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Vol. IV.]

BANK OF KENTUCKY V. ADAMS EXPRESS CO.

[No. 3.

With this ruling we are unable to concur. The railroad company, in transporting the messenger of the defendants and the express matter in his charge, was the agent of somebody, either of the express company or of the shippers or consignees of the property. That it was the agent of the defendants is quite clear. It was employed by them and paid by them. The service it was called upon to perform was a service for the defendants, a duty incumbent upon them, and not upon the plaintiffs. The latter had nothing to do with the employment. It was neither directed by them, nor had they any control over the railroad company or its employees. It is true the defendants had also no control over the company or its servants, but they were its employers; presumably they paid for its service, and that service was directly and immediately for them. Control of the conduct of an agency is not in all cases essential to liability for the consequences of that conduct. If any one is to be affected by the acts or omissions of persons employed to do a particular service, surely it must be he who gave the employment. Their acts became his, because done in his service and by his direction. Moreover, a common carrier who undertakes for himself to perform an entire service has no authority to constitute another person or corporation the agent of his consignor or consignee. He may employ a subordinate agency, but it must be subordinate to him, and not to one who neither employs it nor pays, nor has any right to interfere with it.

If, then, the Louisville and Nashville Railroad Company was acting for these defendants, and performing a service for them, when transporting the packages they had undertaken to convey, as we think must be concluded, it would seem it must be considered their agent. And why is not the reason of the rule, that common carriers cannot stipulate for exemption from liability for their own negligence and that of their servants and agents, as applicable to the contract made in these cases as it was to the facts that appeared in the case of Railroad Company v. Lockwood? The foundation of the rule is, that it tends to the greater security of consignors, who always deal with such carriers at a disadvantage. It tends to induce greater care and watchfulness in those to whom an owner intrusts his goods, and by whom alone the needful care can be exercised. Any contract that withdraws a motive for such care, or that makes a failure to bestow upon the duty assumed extreme vigilance and caution more probable, takes away the security of the consignors and makes common carriage more unreliable. This is equally true, whether the contract be for exemption from liability for the negligence of agencies employed by the carrier to assist him in the discharge of his obligations, though he has no control over them, or whether it be for exemption from liability for a loss occasioned by the carelessness of his immediate servant. Even in the latter case he may have no actual control. Theoretically he has ; but most frequently when the negligence of his servant occurs he is not at hand, has no opportunity to give directions, and the negligent act is against his will. He is responsible, because he has put the servant in a place where the wrong could be done. It is quite as important to the consignor, and to the public, that the subordinate agency, though not a servant under immediate control, should be held to the strictest care, as it is that the carrier himself and the servant under his orders should be.

Vol. IV.]

BANK OF KENTUCKY v. ADAMS EXPRESS CO.

[No. 3.

For these reasons we think it is not admissible to construe the exception in the defendants' bills of lading as excusing them from liability for the loss of the packages by fire, if caused by the negligence of the railroad company to which they confided a part of the duty they had assumed.

There are other reasons of weight which deserve consideration. Express companies frequently carry over long routes, at great distances from the places of designation of the property carried, and from the residence of its owners. If in the course of transportation a loss occurs through the want of care of managers of public conveyances which they employ, the carriers or their servants are at hand. They are best acquainted with the facts. To them those managers of the public conveyances are responsible, and they can obtain redress much more conveniently than distant owners of the property can. Indeed, in many cases, suits by absent owners would be attended with serious difficulties. Besides, express companies make their own bargains with the companies they employ, while they keep the property in their own charge, usually attended by a messenger. It was so in the present case. The defendants had an arrangement with the railroad company, under which the packages of money, inclosed in an iron safe, were put into an apartment of a car set apart for the use of the express company; yet the safe containing the packages continued in the custody of the messenger. Therefore, as between the defendants and the railroad company, it may be doubted whether the relation was that of a common carrier to his consignor, because the company had not the packages in charge. The department in the car was the defendants' for the time being; and if the defendants retained the custody of the packages carried, instead of trusting them to the company, the latter did not insure the carriage. Miles v. Cattle, 6 Bingham, 743; Towers v. The Utica & Syracuse R. R. Co. 7 Hill, N. Y. 47; Redfield on Railways, sec. 74.

Now, can it be a reasonable construction to give to the contract between the defendants and the plaintiffs, that the former, who had agreed to carry and deliver the packages at Louisville, reserved to themselves the right to employ a subordinate carrier, arrange with him that he should be responsible only for ordinary vigilance against fire, and by that arrangement relieve themselves from what without it would have been their clear duty? Granting that the plaintiffs can sue the railroad company for the loss of the packages through its fault, their right comes through their contract between it and the defendants. They must claim through that. 6 How. 381. Had the packages been delivered to the charge of the railroad company, without any stipulation for exemption from the ordinary liability of carriers, it would have been an insurer both to the express company and to the plaintiffs. But as they were not so delivered, the right of the plaintiffs to the extremest constant vigilance during all stages of the carriage is lost, if the defendants are not answerable for the negligence of the railroad company, notwithstanding the exception in their bills of lading. We cannot close our eyes to the well known course of business in the country. Over very many of our railroads the contracts for transportation of goods are made, not with the owners of the roads, nor with the railroad companies themselves, but with transportation agencies or companies which have arrangements with the railroad companies for the carriage. In this manner some of the responsibilities of common

Vol. IV.]

BANK OF KENTUCKY v. ADAMS EXPRESS Co.

[No. 3.

carriage are often sought to be evaded; but in vain. Public policy demands that the right of the owners to absolute security against the negligence of the carrier, and of all persons engaged in performing the carrier's duty, shall not be taken away by any reservation in the carrier's receipt, or by any arrangement between him and the performing company.

It has been urged on the part of the defence that, though the contract does not attempt to exempt, and could not have exempted the express company from liability for loss occasioned by the neglect of itself or its servants, yet, when it is sought to charge the company with neglect it must be such as it is responsible for upon the general principles of law, and that upon these principles no one is responsible for damage occasioned by neglect unless it be the neglect of himself, his servants, or agents. The argument mistakes, we think, when it asserts that upon general principles of law no one is responsible for the consequence of any neglect except his own or that of his agents or servants. Common carriers certainly are, and for very substantial reasons. These defendants, it is agreed, were common carriers, and they remained such after the exception in their receipt. If it be said the exception reduced responsibility to such an extent as to make them liable only for such neglect as fastens a liability upon persons who are not common carriers, the answer is, such an averment assumes the very thing to be proved. And even if the argument were sound, the question would still remain whether the railroad company employed by the defendants to effect the carriage is not properly to be regarded as their agent, though not under their control. That question we have already considered.

Again, it is urged that though the defendants remained common carriers notwithstanding their contract, their responsibility was limited by their receipt to that of an ordinary bailee for hire. And as such bailee is not held liable for the neglect of persons over whom he has no control, it is argued that these defendants are not liable for the negligence of the railroad company. This also assumes what cannot be admitted. Although we are told all the authorities agree that when a common carrier has by special contract limited his liability, he becomes, with reference to that particular transaction, an ordinary bailee-a private carrier for hire or reduces his responsibilities to those of an ordinary bailee for hire; yet we do not find that the authorities assert that doctrine, if by the phrase "that particular transaction" is meant the undertaking to carry. Certainly those to which we have been referred do not. We do not deny that a contract may be made which will put a common carrier on the same level with a private carrier for hire, as respects his liability for loss caused by the act or omissions of others. The consignor may by contract restrain him, may direct how and by what agencies he shall carry. Under such an arrangement he may become a mere forwarder, and cease to be a carrier. But what we have to do with in these cases is, whether the contract proved has that operation. We have already said we think it has not. The exception in the bills of lading has sufficient to operate upon without being a cover for negligence on the part of any person engaged in the service undertaken by the carriers. It exempts the defendants from responsibility for loss by fire caused by the acts or omissions of all persons who are not agents or agencies for the transaction.

BANK OF KENTUCKY v. ADAMS EXPRESS Co.

Vol. IV.]

[No. 3.

That is a large restriction, and beyond that, in our judgment, the exception in the present case does not extend.

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To the opinion we have thus expressed we find direct support in the case of Hooper v. Wells, Fargo & Co. 27 Cal. 11. There an express company had undertaken to transport gold dust and bullion from Los Angeles to San Francisco, and deliver to address. The receipt for the property contained the following stipulation: "In no event to be liable beyond our route, as herein receipted. It is further agreed, and is part of the consideration of this contract, that Wells, Fargo & Co. are not to be sible except as forwarders, nor for any loss or damage arising from the dangers of railroad, ocean, or river navigation, fire, &c., unless specially insured by them and so specified in this receipt.' In the course of the transportation the messenger of the carriers, who had the property in charge, took it on board a steam-tug for the purpose of placing it on a steamer bound to San Francisco. On the way to the steamer the boiler of the steam-tug exploded, in consequence of carelessness of its officers, and the gold dust and bullion were thereby lost. The steam-tug did not belong to the express company, nor was it or its officers under their control. Yet the court adjudged that the managers and employees of the steam-tug were, in legal contemplation, the managers and employees of the carriers, and that the restrictive clause in the receipt did not exempt the carriers from liability for loss occasioned by the carelessness of those employees. To the same effect is the case of Christensen v. American Express Company, 15 Minn. 270; and the case of Machu v. London & Southwestern Railway Company, 3 Exch. 415, though arising under the carrier acts of 11 George 4, and 1 William 4, is very analogous. The statute declared that the carrier should be liable to answer for the felonious acts of any coachman, guard, book-keeper, porter, or other servant in his employ. The court considered that all parties actually employed in doing the work which the carrier undertook to do, either by himself or his servants, were to be regarded as his servants within the meaning of the act. Baron Rolfe said, the right as against the carriers arises, not from the relation of master and servant, but by virtue of the contract into which they have entered to deliver the goods. This was said in answer to an argument like the one relied upon in this case, that the relation of master and servant could not exist between the carriers and the servants of a sub-contractor.

The other objections urged against the charge given by the court below to the jury require but brief notice.

We find no error in what the circuit judge said upon the question, whether the bills of lading with the exceptions constituted the contract between the parties. The charge in this particular is justified by very numerous authoritative decisions: York County v. Central Railroad Company, 3 Wall. 107; Grace v. Adams, 100 Mass. 505; Wells v. The Steam Nav. Co. 2 Comstock, 204; Dorr v. New Jersey Steam Nav. Co. 1 Kernan, 485; 6 How. 344; 3 Wall. 107; 6 Blatchf. 64; Kirkland v. Dinsmore, 62 N. Y. 161.

Nor was there error in the instruction given respecting the iron safe. Taken as a whole it was correct.

The charge covered the whole case, and except in those particulars in which we have indicated our opinion that it was erroneous, we find no just reason to complain of it.

Vol. IV.]

MEYER V. JOHNSTON.

[No. 3.

But for the errors we have pointed out, new trials must be awarded. The judgment in each case is reversed, and the record is remitted with directions to award a Venire de novo.

SUPREME COURT OF ALABAMA.

[DECEMBER, 1876.]

OF THE POWER OF A RECEIVER TO ISSUE CERTIFICATES OF INDEBTEDNESS.

MEYER v. JOHNSTON.

A court of equity has power in a proper case to allow the issuing by a receiver of negotiable certificates of indebtedness creating a first lien upon the property in his hands.

MANNING, J., delivered the opinion of the court.

On the day after the appointment of the first receiver, he petitioned the chancellor for leave to borrow $90,000, or such other sum as his honor might prescribe; and the chancellor thereupon, and in vacation, made an order authorizing him to borrow $150,000 on certificates of indebtedness which should have priority of payment over any other claim, out of the proceeds of sales of any property in the receiver's possession. And the authority thus granted not having been used, the two receivers subsequently petitioned the chancellor for leave to borrow, instead, $700,000, to be used in purchasing rolling-stock and putting the railroad and its appurtenances in repair. The chancellor thereupon made an order authorizing them to do so, directing what portion of the amount should be expended in rolling-stock (about $450,000); prescribing, in accordance with suggestions in the petition, the form of the certificates to be issued therefor, making them negotiable, and interest thereon payable semi-annually at the office of the New York Guaranty and Indemnity Company, and undertaking to charge these certificates upon the railroad and its appurtenances and equipments as a prior lien, having precedence of liens created by the first and other prior mortgages. The receivers were also authorized to sell the certificates at ninety cents on the dollar; and it seems to have been intended that the proceeds should be used, in part, in enlarging and completing the work beyond what was necessary for the preservation of the property.

Counsel for the first and other early mortgage creditors, alarmed by this decree, object to and protest against having their liens on the property of the company, existing by virtue of instruments solemnly executed long before the receiver's certificates were thought of, postponed in favor of charges created by the latter; and they deny that the chancellor has rightfully the power to give such precedence to new creditors. The chancellor has not in his opinion discussed this question, or presented any arguments or authorities in support of the disputed power. But this has been ably done by the counsel for appellees.

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