Roadway Express, Inc. v. Fidelity Guaranty Fire Corp.

In this action in the Common Pleas Court, the Roadway Express, Inc., which will be hereinafter referred to as the carrier, secured a judgment against the Fidelity Guaranty Fire Corporation, which will be hereinafter referred to as the fidelity company, upon a policy of insurance issued to such carrier for loss by fire of goods being transported by the carrier. In that court a jury was waived and the cause was submitted to and determined by the court.

A number of very interesting questions of law are presented by the record, but we do not deem it necessary to determine all of them, and therefore will not detail all the facts as to the questions we do not deem it necessary to decide.

The policy of the fidelity company covered "shipments made on and after December 1, 1931, at noon." If the shipment upon which the loss in question occurred was a shipment made after noon of December 1, 1931, we assume, for the purpose of this opinion, that the insurance company is liable, and if the loss occurred upon a shipment made before that time, it is conceded that the insurance company is not liable. As we view the record, there is very little dispute as to any of the material facts involved in the issue.

On November 30, 1931, at 1:45 p.m., the Goodyear Tire Rubber Company, Inc., shipped certain goods at Akron, Ohio, by such carrier, which goods, by the bills of lading issued by the carrier, were shipped to the Goodyear Tire Rubber Company, Inc., and the carrier contracted to deliver about one-third of the shipment to such tire company at its branch office in Richmond, Virginia, and the other two-thirds to it at its branch office in Norfolk, Virginia — the entire shipment being transported by the carrier in one of its trucks. One bill of lading was issued for the Richmond part of the shipment, and another bill of lading was issued for the Norfolk part of the shipment, and the tire company prepaid the freight charges on both bills of lading. The bills of lading were nonnegotiable.

The truck of the carrier left Akron with the shipment on November 30, 1931, and when it reached a point in West Virginia either on December 1 or December 2, the truck was overturned, which resulted in damage to some of said goods, and a loss by theft of some of the goods.

The carrier did not notify the tire company of the accident, but sent another truck to the place of the accident and picked up the remainder of the goods and continued to Richmond, Virginia, and on December 4 was there, ready to deliver the part of the shipment which was deliverable at that point, when the tire company discovered the condition of the goods. Thereupon the branch manager reported to the home office in Akron the condition of the goods, and the home office telegraphed to the manager at Richmond to "return Norfolk and Richmond shipments on truck," and that telegram being shown to the driver of the carrier, he, without making any further attempt to deliver in Norfolk the part of the shipment originally intended for delivery there, started with the goods for Akron; that was on December 4, and on the first or second day following, while in Pennsylvania, the driver lost control of the truck, with the result that the truck was wrecked and the entire cargo and truck were destroyed by fire.

The tire company did not communicate with the carrier except through its driver, and no endorsements were made upon the bills of lading, and no new bills of lading were issued or mentioned.

Other facts appearing in the record, which I need not detail, were such that another insurance company was liable, for the loss of said goods, direct to the tire company, upon the other insurance company's policy of insurance theretofore issued to the carrier, and as to which notice of intention to cancel had been given, by the other insurance company to the carrier and tire company, three days before the shipment of November 30, but which policy, by virtue of its provisions as to cancellation, was in full force at the time of the loss, at least so far as the tire company is concerned.

As has been said, the other insurance company was liable to the tire company for the loss if suit had been brought by the tire company directly against the insurance company; but the insurance company "loaned" to the carrier the money with which to pay the tire company, which was done, and immediately thereafter this suit was begun by the carrier company against the fidelity company.

At all times the property lost by fire was the property of the tire company, and the carrier had full knowledge of that fact; and as long as the goods remained the property of the tire company, it had a perfect right, during transit, to countermand any directions given as to the consignment of the goods and to order that they be redelivered to it.

Therefore the tire company had a right, while the goods consigned to Norfolk were in transit, to have them delivered to it at any place on the route, and it also had the right to divert the shipment to a different destination.

Such right is recognized in section 7 of the bill of lading, wherein it is provided that "in case of a shipment reconsigned or diverted to a point other than that specified in the original bill of lading, * * * the shipper or consignor * * * shall be liable for such additional charges" — not under a new contract of shipment, but under and in accordance with the then existing contract evidenced by the bill of lading.

While the goods consigned to Richmond, except what were stolen at the time of the first accident, had reached Richmond, the carrier had not completed his undertaking; the goods had not been delivered, and were, at least for some purposes, in transit (M.Degaro Co. v. Cleveland, Cincinnati, Chicago St. Louis Ry. Co.,123 Ohio St. 179, 174 N.E. 587); in any event, the condition of the goods, and the responsibility of the carrier therefor, were such that both parties recognized and treated the goods as being still in transit and subject to diversion, the same as the Norfolk part of the shipment, and subject to the terms of the bill of lading with reference to charges and expenses upon diversion; and the carrier, recognizing that the return of the goods was made necessary by its fault, made no attempt whatever to negotiate an agreement of shipment on the basis of a new contract.

The tire company did not want the goods in the condition in which they were, either in Richmond or Norfolk, and the carrier's responsibility for the condition of the goods was such that the carrier did not care to claim that it had a right to insist that the tire company take delivery of the Richmond part of the shipment and make a contract with the carrier for its shipment to Akron.

That the tire company and the carrier did not regard what occurred at Richmond on December 4th as the making of a new contract of shipment entered into after the insurance policy of the fidelity company became effective, is further evidenced by the fact that the tire company never made any claim for said loss against the fidelity company, although under its policy, if the shipment was covered by the policy, the tire company had a right to sue said company for the loss, and by the fact that the carrier did not report the loss to the fidelity company and made no claim whatever against the company until the bringing of this suit, but did report the loss to the agents of the other insurance company, whose policy was in force when the goods left Akron, and whose policy was also in force at the time of the loss, according to the preponderance of the evidence in reference thereto.

Until this suit was brought, the only notice of the loss to the fidelity company, and the only claim that it was liable therefor, was made by the agents of the other insurance company, to whom the carrier had reported the loss, and which other insurance company was being urged to pay the same.

As we view the law applicable to such a state of facts, we do not think that the conduct of the parties constituted a new contract of shipment of the goods from Richmond to Akron, so as to bring the same within the terms of the policy of the fidelity company, but that such transaction constituted a diversion of the original shipment, the entire transaction being between a single carrier and the consignor and owner of the goods.

There is no evidence of an express contract made on December 4th, and the carrier's undertaking to return the goods to Akron was not referable to a new agreement, but was rather an acknowledgment of its obligation under the bill of lading to comply with the directions of the owner of the goods to divert the shipment, while in transit, to a new destination, and the promise of the owner to pay the additional charges was not an implied promise arising out of a new contract, but was an express promise made in the bill of lading as a part of the original contract of shipment.

The parties themselves construed their transaction at Richmond to be a diversion of the original shipment, and their subsequent conduct is consistent with such construction and inconsistent with any other construction; and there is evidence in the record that the agent of the first or other insurance company was notified by the carrier of the damaged condition of the goods while they were at Richmond, and that "he instructed return of load to Akron," which act is also consistent with said construction of the transaction.

We are justified, under the facts and circumstances of this case, in giving effect to such construction of the parties to and interested in the transaction, and therefore we hold that the goods were not lost upon a shipment made after December 1, 1931, at noon, and that the fidelity company is not liable under its policy for any part of such loss.

We have heretofore stated that the carrier did not report the loss to the fidelity company, and made no claim whatever against it until the bringing of this suit, and perhaps that statement should be somewhat amplified.

The record discloses that the carrier reported the loss, not to the agents of the fidelity company, but to the agents of the other insurance company, and that, some time thereafter, such agents wrote to the agents of the fidelity company about the loss and suggested that the loss was covered by the fidelity policy, rather than by the policy of the other insurance company, which other company was being urged by the carrier to pay the loss, and the record discloses further that the statement by the fidelity company, that it was not liable and would deny liability, was not made to the carrier or to any agent of the carrier, but was made in a letter to its own resident agents; and there is no evidence in the record that the contents of the letter were made known to the carrier or to any agent of the carrier.

It is true that such agents of the other insurance company negotiated with the resident agents of the fidelity company for the issuance of its policy, but such policy was issued and countersigned by its resident agents; other than that, such agents of the other insurance company were never in any sense the agents of the carrier or the tire company, and the agents of the other insurance company, not being regular agents of the fidelity company, could not properly be the agents of the fidelity company or the carrier as to any matter as to which there was a conflict of interests between the carrier and the insurance company for which they were regular agents; and the evidence in the record does not justify the conclusion that such agents, in writing about the loss to the agents of the fidelity company, suggesting that it was liable for the loss, represented or claimed to represent said carrier, or any one except the insurance company for which they were regular agents, the interests of which company they were attempting to serve by trying to get the fidelity company to pay the loss.

We can find no evidence in the record indicating that after the loss the carrier communicated, or attempted to communicate, with the fidelity company, or that it directed any one to communicate with the company in its behalf, or that any one who did communicate with the fidelity company with reference to the loss claimed to do so on behalf of the carrier.

The relief sought by the petition in error will therefore be denied, and the relief sought by the cross-petition in error granted, and the judgment of the Common Pleas Court reversed; and the material facts being undisputed, and the reasonable inferences deducible therefrom admitting of but one reasonable conclusion, judgment will be rendered in favor of the Fidelity Guaranty Fire Corporation, dismissing the petition of the carrier, the Roadway Express, Incorporated, at its costs.

Judgment reversed and final judgment for defendant in error.

FUNK, P.J., and STEVENS, J., concur in judgment.

ON APPLICATION FOR REHEARING.