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In fact, as far as ordinary negligence is valuation of the property carried, with the concerned, the rule at common law has been rate of freight based on the condition that abrogated by our Code (section 2171) to the the carrier assumes liability only to the exextent that the shipper and carrier may now tent of the agreed valuation, even in case of contract for the purpose of limiting the liabil loss or damage by the negligence of the carity of the latter therefor. Tlie prohibition of
The prohibition of rier, the contract will be upheld as a proper the common law against a carrier limiting and lawful mode of securing a due proportion his liability from any kind of negligence is between the amount for which the carrier declared in this state by section 2175 only to may be responsible and the freight he reapply to the limitation for gross negligence. ceives, and of protecting himself against exBut, in so declaring, our statute has added travagant and fanciful valuation. nothing to the restrictive force of the com- | There is no justice in allowing the shipper mon-law rule. Declaring the same rule as it to be paid a large value for an article which existed at common law, and nothing more, he has induced the carrier to take at a low the section should not be construed as re rate of freight on the assertion and agreement stricting the right of contract to any narrow that its value is a less sum than that claimel er compass than the common law restricted after a loss. It is just to hold the shipper it. In fact, section 2173, as it is but a dec to his agreement fairly made as to value, even laration of that rule, as far as it applies to where the loss or injury has occurred through contracts limiting liability for gross negli- the negligence of the carrier. The effect of gence, should not be interpreted as restricting the agreement is to cheapen the freight and the right of contract as to an agreed valua secure the carriage if there is no loss, and the tion of property for the purpose of fixing re- effect of disregarding the agreement after a sponsibility any further than it was restrict loss is to expose the carrier to a greater risk ed under the common-law rule. At common than the parties intended he should assume. law such agreed valuation was not considered * * The limitation as to the value has no a limitation of liability for either ordinary | tendency to exempt from liability for neglior gross negligence. In jurisdictions in this gence. It does not induce want of care. It excountry where the common-law rule obtains, acts from the carrier the measure of care due it is the prevailing doctrine that there is a to the value agreed on. The carrier is bound wide distinction between a contract by a car to respond in that value for negligence. The rier providing for exemption from liability compensation for carriage is based on that for its negligence and a contract, fairly en value. The shipper is estopped from saying tered into, whereby, in consideration of a re that the value is greater. The articles have duced rate of compensation for the transporta no greater value for the purpose of the contion, the shipper and carrier agree upon a fix- | tract of transportation between the parties ed valuation therefor under which the re- | to that contract. The carrier must respond sponsibility of the carrier in case of loss shall for negligence up to that value. It is just be measured. In his work on Carriers, and reasonable that such a contract, fairly Hutchinson, at section 2:50, notes the distinc entered into and where there is no dereit tion, where, after discussing cases involving practiced on the shipper, should be upheld. the question of contracts providing for total There is no violation of public policy. On exemption of carriers in cases of negligence, the contrary, it would be unjust and unreahe says: "To be distinguished from these sonable, and would be repugnant to the soundcases, however—though the distinction is not
est principles of fair dealing and of the freealways observed-are those cases, obviously dom of contract, and thus in conflict with different, in which, for the purpose of deter- public policy, if a shipper should be allowed mining the shipper's liability for freight and to reap the benefit of the contract if there the carrier's responsibility for damages, the is no loss, and to repudiate it in case of loss. value of the property is agreed upon."
The distinct ground of our decision The leading case marking this distinction is in the case at bar is that where a contract that of Hart v. Pennsylvania R. R. Co., 112 of the kind, signed by the shipper, is fairly U. S. 331, 5 Sup. Ct. 151, 28 L. Ed. 717. The made, agreeing on the valuation of the propdistinction is further pointed out and approv erty carried, with the rate of freight based ed in many of the state courts; most of them, on the condition that the carrier assumes lialike the Supreme Court of the United States, bility only to the extent of the agreed valuaholding that agreements such as are involvedtion, even in case of loss or damage by the here do not constitute contracts limiting lia negligence of the carrier, the contract will be bility on the part of the carrier, and all hold- | upheld as a proper and lawful mode of securing that in any view the shipper is estopped | ing a due proportion between the amount for from questioning the value as represented by which the carrier may be responsible and him and agreed on. In the Hart Case, where the freight he receives and of protecting himthe provision of the contract under considera selt against extravagant and fancitul valualtion was that "the carrier assumes liability tions." on the stock [horses) to the extent of the fol In the case of Graves v. L. S. & M. S. R. R. lowing valuation," the court said relative to Co., 137 Mass. 33, 50 Am. Rep. 282, where the it that where the contract of the kind signed valuation was contained in a bill of lading in by the shipper is fairly made, agreeing on the which it was stipulated that the goods were
"shipped at an agreed valuation of $20 per , in case of loss, to claim a greater value. Such barrel," it is said: "If we adopt the general; a contract is fair and reasonable, and is not rule that a carrier cannot
exempt contrary to public policy. It is not a conhimself from responsibility,
we are tract that relieves the carrier from responof opinion that it does not corer the case be-sibility for his own misbehavior. Ile is liable fore us, which must be governed by other in case of loss for the value of the packages considerations. The defendant has not at- : as agreed to by the shipper, and upon which tempted to exempt itself from liability for value he pars a reduced compensation for the negligence of its servants. It has made the carriage. Limitation as to value does no contract for that purpose, but admits its not excuse negligence.” Vichalitse-like y. W. responsibility.
* * * The care to be exer- ! F. & Co., 118 (al. 683. 688, 50 Pac. $17. cised in transporting property and the real- ! We content ourselves with thus quoting at sonable compensation for its carriage depend ' length from these authorities. They discuss largely on its nature and value. *
the matter fully, and declare principles which It is just and reasonable that a carrier should should govern in construing contracts of this base his rate of compensation to some extent nature. To the same effort are St. Louis, etc., upon the value of the goods carried. This · Ry. Co. v. Weakly, 50 Ark. 397, 8 S. W. 131, measures, anıl is an important element in fix- : 7 Am. St. Rep. 104; Zimmer v. X. Y. ('. ing. his compensation. If a person volun & II. R. R. R. Co., 137 X. Y. 460, 33 V. E. tarily represents and agrees that the goods 012: Jennings v. Smith, 106 Fed. 139, 15 C. C. delivered to a carrier are of a certain val A. 219: Bermel P. X. Y. X. H. & II. R. R. R. ue, and the carrier is thereby induced to grant Co., 172 X. Y. 6:39, 0.7 X. E. 1113; Hill v. N. him a reduced rate of compensation for the P. Ry. Co., 74 Pac. 10.1, 33 Wash. 697; 0'carriage, such person ought to be barred by Malley 1. Great Northern Ry., 86 Vinn. 380. his representations and agreement. Other 90 X. W. 974: Railway v. Sowell, 90 Tenn. wise, he imposes upon the carrier the obli 17, 15 S. W. 837; Vormile v. 0. R. & Y. (0, gations of a contract different from that into . 41 Or. 177, 09 Pac. 928. It is true that there which he has entered. * * * We are of are some authorities holding to a contrary opinion that the plaintiffs are estopped to doctrine, as there are those which sustain show that the property shipped' was of contracts exempting carriers from all liagreater value than was represented. The
bility for negligence; but the weight of Amerplaintiffs cannot recorer a larger sum without ican authority is in support of the doctrine riolating their own agreement. Although announced in the Ilart and other cases citeil. one of the indirect efforts of such a contrart
While the authorities referred to discuss the is 'to limit the extent of the responsibility of effect of such contracts arising in cases where the carrier for the negligence of its servants, only ordinary negligence was involved, that this was not the purpose of the contract. can make no difference in the application of We cannot see that any consideration of a the principle to cases involving gross neg. sound public policy requires that such con
ligence. It is obvious that in principle it can tracts should be held invalid, or that a per make no difference what the character of son who in such contract fixes a value upon the negligence may be. As it is pertinently his goods, which he intrusts to the carrier.
said in Calderon v. Atlas S. S. Co., 09 Fed. should not be bound by his valuation."
574, 578, 16 C. C. A. 332: "Such a valuation In two cases in this court, while the par- would necessarily, in the absence of fraud, ticular section of our ('ode as to contracts | conclude both the shipper and the carrier upon limiting liability for gross negligence was not
any inquiry as to the amount of damages directly involved, still, discussing the effect of i arising from a loss, and the contract would an agreed valuation in a contract between a therefore extend to any kind of a liability." shipper and carrier, the court expressed itself It will be observed in the authorities quoted in approval o the rule laid down in the Hart that they speak of a contract which is reaCase. Said this court: “There is a wide sonable and freely made between the parties. distinction between a contract for exemption In the case at bar there can be no question from liability in case of negligence, which of the reasonableness of the contract. It was is usually helil in derogation of public policy, based upon a consideration of a rate of transtending to encourage negligence and a con portation much lower than it would have tract fairly made whereby, in consideration, been had the valuation been higher, or if the of a lower freightage, the parties agree upon carrier assumed all the risk which the shipa fixed or deforminate ralue to be placed up : per now seeks to charge it with. The imon the article to be shipped, in case of its practicability of establishing one rate for Joss." Pierce v. S. P. Co., 120 Cal. 156, 100. the transportation of stock of different values 47 Pac. 871. J2 Pac. 302, 10 L. R. A. 3.30. is universally recognizeul. Rates for transAlso: "It would be unreasonable for a ship- portation are based upon the value of the per to expect his packages to be carried for property, and it is only natural, that the a compensation based upon an agreed valua amount of care which is to be exercised by tion much less than the actual ralue, anal the carrier in the protection of the property then, in case of loss, recover the full value. | will be largely determined by its value. In Where
the shipper agrees , the case at bir, fullewing the general rule, deto a certain value, he should not be heard, | fendant established freight rates under these
special contracts of shipment which were pro of its contents exceeded $1,000. In Zimmer portional to the value of the property shipped V. N. Y. C. & H. R. R. R. Co., supra, the -an increase of 10 per cent. in the freight agreed valuation was $100, though the value charges for a rise of 100 per cent. in the thereof found by the jury was over $3,000. value of horses to be transported, which can And in all the other cases cited sustaining not be said to be an unreasonable charge. such special contracts, necessarily the actual
As to the contract being freely and fairly valuation must have exceeded the agreed made: Delaney had shipped these horses valuation, and the question whether it did over the road of the defendant before, and on or not must have been held to be immaterial. just such a contract, containing the same valu We do not think that this matter requires ations as appear in the one in question here. any further discussion. Under the author. Before this latter contract was entered into, ities the special contract entered into between he had discussed with the agent of the del plaintiffs and defendant cannot be held infendant the shipment and the rate of ship valid as one exempting the defendant from ment of these horses. He was not required liability for gross negligence. It does not do to ship them under the contract. If he did so, nor pretend to do so, but, on the contrary, not consider the rates thereunder reasonable, must be sustained as a reasonable contract he was not required to take them. IIe could freely entered into by the shipper and under have shipped them under an ordinary bill which the defendant assumed full responsiof lading, though at a higher rate of freight, bility for the actual value of the property as and in case of loss could have recovered such value was fixed by the parties, and whatever they were worth. Even under the
Even under the defendant cannot be made responsible for contract he was not required to place the loss in an amount exceeding that agreed valvaluation on them that he did. He fixed the uation. raluation on them himself. The defendant The court erred in refusing to instruct had nothing to do with it. And he knew'. the jury that they could not return a verdict when he signed the contract, that it provided exceeding the agreed valuation in each case that the liability of defendant was limited -$20—and for that reason the judgment is by its terms to the value of $20 for each reversed, and a new trial ordered. horse, as he had valued them. As we have said, these special contracts provided for We concur: BEATTY,
BEATTY, C. J.; MCFARfreight rates proportionate to the value of LAND, J.; ITENSIIAW, J.; ANGELLOTTI, the horses shipped. Delaney could have put J.; SLOSS, J. their valuation at any higher rate than $20 which be deemed they were worth. There SHAW, J. (dissenting). In the absence of was nothing to prevent him from doing so.
a special contract on the subject, when goods It was solely a matter of choice with him.
under shipment are destroyed by the gross and in fixing the valuation he did he could negligence of the carrier, the extent of the have been prompted only by a desire to ob
liability of the carrier in damages is the tain a low freight rate based on this low
actual value of the goods. If a carrier makes valuation. Yor, in determining whether such
an agreement in advance that its liability a contract is fair or reasonable, can there be for such destruction by its own gross neglitaken into consideration the fact whether the
gence shall not be the actual value of the agreed value of the property reasonably ap goods, $1,000 for instance, but a smaller proximated its real value. That question amount, which the carrier and the shipper was presented in some of the cases cited. In
agree shall be considered, for the purposes Hill v. N. P. Ry. Co., supra, in reply to a
of the shipment, the value of the goods, $100 contention of counsel for appellant urging for instance, I am unable to perceive why that it should, the court said: “An exami such a contract does not exonerate the carnation of the cases cited we do not think rier from liability for its gross negligence sustains this contention, and, even where to the extent of $900. And, if a contract has there has been an attempt to make this dis that effect, I cannot see why the fact that tinction, it has been in principle a failure. the effect desired is not directly contracted The contract establishing the released valu
for in express terms, makes it any the less a ation must be construed to embrace the real
violation of section 2175 of the Civil Code, valuation.” In the Hart Case, supra, which which prohibits the making of such contracts. was a suit relative to the value as here of The exemption from liability to the extent race horses, the court dismisses that con of the difference between the actual value tention as without merit, saying: "Althougb and the stated value is expressly contracted the horses, being race horses, may, aside from for in the agreement in question here, how. the bill of lading, have been of greater value ever. If we hold that this contract is not than that specified in it, whatever passed be forbidden by the provision of the Code, then tween the parties before the bill of lading that provision is practically annulled. Thewas signed was merged in the valuation it oretically no person is compelled to avail fixed.
In Steers v. L. N. Y. & P. himself of the services of common carriers, S. S. Co., 57 N. Y. 1, 1.5 Am. Rep. 133, the for he may walk, or hire his own conveyagreed valuation of the trunk in question was ance; but practically the thing is compulsory, $50, whereas it was shown that the value and the terms must be those fixed by the car
rier. If the provision were made solely, or be void ; that only officers at the home office chiefly, for the benefit of the shipper or pas of the insurer had authority to determine whethsenger, the theory that he might waive his
er a policy should issue; and that no statements
made to the soliciting agent should be binding right, or that he might be estopped to assert on the insurer, unless reduced to writing and it by his conduct or by his contract freely presented to the officers of the insurer at the made, would be perfectly sound and reason
home office. Held, that the soliciting agent had
no authority to waive misrepresentations in the able. But the law is not made for the bene
application. fit of the shipper or passenger alone. It is
[Ed. Note.-For cases in point, see Cent. Dig. founded on public policy, having for its ob vol. 28. Insurance, 8 909.] ject the safety of human beings from death 4. SAME — WARRANTIES – MISREPRESENTAor injury and the prevention of the destruc TIONS—WAIVER. tion of property. Where a course of conduct
The applicant for insurance stated that he
had never had paralysis, while as a matter of is required by law in furtherance of such
fact he had had partial paralysis, which fact public policy, it is not within the province was known to the soliciting agent, who did not of the individual immediately interested to
communicate the knowledge to the insurer.
Held, that the insurer, by issuing a policy on dispense with an obedience to its provisions
the application, did not waive its right to rely by any agreement, or to obviate its effects
on the falsity of the statement to defeat liaby his conduct making it inequitable, as be bility. tween himself and the other party, to enforce it.
In Bank. Appeal from Superior Court, The law in such cases makes use of
Los Angeles County; Charles Monroe, Judge. his interest as a means of enforcing the provisions adopted for the purpose of securing
Action by Annie P. Iverson against the the safety of the traveling public and pre
Metropolitan Life Insurance Company. From venting the negligent destruction of property.
a judgment for defendant, plaintiff appeals.
Affirmed. He is to that extent a public agent, and as such he should not be permitted to divest Porter, Sutton & Cruickshank, for appelhimself of the right and power to act.
lant. Seward A. Simons, for respondent. In those jurisdictions where this policy exists solely by virtue of the common law, LORIGAN, J. This action was brought by which is the creature of the judicial power. | plaintiff as beneficiary to recover upon two I concede that the same power is competent policies of life insurance issued by defendto qualify it. or limit its application, although ant in favor of James E. Iverson, her husthe modification may render the policy prac band. The case was tried by the court and tically fruitless. But in this state the policy
from a judgment in favor of defendant, is the creature of the legislative power. It
plaintiff appeals; the appeal being presented has been established by legislative act, which
on the judgment roll. in such matters is superior to the judiciary,
The applications for both policies of inand I do not believe that it should be within
surance, which were made and signed by the the power of the courts to declare that the
assured, contained the following: “(2) I parties immediately concerned may, by their
have never had any of the following comprevious conduct or by agreements made in
plaints or diseases: Apoplexy, asthma, advance, defeat the purpose of the law,
hemorrhage, insanity, paralysis, pneumonia, rheumatism.
(12) I agree that this application (151 Cal. 746)
has been made, prepared, and written by myIVERSON V. METROPOLITAN LIFE INS.
self, or my own proper agent, and that inasCO. (L. A. 1,902.)
much as only the officers at the home office of (Supreme Court of California. Aug. 20, 1907.) the company in the city of New York have au1. INSURANCE-APPLICATIONS FOR LIFE POLI thority to determine whether or not a policy CIES-IVARRANTIES—WAIVER.
shall issue upon any application, and as they Where the insurer with knowledge that any representations of the insured are untrue,
act on the written statements, answers, warconsummates the contract of insurance by issu ranties, and agreements herein made, no ing a policy, it waives the right to subsequently statements, promises. or information made assert the falsity of the representations and
or given by or to the person soliciting or takavoid liability. [Ed. Note.--For cases in point, see Cent. Dig.
ing this application for a policy, or by or to vol. 28, Insurance, $$ 966–997.)
any person, shall be binding on the company 2. SAME.
or in any manner affect its rights, unless Where a soliciting agent of an insurer has such statements, promises, or information be neither actual nor ostensible authority to waive reduced to writing and presented to the ofthe falsity of statements in an application for a life policy, his knowledge of the falsity of
ficers of the company at the home office. And statements therein, not communicated to the in
I further declare, warrant, and agree that surer, is not knowledge of the insurer.
the representations and answers made above [Ed. Note.--For cases in point, see Cent. Dig. are strictly correct and wholly true, that they vol. 28, Insurance, $ 969.]
shall form the basis and become part of the 3. SAME-AUTHORITY OF SOLICITING AGENT. contract of insurance, if one be issued, and
An application for a life policy stipulated that any untrue answer will render the policy that the answers of the applicant were true, and that they were the basis of the contract of null and void, and that said contract shall insurance, and, if untrue, that the policy should not be binding upon the company unless upon
its date and delivery the insured be alive and in sound liealth.” The policies issued were based on these applications and contain the following provision: “This policy is void if any of the statements or warranties in the application for this policy be not true.”
The court found that at the date of the policies Iverson was alive and in sound health, and that he and plaintiff had complied with all the terms and conditions of the policy to be performed by them, except as further stated in the findings, and in that regard the court made the following finding: “(3) The defendant issued the said policies of insurance, induced by the warranties and agreements made in the application, a copy of which is attached to the said policies.
(7) The statement made by said James E. Iverson in his application that he bad 'never had any of the following complaints or diseases, to wit: Apoplexy, asthma, bronchitis,
* paralysis, pneumonia, rheumatism
*'-was untrue, in this: that he had had a partial paralysis in August, 1900, and was seriously ill at that time from said stroke of partial paralysis, and was attended by Dr. C. A. Briggs." The court further found: "(8) That Harvey L. Clark was the agent who solicited the said James E. Iverson to take an insurance policy with the defendant company, and that he was an agent for the purpose of soliciting insurance only; that he had known James E. Iverson for more than two years, and at the time he solicited said insurance, and at the time of making said application, he knew that James E. Iverson bad had said stroke of partial paralysis, and communicated said fact to his immediate superior, who was a soliciting agent of the defendant in charge of the other soliciting agents in Pasadena, but who was under the general agent in Los Angeles, to whom he reported; but the fact that said James E. Iverson had had a partial stroke of paralysis as aforesaid was not communicated to said general agent at Los Angeles, or to any other agent or officers of the defendant company." As a conclusion of law the court held “that the said policies of insurance were null and void by reason of the statement of said James E. Iverson in his application that he had had no paralysis."
There can be no question but that the written answers in the application for insurance, made by the insured in response to the questions asked him relative to whether he had ever had any of the diseases specifically mentioned in the questions, were material to the risk assumed by the respondent; that the contract of insurance was based on them, and on the agreement of the insured that if any answer was untrue the policy to be issueil thereon should be void. As the insured stated in response to an inquiry on the subject in his application that he had not liad päralysis, and this statement was untile, the cul
clusion of the court that the policy was void was proper, unless the contention made by apellant is to be sustained. That contention involves the legal effect to be given to the finding of the trial court that Clark, the soliciting agent of the defendant, who solixited the insured to apply for the policy, know, when the insured made his application to the company in which he stated that he had not had paralysis, that that applicant had in fact suffered a stroke of paralysis. The position of appellant relative to this finding is that this knowledge of the soliciting igent, Clark, was knowledge of the company, ind that the company, having issued the policy with knowledge that the statement of the insured in his application that he had not hail paralysis was untrue, must be deemed to have waived the warranty with respect to it, and cannot be heard to insist upon the falsity of the statement to avoid the policy. Undoubtedly, if the company did have such knowledge, the issuance of the policy after possession of it would amount to a waiver. Warranties in an application of insurance are for the benefit of the insurer, in order that it may determine whether it will acepit the risk, and if, with knowledge that any representations or statements made therein are untrue, it consummates the contract of insurance, it is deemed to have thereby waived the right to subsequently assert their falsity to avoid liability. But the question always is, did the company have knowledge and that is the question here. It is not pretended that any knowledge possessed by Clark was in fact communicated to any general agent of the defendant, or that it was cominunicated to the officers of the company at the home office in New York. The claim is, however, that the relation of Clark to the defendant as soliciting agent was such that, whether the knowledge was imparted to these agents or officers or not, this knowledge was in contemplation of law the knowledge of the company, because Clark had it, and binds it as effectively as if it was communicated. But this effect on the defendant of knowledge possessed by Clark would not follow from the fact simply that Clark was the soliciting agent. It could only follow if, as such soliciting agent of the company, he had either actual or ostensible authority from it t:) waive the truthfulness of statements, or the warranties accompanying them in the application for the policy. If he had neither actual nor ostensible authority to do so, mere knowledge on his part, un'ommunicated to the officers of the company having conceded power to waive conditions or warranties, would not be binding on the company, because knowledge of the agent is only knowledge to the principal in matters which are within the Scope of the agent's authority to act. terfield v. New York Life Insurance Co., 129 Cal. 68, 79, 58 Pac. 92, 61 Pai. 667. And that Clark, as soliciting agent, had neither actual nor ostensible authority to act so as to waive