Argued October 24, 1890
Decided January 22, 1891
Burton N. Harrison for appellant.
Thomas G. Shearman for respondent.
This action was tried and a recovery had at Circuit, which was sustained at the General Term on the theory that the contract between the parties was the one implied by law when a telegraph company receives, without conditions, a message for transmission. Among other obligations implied in such a case, is the duty to accurately transmit and deliver to the addressee the message received, which in this case defendant failed to do, as it admits, by reason of the mistake of the operator who received and undertook to send forward the communication. Under such a contract a telegraph company does not insure the accurate transmission and delivery of a dispatch, but undertakes to exercise due diligence to do so.
The question has several times arisen whether, in actions for damages against such corporations for failing to accurately or promptly deliver communications, a plaintiff makes out a prima facie case by proving the contract and its breach, or whether the plaintiff must go further and give evidence of some negligent act of omission or commission on the part of the corporation or of its agents.
Rittenhouse v. Independent Line of Tel. (1 Daly, 474; 44 N.Y. 263), was brought to recover damages for failing to correctly transmit a message, and it was held that a prima facie case was made out by showing that the communication delivered was not a copy of the one sent.
In Baldwin v. U.S. Tel. Co. ( 45 N.Y. 744), a dispatch was received for "Erie Darling," but as transmitted it was addressed to "E.R. Cooley" and was not delivered to Darling for several days; and it was held that by proof of these facts a prima facie case was established.
In Breese v. U.S. Tel. Co. ( 48 N.Y. 132), it was proved that a message directing the purchase of $700 in gold was changed to one ordering $7,000 in gold, and it was said, though not necessary for the decision of the case, that it was not prima facie proof of neligence.
The rule laid down in the first two cases has been followed by the courts of other states and is approved by the text writers. (Whart. on Neg. § 756; Gray Tel. §§ 26, 53, 54, 77; Abb. Tr. Ev. chap. 32; 2 Green. Ev. § 222a, note; 2 Shear. Red. Neg. § 542; 2 Thomp. Neg. 837; 3 Suth. Dam. 295.)
The court correctly instructed the jury that the evidence made out a prima facie case of negligence against the defendant.
In the cases holding that telegraph companies are only liable when grossly negligent, there were contracts exempting them from all liability, except to refund the tolls received for negligently sending or delivering the communication. Without considering whether there is any legal distinction to be drawn between gross and ordinary negligence in such cases, it is sufficient to say that these cases are not germane to the question in the case at bar.
At the time this message was received the plaintiff was one of defendant's shareholders, and it was offered to be proved, in defense of the action, that the board of directors had adopted a resolution that it would not be liable for mistakes or delays in the transmission or delivery of unrepeated messages, and would not be liable for damages arising from delays in the transmission or delivery of a repeated message beyond an amount specified; and it was insisted that he being a shareholder was chargeable with notice of this resolution. The regulations were excluded and the defendant excepted. In this there was no error, for a shareholder in a corporation is not chargeable with constructive notice of resolutions adopted by the board of directors, or by provisions in the by-laws regulating the mode in which its business shall be transacted with its customers, and the plaintiff's rights arising out of defendant's contract to transmit the message were in no wise limited by its regulations or by-laws not brought to the plaintiff's knowledge. ( Hill v. Manchester Salford Water Works Co., 5 B. Adol. 866; Rice v. Penninsular Club, 52 Mich. 87; Mor. Corp. §§ 500, 500a.)
The court instructed the jury that the plaintiff was entitled to recover the difference between the market value of the stock on the morning of July thirty-first and the sum which he paid for it on the morning of the following day. It distinctly appeared on the face of the dispatch that it was an order to buy shares; and in such cases the liability of the corporation not being limited by a special contract, the measure of damages is the difference between the market value of the shares at the time when the dispatch should have been delivered and the sum paid for them in the market on the receipt of the message. ( Rittenhouse v. Tel. Co., 44 N.Y. 263; Leonard v. Tel. Co., 41 id. 544; Squire v. W.U. Tel. Co., 98 Mass. 232; Western Union Tel. Co. v. Hall, 124 U.S. 444; U.S. Tel. Co. v. Wenger, 55 Pa. St. 262; 3 Suth. Dam. 307.)
It is insisted on behalf of the defendant that the court erred in excluding from the consideration of the jury the conditions printed on Form No. 2. It is settled that a telegraph company, incorporated under the general statutes of this state may, by contract, limit its liability for mistakes or delays in the transmission or delivery, or for the non-delivery of messages caused by the negligence of its servants, if the negligence be not gross, to the amount received for sending the dispatch. ( Breese v. U.S. Tel. Co., 48 N.Y. 132; Kiley v. W.U. Tel. Co., 109 id. 236.) But it has never been decided by the court of last resort that such a company can, by notice, limit its liability for such mistakes or delays.
Breese v. U.S. Tel. Co. (45 Barb. 274; 48 N.Y. 132), arose out of the erroneous transmission of a message written on a blank containing printed conditions, and it was held that a party by writing his dispatch on the blank assented to the printed terms and conditions. In discussing the question it was said: "They (telegraph companies) can thus limit their liability for mistake not occasioned by gross negligence or willful misconduct, and this they can do by notice brought home to the sender of the message, or by special contract entered into with him." We think this remark cannot be regarded as an adjudication that the common-law liability of a telegraph company may be limited by a mere notice, unless it is brought to the personal knowledge of the sender of the message, and he is shown to have assented to it. In this state a common carrier may, by an express contract with the shipper, exempt itself from liability for loss or damage occasioned by the negligence of its servants. ( Wells v. N.Y.C.R.R. Co., 24 N.Y. 181; Bissel N.Y.C.R.R. Co., 25 id. 442; Poucher v. N.Y.C.R.R. Co., 49 id. 263; Cragin v. N.Y.C.R.R. Co., 51 id. 61; Spinetti v. Atlas S.S. Co., 80 id. 71; Mynard v. Syr., B. N.Y.R.R. Co., 71 id. 180; Wheeler on Carriers, 76, 86.) But a common carrier cannot, by notice, limit its common-law liability to safely carry and deliver goods without evidence of the shipper's assent to the limitation proposed. ( Hollister v. Nowlen, 19 Wend. 234; Cole v. Goodwin, Id. 251; Clark v. Faxton, 21 id. 153; Camden, etc., Trans. Co. v. Belknap, Id. 354; Dorr v. N.J. Steam Nav. Co., 11 N.Y. 485; Blossom v. Dodd, 43 id. 264.)
Telegraph companies organized like the defendant under chapter 265 of the Laws of 1848, and the acts amendatory thereof and supplementary thereto, like companies incorporated for the carriage of goods and passengers, owe duties to the public. Such corporations, like railroads, may exercise the right of eminent domain, and they are required to exercise due diligence to transmit with celerity and skill all messages delivered to them, subject to such reasonable rules as may be adopted to protect their rights and facilitate the performance of their duties. They, like common carriers have become necessary instrumentalities for conducting the business of the country, and they owe the same duty to the public and, we think, should be held to the same rule in respect to their right to limit their liability by notice. In this state the doctrine that the common-law liability could not be limited without an express contract has been applied to individuals and firms acting as common carriers, as well as to corporations.
In MacAndrew v. Electric Tel. Co. (17 Com. B. 3), it was said that the common-law liability of a telegraph company may be limited by notice, but the report of the case does not show whether the message was written on a blank with or without conditions. But in England it was held that carriers could, by notice, limit their liability for the loss of goods, even in cases of gross negligence, which resulted in statutes providing that their liability could not be limited except by an express contract. (§ 6, chap. 68, 11 Geo. IV. and 1 Wm. IV; § 7, chap. 31, 17 18 Vic.)
In Clement v. Western Union Tel. Co. ( 137 Mass. 463), a message not written upon one of the defendant's blanks was sent to its office for transmission. It was forwarded in due time, but was not delivered by the office at which it was received. In an action brought for the recovery of damages occasioned by the failure to deliver, it appeared that the plaintiff's agent who sent the message knew the terms and conditions on which the defendant, by its rules, provided that messages should be sent over its line as set forth in the blank then in use by it, and it was held that this knowledge of the plaintiff's agent was binding upon him, and that no recovery could be had.
In the case last cited a different rule was applied to telegraph companies from the one applied by the same court to express companies. In Gott v. Dinsmore ( 111 Mass. 45) the plaintiff shipped goods by express, not taking at the time the usual receipt containing printed conditions limiting the liability of the company, with which the plaintiff was familiar, he having been in its employment and issued many such receipts. It was held that mere notice brought home to the owner of the goods, by which the carrier seeks to limit its common-law liability, and the terms of which are not expressly assented to, were insufficient to defeat a claim for loss. The court said: "Nor does the knowledge of the regulation which the plaintiff had previously acquired while in defendant's employment subject him to limitations imposed by the receipt." In Ellis v. American Tel. Co. (13 Allen, 226) the reasons are clearly and satisfactorily stated for the existence of the rule that telegraph companies are not, unless they so expressly contract, held to warrant or insure the accurate transmission or prompt delivery of messages, and are only liable for negligence. But we find no satisfactory reason in this or in any case for a rule that such companies may, by notice, limit their liability for negligence, nor do we see any in the nature of the business in which they are engaged. Carriers and telegraph companies are alike engaged in quasi public employments, and persons are, from necessity, compelled to employ the latter without more opportunity for choice and deliberation than when they select the former. As before shown, the liability on contract of carriers of goods which is implied by law cannot be limited by notice, and it is difficult to see why telegraph companies should be permitted to limit a much less onerous obligation by a mere notice.
The judgment should be affirmed, with costs.
After the blank known as Form No. 2 was put in evidence the defendant's counsel was refused permission to read to the jury the rules and regulations printed upon said blank, and which stated the condition upon which all messages were taken by the company. In substance these regulations were to the effect that the company would not be liable for mistakes in the delivery of a message, whether happening by negligence of its servants or otherwise, beyond the amount received for sending the same, unless the sender should order the message telegraphed back to the originating office for comparison, and for that service one-half the regular rate was to be charged in addition to the amount received for sending the message.
The defendant testified that he had no knowledge of the terms of the conditions upon the Form No. 2. But there was ample evidence in the case from which the jury could have found that the plaintiff knew of these regulations, and that all messages received by the company were sent over its wires subject thereto.
If the jury had so found it would have also been permissible for them to find that the message in question was sent subject to such conditions, and that the defendant's liability was limited to the amount charged for sending the message.
A special and express contract is not necessary to limit the liability of the telegraph company for mistakes in the transmission of messages, and in this respect such corporations differ from common carriers. The reasons for this distinction are very clearly pointed out in Ellis v. American Tel. Co. (13 Allen, 226), and in the views there expressed we concur.
In that case the message was written upon one of the blanks of the corporation, upon which was printed the rules of the company limiting its liability.
In Clement v. Western Union Telegraph Co. ( 137 Mass. 463) the message was not written upon one of the defendant's blanks, but on its delivery to the defendant it was upon a plain piece of paper. The condition upon which defendant, by its rules, provided that messages should be sent over its line as set forth in the form of a blank in use by it were, however, known to the plaintiff's agent, such blanks having been frequently used by him, and it was accordingly held that a finding was warranted that the contract was entered into subject to the stipulations contained upon such blanks, and that the plaintiff could recover only the cost of the message.
We can see no conflict between this case and Gott v. Dinsmore ( 111 Mass. 45), cited in the prevailing opinion, the latter being an action against an express company for the loss of a trunk, and was disposed of by the application of rules of law applicable to common carriers.
In this state it has been decided that a telegraph company is not a common carrier, and is not subject to the peculiar liability of common carriers. ( Breese v. U.S. Telegraph Co., 48 N.Y. 132; Schwartz v. A. P. Telegraph Co., 18 Hun, 158; Kiley v. Western Union Telegraph Co., 109 N.Y. 231. )
In the case last cited, in speaking of the regulations limiting the liability of the company unless the message was repeated, it was said "that a telegraph company has the right to exact such a stipulation from its customers is the settled law in this and most of the states of the union and in England.
"The authorities hold that telegraph companies are not under the obligation of common carriers. They have the right to make reasonable regulations for the transaction of their business and to protect themselves from liabilities which they would otherwise incur through the carelessness of their numerous agents and the mistakes and defaults incident to the transaction of their peculiar business.
"The stipulation printed in the blank in use in this case has frequently been under consideration in the courts and has always in this state and generally elsewhere been upheld as reasonable."
In that case the message was written upon one of the printed forms of the defendant and it was decided that the plaintiff would be held by the use of the blank and its delivery to the company, to have assented to the condition thereon although he might not have known their precise terms; and the Massachusetts case referred to and the Breeze case and Schwartz case were cited as authorities for such decision.
The authorities cited establish in our opinion the rule that a telegraph company may limit its liability for mistakes in the transmission of messages by reasonable regulations brought to the knowledge of its customers, and had the jury found, as they might have done upon the evidence in this case, that the plaintiff knew that such regulations had been established and that the defendant's liability was limited to the amount charged for sending the message unless it was ordered to be telegraphed back it would also have been permissible for them to find that he contracted with the defendant upon such condition. Whether the court would have been justified upon a finding of knowledge of these conditions upon plaintiff's part in holding as a matter of law that he must be deemed to have assented to the condition, it is unnecessary to here state, in view of the fact that the judgment is to be affirmed.
The views now expressed sufficiently indicate the difference existing between the majority and minority of the court.
It was material to a proper disposition of the case that the regulations printed upon the blank put in evidence should have been read to the jury and it was error for the court to exclude them and for such error the judgment should be reversed and a new trial granted.
All concur with FOLLETT, Ch. J., except BRADLEY and BROWN, JJ., dissenting and HAIGHT J., not sitting.