Willock v. Pennsylvania R. R.

Opinion by

Mb. Justice Williams,

Who shall be deemed a common carrier, and what are the nature and extent of his undertaking, are questions that were settled centuries ago upon common law principles. A common carrier is bound to employ safe and sufficient means of carriage, trustworthy and competent servants, and, by himself or his agent, to exercise an intelligent supervision over the system of carriage which he employs. He is therefore, to all intents and purposes, an insurer against such perils of transportation as it is his duty to provide against; and these include all the perils of the journey except such as arise from “ the act of God or the king’s enemies.”

Our forefathers brought this definition of the duties of a common carrier with them, when they came to this continent, and its outlines remain substantially the same to this day. Some limitations upon his common law liabilities have been sustained to protect the carrier against unjust and fraudulent claims on the part of customers; but the measure of care due from him to those whom he serves has not been abated in the slightest degree. He is still held to be an insurer against such perils as it is his duty to provide against, and among these are such as arise from the use of defective or inadequate instruments of carriage, and from the employment of incompetent, negligent or criminal servants. Farnham et al. v. The Camden and Amboy Railroad Company, 55 Pa. 53.

What are commonly spoken of as limitations of the liability of the carrier and have been upheld by the courts of this state as such, are, when carefully considered, undertakings of the shipper implied from the nature of the contract and enforced against him at the instance of the carrier. Thus a stipulation that the carrier shall not be liable to the shipper for the loss of certain packages in a greater sum than that named in the receipt or bill of lading, unless the actual value of the package was fully disclosed to the carrier when it was delivered to him, so that he might know the amount of risk involved and charge accordingly, has been upheld, because good faith on the part of the shipper requires such full disclosure by him. So also if the contents of a package are perishable, or easily broken, or explosive, so that the danger of loss is increased and the exercise of an unusual degree of care is made necessary, good faith requires the shipper to make the facts known to the carrier; and a failure to do so ought to affect the extent, and in some cases the right, of recovery for the loss of goods so shipped.

The carrier is relieved in these cases, not from the duty to exercise care and diligence in the transportation of his customer’s goods, but from the consequences of the failure of the shipper to advise him fully of facts and circumstances material to the contract, the suppression of which is in effect a fraud upon him. His obligations as a common carrier are not reduced. He is bound to the exercise of great care by the nature of his undertaking. He must not be negligent. It is against public policy that he should be. It is also a violation of his contract, which is to carry safely. A stipulation that is intended to protect him in the violation of his contract as a carrier, and in disregarding a settled rule of public policy, will not be sustained. The cases in which this doctrine is recognized and applied in this state are very numerous. Among them may be named the following: Beckman et al. v. Shouse, 5 R. 179; Bingham v. Rogers, 6 W. & S. 495; Laing v. Colder, 8 Pa. 479; Goldey v. The Railroad Company, 30 Pa. 242; Powell v. The Railroad Company, 32 Pa. 414; Am. Express Company v. Sands, 55 Pa. 140; Railroad Co. v. Miller, 87 Pa. 395; Grogan et al. v. Adams Express Co., 114 Pa. 523; Penna. Railroad Co. v. Raiordon, 119 Pa. 577; Western Union Telegraph Co. v. Stevenson, 128 Pa. 442; Phoenix Pot. Works v. The Railroad Co., 139 Pa. 284; Buck v. The Penna. Railroad Co., 150 Pa. 171.

It is a sufficient answer to an argument in favor of changing the rule in Pennsylvania and permitting carriers to stipulate for a release from the consequences of their own negligence or fraud, that the question is not an open one. It has been settled by the cases cited and many others, and we are bound by the rule stare decisis. The attempt to overturn the common law doctrine fixing the liability of carriers was made in England by act of Parliament. The result is, after several statutes upon the subject, that the carrier may make a contract limiting his liability on two conditions. The first is that the contract be actually signed by the shipper. The second is that the courts shall adjudge the limitation to be “ just and reasonable.” This works no substantial change in the law. It makes a contract for carriage of persons or property tripartite. The carrier and the shipper are the ostensible parties, but the public, as represented by the courts of law, is the third party and may refuse its consent to stipulations on which carrier and shipper have agreed. When such a contract comes "before the courts the question is, not what terms have the parties incorporated into their agreement, but are the term's so incorporated “ just and reasonable,” so that they ought, on grounds of -public policy, to be enforced? In determining this question the courts have been constrained to apply common law principles and hold that to be just or unjust which was so held at common law. Thus in McManus v. The Railway Co., 4 H. & N. 327, the contract provided that the live stock shipped over the defendant’s railroad should be carried at the risk of . the owner, and that the company should in no case be liable for any loss or injury sustained. The contract was signed by the shipper but the court held it to be both unjust and unreasonable and refused to enforce it. In Kirby v. The Railway Co., 18 L. T. (N. S.) 658, the contract provided that the carrier should not be liable for injury to the goods shipped occasioned by delay, no matter what the cause of the delay might be. The courts, representing the public, the third party to the agreement, declined to give assent and held the provision relieving the carrier from the consequences of his own negligence to be unjust and unreasonable. Still nearer to the question in the case before us is Peck v. The Railway Co., 10 H. L. Cases, 473. The carrier in that case had a contract with the shipper' containing a stipulation that he should not be liable for loss of the goods unless their value was declared at the time of the delivery of the goods to him, and they were then insured to their full value by the shipper. This was held to be neither just nor reasonable and its enforcement was refused. The courts of England have thus held in substance that the public have a greater interest in the transportation of persons and property than any individual shipper, and that public policy requires of a common carrier the exercise of constant care over his vehicles or means of transportation, and over his servants and employees in charge of them. They further hold that it is against the public good that he should be allowed to contract for immunity from the consequences of his own negligence or fraud, or the negligence or fraud of his employees ; and that stipulations to that effect are incapable of enforcement because unjust and unreasonable.

The Supreme Court of the United States holds to the same 'doctrine upon this subject as the courts of Pennsylvania: Railroad Co. v. Lockwood, 17 Wall. 357; Steamship Co. v. Phœnix Ins Co., 129 U. S. 397.

The public is interested in securing the highest measure of safety in the transportation of passengers and goods, and to this end public policy requires that common carriers be held to the highest measure of care in the conduct of their business. Greenhood in his treatise on Public Policy, 573, says: “It is obvious therefore that if a carrier stipulate not. to be bound to the exercise of care and diligence but to be at liberty to indulge in the contrary, he seeks to put off the essential duties of his employment; and to assert that he may do so seems almost a contradiction in terms.”

The carrier and the shipper do not stand on equal terms. The latter cannot afford to refuse that which the carrier demands as a condition to the transportation of his goods, and in ninety-nine cases out of every hundred, if he does so refuse he will find himself discriminated against until his business is ruined and he has nothing left to ship. The rule that stipulations, insisted on by carriers or other persons who stand in such a position towards their customers as enables them to compel compliance with their demands or destroy their customer’s business, should be judged of by their fairness and be held void whenever they are unreasonable or oppressive, is one of very general acceptance. Public policy compels its acceptance in all civilized countries.

The learned counsel for the appellant cite Phoenix Ins. Co. v. Erie Transportation Co., 117 U. S. 312, as tending to sustain their contention. But an examination of that case shows that it was begun by libel filed by the insurance company asking subrogation to the rights of the shipper against the carrier. The-first question to be determined was, therefore, what could the shipper recover upon the facts of that case? He had contracted that any insurance he might obtain should enure to the benefit of the carrier. He obtained insurance on the goods shipped, suffered a loss, and was paid the insurance money. The question presented on these facts was whether the right of the shipper to recover against the carrier was not extinguished to the extent to which his loss had been paid by the insurer? If so, subrogation must necessarily be refused, and it was refused for this reason. This point was elaborated in Provident Insurance Company v. Morse, 150 U. S. 99, in which it was said that in case of loss the carrier is primarily liable to the shipper, and the position of an insurer is substantially that of a surety. The insurer can recover, therefore, after payment of a loss by subrogation to the rights of the shipper and upon no other ground; so that whatever amo'uuts to an extinguishment of the right of action of the shipper against the carrier, must defeat the insurer’s right to subrogation. The general proposition that the surety who pays the debt of hi's principal succeeds only to the rights of the creditor whom he pays is beyond all doubt; and in Phoenix Ins. Co. v. Erie Transportation Co. it was held to be applicable to contracts that, as we have seen, are "tripartite, having the public as a third though unnamed party.

In the case at bar the carrier inserted in its bill of lading a stipulation that the owner, shipper, and consignee severally shall cause the goods to be fully and sufficiently insured, and that in case of loss the carrier shall have the benefit of such insurance if such loss “ shall occur from any cause which shall be held to render this line or any of its agents liable therefor.” No insurance was effected. A loss occurred as the result of a collision by two of the carrier’s trains. The shipper sues to recover the amount of his loss. The only defence set up is under the condition in the bill of lading; and the question raised is, will the courts compel the performance of a contract between shipper and carrier requiring the shipper to protect the carrier against the consequences of its own negligence ? There is no doubt about the carrier’s having an insurable interest in the goods, or about his right to protect himself from loss by procuring a policy of insurance for that purpose, but the question here presented is, can he compel the shipper to insure the goods for his benefit ? If so he can compel the shipper to release him entirely, and so stipulate for complete immunity from the consequences of the negligence and fraud of himself or of his servants and employees. This, in the language of the English courts, would be “ unjust and unreasonable.” In the language of our own cases it would be “ contrary to public policy.” The thought is the same. Our own mode of expressing it is preferable, in this, that it suggests the reason on which the rule rests.

The judgment is affirmed.