Argued January 28, 1914
Decided March 3, 1914
I.R. Oeland and H.E.J. MacDermott for appellant. Wilmot L. Morehouse for respondent.
The decision of this appeal turns on the construction and effect of the following special contract entered into between shipper and carrier indorsed on the bill of lading and signed by the shipper:
"The consignor of this property has the option of shipping same at a higher rate without limitation as to value in case of loss or damage from causes which would make the carrier liable, but agrees to the specified valuation named in case of loss or damage from causes which would make the carrier liable, because of the lower rate thereby accorded for transportation."
The value of the shipment was stated to be $5.00 per hundred pounds and the weight 3,750 pounds. The question arises on the exception to the refusal of the court to charge that the damages must be limited to $5.00 for each one hundred pounds in weight of the property shipped.
Although the rule in the Federal courts, unlike that prevailing in this state, has always been that a common carrier could not exempt himself from liability for negligence even by express words, it is settled by the decisions of the United States Supreme Court that a contract limiting liability to a value agreed upon for the purpose of fixing the rate is valid, and that holding is based on the principles of the common law, and not, as is said, on the provisions of the so-called Carmack amendment. ( Adams Express Co. v. Croninger, 226 U.S. 491, and cases cited on page 510; Kansas Southern Ry. Co. v. Carl, 227 U.S. 639; Mo., Kan. Tex. Ry. Co. v. Harriman, Id. 657.)
The question considered in those cases, as far as that amendment was concerned, was whether it prevented, not whether it permitted the making of such contracts, as is pointedly shown by a quotation from the opinion of the present chief judge of this court in Greenwald v. Barret ( 199 N.Y. 170, 175), made by Mr. Justice LURTON in Adams Express Co. v. Croninger ( supra), to wit:
"The language of the enactment does not disclose any intent to abrogate the right of common carriers to regulate their charges for carriage by the value of the goods or to agree with the shipper upon a valuation of the property carried. It has been the uniform practice of transportation companies in this country to make their charges dependent upon the value of the property carried and the propriety of this practice and the legality of contracts signed by the shipper agreeing upon a valuation of the property were distinctly upheld by the Supreme Court of the United States in Hart v. Penn. R.R. Co. ( 112 U.S. 331, 341)."
It is difficult to understand how more appropriate words could be used to express an agreement fixing a value as a basis for determining the rate and the amount of liability of the carrier in case of loss or damage than were used in the special contract above quoted. The rule in this state is that although a common carrier may by contract exempt itself even from negligence, it cannot do so by general words. ( Mynard v. Syracuse, B. N.Y.R.R. Co,, 71 N.Y. 180.) But the contract in this case did not provide for exemption from liability. On the contrary, the agreement fixed the value of the goods and thereby measured the liability of the carrier for damage or loss, whether from negligence or otherwise. The carrier's charge was based on the agreed value. For that charge it contracted to be responsible for the safety of goods of that value. The shipper should not be allowed to have one part of the agreement, i.e., the reduced rate, and reject the other, i.e., the agreed value. The respondent, however, and the learned court below relied upon the case of Bermel v. N.Y., N.H. H.R.R. Co. ( 62 App. Div. 389, affirmed on opinion below, 172 N.Y. 639) as establishing the rule in this state that there was no limitation of liability for negligence even in such a case, unless expressly provided for. We shall not attempt to distinguish the Bermel case from the case at bar. Though not expressly overruled its authority has been greatly weakened by subsequent decisions of this court.
In Tewes v. North Ger. Lloyd S.S. Co. ( 186 N.Y. 151, 152) the contract was one between a passenger and a steamship company governing the transportation of baggage of the passenger and provided as follows:
"It is also agreed that neither the shipowner, nor the passage broker or agent, nor the ship, is in any way liable for loss of or injury to or delay in the delivery of luggage or personal effects of the passengers beyond the amount of fifty dollars, unless the value of the same in excess of that sum be declared at or before the issue of this contract, or at or before the delivery of said luggage to the ship, and freight at current rates for every kind of property is paid thereon."
In Gardiner v. N.Y.C. H.R.R.R. Co. ( 201 N.Y. 387, 388) the contract was one between a passenger and a railroad company governing the transportation of baggage on a fifty-trip family ticket which contained the following provision:
"Conditions. In consideration of the reduced fare at which this ticket is sold, the purchaser agrees that its use shall be subject to the following conditions: * * * 3. That this company's liability for baggage belonging to each passenger shall not exceed fifty dollars ($50)."
In the tariff published by the company there was a provision for rates on baggage in excess of the free allowance.
In principle we can see no distinction between this case and the Tewes and Gardiner cases. The contract in those cases provided for free transportation of baggage up to fifty dollars and for a charge beyond that sum. In this case the parties have agreed upon a valuation of the articles shipped for two purposes: (a) To determine the charge to be paid the carrier; (b) to measure the carrier's liability in case of loss. According to every rule of fair dealing both parties should be bound by the contract, unless the court is to interpose restrictions upon the right of shippers to contract. We are not disposed to make distinctions based upon the varying circumstances of different cases, unless they involve a difference of principle, but hold that a contract between carrier and shipper fixing the value of the goods shipped for the purpose of determining the rate of charge and the liability of the carrier in case of loss or damage concludes the shipper, though the loss or damage may be due to negligence. In so far as the Bermel case conflicts with that rule, it must be considered as overruled.
The judgment of the Trial Term and of the Appellate Division should be reversed and a new trial granted, with costs to abide the event.
WILLARD BARTLETT, Ch. J., WERNER, HISCOCK, CHASE, COLLIN and HOGAN, JJ., concur.
Judgment reversed, etc.