Lahood v. Continental Telegraph Co. , 52 Mont. 313 ( 1916 )

MR. JUSTICE HOLLOWAY

delivered the opinion of the court.

In April, 1912, P. H. Tyro was the agent for the Continental Telegraph Company at Jefferson Island station, and Shadan Lahood was engaged in the mercantile business at the same place. On April 8 Lahood had an inquiry from the Gamble-Robinson Fruit Company for three carloads of potatoes, and in reply thereto telegraphed quoting prices. About noon of the same day he received a telegram from the fruit company to send three carloads at once and wire just what he could do. At 1:55 P. M., Lahood wired that one carload had been sold to another concern before the fruit company’s telegram arrived, and inquired what top price the company would pay. As agent for the telegraph company in charge of their office, Tyro had sent and received these messages and knew their contents. At the time he sent Lahood’s message at 1:55 P. M. on April 8 he also sent one on his own account as follows:

‘ ‘ To Gamble-Robinson Fruit Co., Miles City, Mont.:

“What will you give me commission if I get you a car No. 1 white stock f. o. b. Jefferson Island at one ninety-five. Deal confidential. None of Lahood’s prospects. Ship at once.

“F. H. Tyro.”

About 4:35 of the same day the Gamble-Robinson Fruit Company telegraphed to Lahood that it would pay $2.10 per hundred-weight, and added: “Let me know at once as have another deal on in the Bitter-root.” At the same time it wired Tyro: “Offer you two-ten. Wire quick if that is all right.” Instead of delivering Lahood’s message at once, Tyro retained it in his possession, arranged for a car of potatoes on his own account, and at 5:45 P. M. wired the fruit company that he accepted its offer and would ship on the second or third day following. Then at about 8 P. M. he delivered Lahood’s message, and La-hood, in ignorance of Tyro’s double-dealings, immediately purchased two carloads of potatoes, and the same evening delivered to Tyro for transmission to the fruit company this message: “Load two cars Monday at price named.” This telegram Tyro held up, and on the morning of the ninth wired the fruit company as follows:

“Gamble-Rob. Fruit Company, Miles City, Mont.:

“Can you handle another car of spuds at two ten? Load first car to-morrow. 'What are shipping instructions on this car? F. H. Tyro.”

—and about noon received in reply the following:

“F. H. Tyro, Jefferson Island, Montana:

“Wire received. Answer yes. Ship both cars to us Miles City. . Gamble-Robinson Fruit Company.”

Some time in the evening of the 9th, Tyro sent the message which Lahood had delivered to him the day before, and on the 10th the fruit company wrote Lahood that it had purchased elsewhere and could not use his potatoes. Tyro shipped the two carloads on his own account and made a net profit of about $100. Lahood after great effort and at great loss disposed of most of his potatoes, and brought this action to recover damages, and prevailed in the lower court. From the adverse judgment and from an order denying a new trial, the defendants appealed.

The information which Tyro received concerning the business requirements of the Gamble-Robinson Fruit Company, and which prompted his duplicity to his own profit and Lahood’s loss, belonged to Lahood, who had paid for it. It was confidential in the strictest sense of the term, and could not be used or disclosed by the telegraph company or its agent. In using it to undermine his company’s customer and to secure the profit from the transaction for himself Tyro was not merely guilty of perpetrating a gross fraud upon Lahood, but, according to his own account, he was guilty of a crime for which he should have suffered severe punishment. Section 8824, Revised Codes, provides: “Every agent, operator, or employee of any telegraph office, who in any way uses or appropriates any information derived by him from any private message passing through his hands, and addressed to another person, or in any other manner acquired by him by reason of his trust as such agent, operator, or employee, or trades or speculates upon any such information so obtained, or in any manner turns, or attempts to turn, the same to his own account, profit, or advantage, is punishable by imprisonment in the state prison not exceeding five years, or by imprisonment in the county jail not exceeding one year, or by a fine not exceeding five thousand dollars, .or by both fine and imprisonment. ’ ’

That Tyro is liable to Lahood for exemplary damages as well’ as for damages by way of compensation is settled by our Codes. Section 6047 provides: “In any action for a breach of an obligation not arising from contract, where the defendant has been guilty of oppression, fraud, or malice, actual or presumed, the jury, in addition to the actual damages, may give damages for the sake of example, and by way of punishing the defendant.”

So likewise is Tyro’s principal, the telegraph company, liable for compensatory damages; but it is insisted that the trial court erred: (1) In holding the telegraph company liable in punitive damages; and (2) in fixing the measure of recovery.

1. It is urged that the telegraph company is not liable for [1] punitive damages in this instance: (a) Because this is an action for the breach of a contract to transmit and deliver the messages referred to, and section 6047 is not applicable; (b) because the telegraph company is not charged as a primary tort-feasor, and never authorized Tyro’s wrongful acts in the first instance, nor ratified them thereafter.

(a) At the time these messages were sent and received the defendant telegraph company was a carrier of messages for hire, holding itself out as such and soliciting the business of the public generally. While the application of the science of electricity to the transmission of intelligence- is of comparatively recent date, the importance of the function which the magnetic telegraph has performed in the commercial and social life during the last half century particularly has received recognition in rules and regulations adopted to define the rights and liabilities of the telegraph company, and which collectively may justly be termed the common law upon the subject. It is too well settled to admit of further debate that a telegraph company is not a common carrier unless made such by express statute. Our own Codes define “common carrier” (section 5332, Rev. Codes), and distinguish between a common carrier of messages and a carrier of messages by telegraph or telephone. While the telegraph company is not an insurer of the speedy and accurate transmission of a paid message, it is engaged in the performance of a public service, owes to the general public a well-defined duty, and in return enjoys the privilege of exercising the power of eminent domain. It is held to the exercise of ordinary care and diligence, and for its negligence may be compelled to respond in damages. Though its engagements with its customers may be, and generally are, evidenced by contract, its duty arises from the public character of its business, and its responsibility is not dependent upon the existence of an agreement. The customer injured through the negligence of the telegraph company in transmitting or delivering his message may sue upon the contract, if one exists, but he is not limited to that remedy. He may sue in tort. This is the modern rule, now recognized generally. (Jones on Telegraph and Telephone Cos., sec. 468.) It is analogous to the principle applied to common carriers. (Wall v. Northern Pac. Ry. Co., 50 Mont. 122, 145 Pac. 291; Nelson v. Great Northern Ry. Co., 28 Mont. 297, 72 Pac. 642.)

(b) Appellants’ contention that the telegraph company [2] cannot be made to respond in punitive damages for its agent’s misconduct in the absence of proof that the wrongful acts were authorized or ratified, finds some support in authorities from other jurisdictions; but the contrary doctrine is now settled as the rule of decision in this state. (Grorud v. Lossl, 48 Mont. 274, 136 Pac. 1069; Burles v. Oregon S. L. Ry. Co., 49 Mont. 129, Ann. Cas. 1916A, 873, 140 Pac. 513.)

2. Measure of damages as affected: (a) By statute; (b) by agreement.

(a) By statute. Section 5361, Revised Codes, prescribes the [3] duties of a carrier of messages by telegraph or telephone.' Section 5362 designates the order in which messages must be transmitted by a common carrier, and section 5363 provides that the person whose message is refused or postponed contrary to the provisions of the chapter is entitled to recover from the carrier his actual damages and $50 in addition thereto. These provisions do not apply here, but merely fix the measure of recovery in the ordinary negligence case where the circumstances are not aggravated by the presence of the elements of fraud, malice or oppression. Under the allegations of this complaint and the proof in support of them, plaintiff’s right to punitive damages is governed by section 6047, above.

(b) By agreement. Upon the telegraph blanks used by this [4] plaintiff for the text of his messages two provisions were printed over the heading, “All messages taken by this company are subject to the following terms.” The first provides for repeating the message to avoid mistake, but it can have no possible bearing in a case of this character, where the wrongful acts consist in fraudulently delaying messages and appropriating their contents to the use of the telegraph company’s agent. If this action arose over a mistake in transmission, then the effect of that provision might require consideration. The second stipulation indorsed on the telegraph blank follows: “The company will not be liable for. damages or statutory penalties in any case where the claim is not presented in writing within sixty days after the message is filed with the company for transmission.” It is conceded that plaintiff did not make any demand upon or present any claim to the telegraph company [5] until approximately a year after the transactions complained of; his excuse for the delay being that he did not discover the fraud until the last of January, 1913. He did, however, make demand within sixty days after such discovery. If mere delay in transmission or delivery of a message furnishes the only ground of complaint in an action for damages for breach of contract, the provision above might possibly be invoked to defeat recovery when there has been unreasonable delay in making known the cause of complaint; but, as we have already determined, this action does not sound in contract in the first instance, and in the second place a telegraph company cannot defend against the fraud or crime of its agent by a stipulation which does not allow for time for the discovery of the wrongful acts. In making such a stipulation the company certainly did not contemplate that its agent would be guilty of gross fraud or serious crime. It was merely undertaking to guard against stale demands founded upon negligence. Our. conclusion is that the stipulation refers only to claims arising from negligence, and therefore is not applicable here. If it was ever intended as a cloak for fraud or crime, we should have no hesitation in holding it void as against public policy. (Rev. Codes, sec. 5052.)

Complaint is made of instruction 8, and, if it stood alone, its inaccuracy might lead to serious consequences; but its defects are negative rather than affirmative; it is deficient rather than positively erroneous; and, when read in connection with instruction 10a, we think it could not have misled the jury to defendants’ prejudice.

The judgment and order are affirmed.

Affirmed.

Mr. Chief Justice Brantly and Mr. Justice Sanner concur.

Rehearing denied May 22, 1916.