Arthur v. Texas & Pacific Ry. Co., 204 U.S. 505 (1907)

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Arthur v. Texas & Pacific Railway Company

No. 176

Argued January 24, 1907
Decided February 2, 1907
204 U.S. 505

ERROR TO THE CIRCUIT COURT OF

APPEALS FOR THE EIGHTH CIRCUIT

Syllabus

Cau v. Texas & Pacific Ry. Co., 194 U.S. 427, followed as to binding effect of agreements in bills of lading exempting carrier from fire loss and claimed to have been forced on the shipper under duress and without consideration.

Where a railway company has no other place for delivery of cotton than the stores and platform of a compress company, where all cotton transported by it is compressed at its expense and by its order, its acceptance of, and exchange of its own bills of lading for, receipts of the compress company passes to it the constructive possession and absolute control of the cotton represented thereby, and constitutes a complete delivery to it thereof, nor can the railway company thereafter divest itself of responsibility for due care by leaving the cotton in the hands of the compress company as that company becomes its agent.

On the evidence in this case, the question of whether the custodians of the cotton were guilty of negligence should have been submitted to the jury.

139 F. 127 reversed.

The plaintiffs in error, who were plaintiffs below, filed their complaint against the railway company in the Circuit Court of the United States for the Western District of Arkansas, Texarkana Division. The case arose under the laws of the United States, as the defendant was incorporated under an act of Congress passed March 3, 1871, which act was amended by one passed May 2, 1872, among other things, changing the name of the corporation to that, under which it was sued in this case. Upon the trial, the court directed a verdict for the defendant, which was affirmed by the circuit court of appeals, 139 F. 127, and the plaintiffs have come here by writ of error.

The action was to recover damages against the defendant for loss by fire of 50 bales of cotton, which were burned at Texarkana, Texas, September 19, 1900, and which the plaintiffs allege had been duly delivered to the defendant at that place, under a through bill of lading for transportation to Utica, New York. In the third clause of the conditions stated in the bill of lading was a provision

that neither the Texas & Pacific Railway Company nor any connecting carrier handling said cotton shall be liable for damages to or destruction of said cotton by fire.

In the fifth clause of the bill of lading, it was provided that

each carrier over whose road the cotton is to be carried hereunder shall have the privilege, at its own cost, to compress the same for greater convenience in handling and forwarding, and shall not be responsible for deviation or unavoidable delays in procuring such compression.

Although the cotton was destroyed by fire, plaintiffs alleged that they were not concluded by the fire clause, which they allege was void

because (1) said bill of lading was executed by said plaintiffs under duress; (2) said provision is unreasonable, and (3) was without a consideration.

The freight rates charged in the bill were the regular rates for the shipment of cotton over all lines of railway between Texarkana and Utica, New York, and no option was given to said plaintiffs, as they allege in their complaint, to receive any other form of bill of lading than that exempting the defendant from liability for loss of the cotton by fire, and plaintiffs allege they did not assent thereto.

It was also alleged that the place where the cotton was stored after its delivery to the railway company by the plaintiffs was not a safe place, being on the platform of the Union Compress Company, that the platform was not enclosed, and that there was no proper provision made to prevent the destruction of the cotton by fire, and that the cotton was at such place exposed to the sparks of passing engines, and that the employees of the Union Compress Company, which was the agent of the defendant, neglected to care for the cotton, which caught fire from sparks from a passing engine and was destroyed September 19, 1900, whereby defendant became liable to the plaintiffs in the sum of $2,605, the value of the cotton. The defendant, by answer, put in issue all the allegations as to negligence by its own servants or by the servants or agents of the compress company, and also denied that the plaintiffs had ever delivered the cotton to the railway company, and alleged that at the time it was destroyed, it was in the possession and control of the compress company, which was not its agent and over which it had no control.

Upon the trial, evidence was given tending to prove the following facts: the plaintiffs, with offices at Texarkana, were extensive buyers of cotton, which they purchased in the surrounding country and had it transported to that place as a place of concentration, where it might be classified and subsequently transported to the East and other parts of the country by the railroads.

The Union Compress Company was an independent corporation, doing business at Texarkana as a compressor of cotton, which it compressed for the various railroads having tracks at that place. The compress company had a platform on its own land of about 400 x 600 feet, upon which cotton was delivered from wagons and from railroad cars, and the receipt of the cotton was acknowledged by the compress company. From this platform cotton was loaded on the respective cars of the different railroads, the tracks of which surrounded the platform on three of its sides. This platform was within the State of Texas. Substantially all the cotton received at Texarkana was received at this platform. The local platform of the defendant company was not calculated to receive cotton for shipment by the company, on account of its small size, and the defendant’s agent testified that he would not know what to do with cotton if offered at this platform except to send it to the platform of the compress company. When cotton was placed on the platform of the compress company, it did not then compress it, but it remained there until further orders were given, as herein stated. After delivery on the platform, and after the shipper had procured the written acknowledgment of the receipt of the cotton by the compress company, the practice was for the shipper, when he was ready to have it shipped, to go to the railway company, and, upon the surrender of the receipts of the compress company to the agent of the railway company, the shipper would receive from such agent a bill of lading for the cotton, which acknowledged its receipt by the company and the place and person it was consigned to, and the shipper had nothing further to do in regard to the cotton. He issued no orders for compressing it, and was not allowed to route it by any particular route. He would identify the cotton covered by the bill and give the destination point of the cotton and the name of the consignee, and there his right ended. The railroad company, when it received from the shipper the compress company’s receipt and gave its bill of lading to the shipper, took the receipts of the compress company and gave them up, and directed the company to compress the cotton and obtain insurance upon it covering the responsibility of the railroad company, and load it into cars to be designated by the railroad company’s agent. It was a general understanding between the railroad company and the compress company that, when the former delivered the cotton receipts to the compress company, it was to compress the cotton, obtain the insurance, and give the policies to the agent of the railway company, and ship the cotton on the cars pointed out by the railway company’s agent. There is no evidence that the compress company ever compressed cotton at the orders of the shipper, or charged him for the storage of the cotton on the platform. The compressing was in fact done by the compress company for the railway company, for its convenience, by its direction, and at its cost. While the cotton was being compressed, the compress company was not under the control of the railway company in matters relating to the mode and manner of compressing, nor were the employees of the compress company under any control by the railway company, but the compress company followed the orders of the railway company when to compress and where to load the cotton after compressing.

This customary way of doing business was followed with regard to the cotton in question. It was received on the platform of the compress company from plaintiffs, and receipts given for it to them. These receipts were taken on September 17, 1900, to the agent of the railway company, who thereupon signed and delivered a bill of lading to plaintiffs, acknowledging the receipt of the cotton to be transported to Utica, New York at named rates. The agent of the railway company then took these receipts which plaintiffs had handed to him and delivered them to the compress company, and gave written instructions, signed by such agent, to the compress company on a form customarily used, and which ran thus:

I have this day issued on your compress receipts bill of lading to W. A. Arthur & Company for 50 bales of cotton (marks, number of bales, and total weight given). Domestic. Compress and ship the above cotton,

as stated in directions. The compress company, when its own receipts were delivered to it by the railway company’s agent, in accordance with its general custom, caused this cotton to be insured for the benefit of the defendant company and in the name of that company, and delivered the policies to the agent of the railway company, who forwarded them to division headquarters at Dallas, Texas. The compress company paid for the insurance under the direction of the railway company.

It was while the cotton was still on the platform, and not yet compressed, that it was burned.

The order adopted by the Texas State Railroad Commission, which was put in evidence, reads as follows:

Thirteenth. When cotton is tendered to railroad companies upon compress platform, which is situated on the track of such railroad companies, it shall be the duty of the railroad companies to take charge of and receipt for such cotton in the same manner and on the same terms as they would receive and receipt for cotton when taken at its own depot or platform erected for such transactions; provided, however, that the shipper or the compress company shall, in such cases, assume the additional risk of insurance involved by such act of the railroad company.

The rule of the defendant was also put in evidence, and reads as follows:

Rule Eleven. When cotton is tendered this company upon a compress platform which is situated on the track of this company, agent shall take charge of and receipt for such cotton in the same manner and on the same terms as he would receive and receipt for the cotton if tendered him at this company’s depot platform or other places assigned by it for such transactions; provided, however, that the shipper or the compress company shall, in such cases, assume the additional risk of insurance involved by such act of this company.