment and authority. Over v. Schiffling, 102 Ind. 191, 26 N. E. 91; Chadsey v. Greene, 24 Conn. 562; Chapman v. Twitchell, 37 Me. 59, 58 Am. Dec. 773; Wehle v. Spelman, 1 Hun, 634. The cases cited by appellant in this connection - deal principally with the doctrine of res gestee; hence are not in point. It was not sought to introduce this evidence as a part of the res gestee, but as a statement made by an agent while acting in a matter with which he had been authorized and directed to deal. As such, it was, we think, clearly admissible as having a direct bearing on the claim which the agent was endeavoring to settle in behalf of the principal.

It now becomes necessary to determine the extent to which the special contract of carriage, or the so-called $50 clause therein, absolved the carrier from liability. Did it limit the liability of the carrier to that amount in any event, or should it be held capable of application only in case the package was lost through the negligence of the carrier ? In other words, did said clause cover liability for conversion or embezzlement ?

Since the degree of care which a carrier may reasonably be expected to exercise in regard to a particular package intrusted to it for transportation is proportionate to the value of said package, the carrier is allowed to consider that degree of care when making up its schedule of rates. This is permitted upon the theory that, as more expense is entailed in the exercise of a high degree of care than would be necessitated by the exercise of a lower degree of care, it is but equitable that the carrier should obtain more compensation in the one instance than in the other. Hart v. Pennsylvania R. Co. 112 U. S. 331, 28 L. ed. 717, 5 Sup. Ct. Rep. 151; Pennsylvania R. Co. v. Hughes, 191 U. S. 477, 48 L. ed. 268, 24 Sup. Ct. Rep. 132. Following this theory, the law has permitted the carrier to make special contracts with the shipper, in which the shipper, in consideration of a reduction in the rate which would ordinarily be charged for transportation of goods such as he has for shipment, agrees that, in case the goods are not safely carried to their destination, he will accept in damages a sum stated, which is usually much less than the real value of said goods. By so doing the shipper waives, in a measure, his common-law right to exact in damages the full value of the goods. But courts have closely scrutinized such contracts, and have generally allowed the carrier to make them only where they provided for partial, not total, absolution from liability, and, further, where the carrier furnished consideration for such limitation in the form of a reduction in the usual rates. To such restriction the carrier impliedly submits when it engages in a business of a public nature. Liverpool & G. W. S. S. Co. v. Phenix Ins. Co. (The Montana) 129 U. S. 397, 32 L. ed. 788, 9 Sup. Ct. Rep. 469.

It is evident that the only way in which a carrier may be relieved from its common-law obligation to pay the full value of goods lost through its negligence is by means of a special contract with the shipper, as above noted. It is also clear, according to the ordinary rules of construction, that such relief is only to the extent named in that contract. New York C. R. Co. v. Lockwood, 17 Wall. 357, 21 L. ed. 627. Is it possible for the carrier to extend this doctrine of contractual limitation of liability to cover cases where the goods are converted or embezzled by it ? We think not. So great would be the opportunity for fraud that public policy will not suffer a practice so manifestly calculated to invite it. That the shipper, in a particular instance, might be willing to make such a concession, does not alter the rule; it is not within the power of the individual to barter away the right to protection inherent in the general pub-lie. In discussing this question, the court, in the case of The New England, 110 Fed. 415, said: “It should be added, further, that it is doutbful if any limitation which seeks to protect a company, not from the negligence, but from the theft or conversion, of its servants, is consonant with public policy.” Story, in his work on Bailments, 8th ed. § 32, says: “In respect to cases of loss by fraud, there is a salutary principle, belonging both to our law and the civil law. It is, that the bailee can never protect himself against responsibility for losses occasioned by his own fraud; nay, not even by a contract with the bailor that he shall not be responsible for such losses, for the law will not tolerate such indecency and immorality that a man shall contract to be safely dishonest.” See also Alabama G. S. R. Co. v. Little, 71 Ala. 615; Louisville & N. R. Co. v. Sherrod, 84 Ala. 178, 4 So. 29; Zouch v. Chesapeake & O. R. Co. 36 W. Va. 524, 11 L.R.A. 116, 15 S. E. 185; American Exp. Co. v. Sands, 55 Pa. 140; Ronan v. Midland R. Co. Ir. L. R. 14 C. L. 157; Schouler, Bailments & Carriers, sec. 20.

Would it be possible for a carrier, after receiving for transportation goods worth $1,000, to embezzle them, and then plead as a limitation of its liability the fact that the shipper had not stated their value to be more than $50 ? In other words, can a carrier engaged in business of a public nature be permitted to justify a conversion of goods intrusted to it, on the ground that its liability is fixed by contract? Such would be the absurd result were appellant’s contention carried to its logical conclusion.

It becomes clear, in the light of the foregoing, since the question -whether the package was converted by appellant or its agent was a proper one for the jury to determine, that evidence as to the real value of the package was competent. Without it the jury, in the event of their finding that the package was converted, as they actually did find, would have been unable to assess damages on that basis. The appellant’s exception on this point was without foundation.

The two remaining assignments of error, the one based on the proposition that the court should not have instructed the jury that there was evidence tending to show that the defendant embezzled the shipment, and the other challenging the court’s charge to the effect that the defendant’s failure to explain the disappearance of the shipment raised a presumption that said shipment had been converted by it, are so related that they may be considered jointly.

Both these assignments are untenable. A survey of the situation makes obvious the fact that the adoption of any other rule than that reaffirmed by the trial court would permit the carrier, in a large majority of the cases where goods disappear while in its keeping for transportation, to escape liability for their conversion, even though the carrier had not shown that said goods were lost by it, and not converted. Bor example, suppose a shipper in Maine intrusts goods to a carrier for transportation to California. The goods fail to reach the consignee. Must the shipper trace those goods through the small army of employees and agents of the carrier scattered across the country, in an endeavor to find a break in the chain? Is it not more reasonable to hold that an explanation is due from the carrier ? The system of transportation employed by the carrier is best known to it. The record of the particular shipment is in its possession. In the absence of an explanation affording a legal excuse, it is the party at fault, having failed of its duty to deliver the goods to the consignee. In the case at bar, the shipper proved the delivery of the package in question to the carrier, and the carrier’s failure to deliver it to the consignee. In addition, the shipper offered evidence to the effect that an agent of the carrier, while negotiating for a settlement of the claim for the loss of said package, stated to the shipper, through its representative, that the carrier had traced the package into the hands of one of its employees, and that said employee “had run away, and was prosecuted for embezzlement.” The only evidence introduced by the carrier to rebut this was the testimony of one of its agents. This witness admitted that the package was traced into the hands of an employee of the carrier, and that it could not be traced farther. "While denying that any employee of his company had been prosecuted for embezzlement, witness was unable to give tbe name of tbe employee known to have been the last to handle the package, and could not say whether that employee was still working for the company. As appears from a review of the correspondence and negotiations of the parties prior to the bringing of this suit, the carrier, though requested so to do, refused to furnish any information “as to the handling of this package, names of all handling it, how long in the service.” It sought to throw all the burden of proof upon the innocent shipper, and, at the same time, to deny to him possession of the facts relating to the disappearance of the package, which facts were, or ought to have been, known to it. In other words, the carrier, knowing that the evidence necessary to account for the disappearance of the package must, from the very nature of the case, naturally come from it, sought, by remaining silent and shielding its guilty agent, to impose upon the shipper, the party without fault, a burden which would compel the shipper to accept its terms of settlement. The law cannot countenance such a subterfuge. A party cannot do indirectly what it would not be allowed to do directly. The situation was occasioned by the carrier’s failure to do that which it held itself out to the public, as the servant of the public, as capable of doing. It then became its duty, so far as within its power, to explain the situation. This it failed to do. No hardship resulted, therefore, in construing that situation in the light most favorable to the innocent shipper. We accordingly hold that the evidence fully warranted the court in charging the jury as it did. The New England, 110 Fed. 415; American Exp. Co. v. Sands, 55 Pa. 140.

The case of Friedlander v. Texas & P. R. Co. 130 U. S. 416, 32 L. ed. 991, 9 Sup. Ct. Rep. 570, much relied on by appellant, is not in point, as will appear from the following excerpt from the opinion therein: “The question arises, then, whether the agent of a railroad company at one of its stations can bind the company by the execution of a bill of lading for goods not actually placed in his possession, and its delivery to a person fraudulently pretending, in collusion with such agent, that he had shipped such goods, in favor of a party without notice, with whom, in furtherance of the fraud, the pretended shipper negotiates a draft, with the false bill of lading attached.” There the agent, acting in collusion with an alleged shipper, fraudulently receipted for goods never actually received by him; here goods were actually received by the carrier from an innocent shipper.

Finding no error in the record the judgment is affirmed, with costs. Affirmed.