American Central Insurance v. Chicago & Alton Railway Co.

74 Mo. App. 89, 1898 Mo. App. LEXIS 276

• Court: Missouri Court of Appeals
• Decided: March 7, 1898
• Status: Published

Opinion

Smith, P. J.

statement. — It is disclosed by the record before us that on the twenty-third day of May, 1894, one John M. Woodson was the owner of an elevator and warehouse situate on the defendant’s right of way at the station of Norton, in this state. Said elevator and warehouse were placed on defendant’s right of way by Woodson under a contract entered into between the defendant and himself, which is as follows, to wit:

“This agreement made and entered into this eighteenth day of March, 1880, by and between the Chicago & Alton Railroad Company, party of the first part, and John M. Woodson, of St. Louis, * * * party of the second part, witnesseth: That the said party of the first part for and in consideration of the shipment at all times hereafter upon and over the line of the first party, of all grain received by said second party in the warehouse hereinafter authorized to be constructed, and in further consideration of the covenants, provisions, conditions and agreements hereinafter contained, on the part and behalf of said second party to be observed and performed, hereby grants unto the said second party the right to erect upon such portion of any land belonging to said first party not otherwise occupied, as may be selected and designated by the general manager of the railroad of said first party at or near the station of Norton, Saline county, Mo., a warehouse suitable for the reception, storage and shipment of grain at said station. And said first party further covenants to and with said second party that the said second party shall have the right to occupy and use such portion of land selected and designated as aforesaid for the location of said warehouse for and during the full term of twenty years from the date of this agreement, free of payment of rent therefor, unless the occupancy of said premises shall be sooner terminated in the manner hereinafter provided and mentioned or othei’wise. * * * And for the consideration aforesaid, the said first party hereby covenants and agrees to and with said second party that if said first party will at all times hereafter, during the continuance of this lease, transport all grain in bulk which may be to it, said first party, delivered by said second party, at said -warehouse,, when the cars of said first party, as hereinafter specified, in quantities not less than one full car load at one time, to other stations upon its railroad, at a rate which shall be less by one cent per one hundred pounds for grain in bulk than the regular tariff price of said first party or than the charges made by said first party to transient shippers who deliver grain to said first party by wagons or otherwise. ' And said party of the second part, in consideration of the covenants herein contained on behalf of the first party, and the right herein granted by said first party, hereby covenants and agrees that he will, within ninety days from the date of this agreement, at his own proper cost and charges, erect upon the said portion of ground selected and designated as aforesaid, at the said station of Norton, a good and substantial warehouse and elevator of the capacity of ten thousand bushels of grain. * * * And said second party hereby further agrees that he will charge for storage and delivery of grain from said warehouse, only reasonable and compensatory commissions, and such as may be charged for like services at other warehouses of similar character along the line of the railroad of said first party.

“And said second party hereby further agrees to and with said first party that said first party shall in no case be held pecuniarily liable for damage to said warehouse or to the contents thereof by fire from any cause whatsoever, and that he, the said second party shall not nor will at any time or times hereafter during the continuance of this license, lease or agreement, receive any grain *' * * from any person or persons whomsoever * * * who desire to store said goods in said warehouse, or to use said warehouse for the purpose of delivering said goods or grain upon the ears of said party of the first part, unless the same be stored subject to the following stipulations, to be signed by the person or persons storing said goods or delivering said grain, * * * viz. -.

“First Stipulation: For a valuable consideration I hereby agree that the Chicago & Alton Railroad Company shall in no wise be held liable for any loss or damage which may be done to my goods, grain, wares or merchandise, stored in the warehouse of John M. Woodson, at Norton station, on their line of railroad, by means of fire from any cause whatever. * * * And said second party hereby agrees that he will not sublet or in any manner assign, transfer or part with the possession of said warehouse or this contract or agreement, without the consent in writing of the general manager for the time being of the party of the first part for that purpose first had and obtained.

“Chicago & Alton Railroad Co.,

“By T. B. Blackstone, President.

“John M. Woodson.”

Sometime after the said Woodson had erected said elevator and warehouse, with the consent of defendant he leased the same for a period of three years to John E. Bridges, upon the “condition that the said Bridges should, for that period, covenant that he would faithfully observe, keep and perform all the covenants and undertakings in the lease and contract mentioned on the part of the said Woodson to be kept and performed.” It further appears from the evidence that said Bridges was, at the time of the assignment of said lease to him, a director of the Meade Mercantile Company, a business corporation, dealing in grain and m erchandise. He testified that he entered into a verbal arrangement with said Meade Mercantile Company by which it paid the monthly rent to Woodson and received from the defendant the rebate specified in the lease to Woodson. Under said arrangement lie was to operate the elevator and warehouse for the said Meade Mercantile Company on a salary to be paid by the latter. On the twenty-third day of May, 1894, the Meade Mercantile Company had grain and grain sacks in said elevator and warehouse which was insured by the plaintiff against damage by fire. On said last named date the said elevator and warehouse, including the grain and grain sacks therein of the Meade Mercantile Company, were wholly destroyed by fire. We will assume, for our present purpose that the elevator and warehouse with the grain and grain sacks therein covered by the policy of insurance was destroyed by fire communicated by the locomotive engines in use upon the defendant’s railroad. The plaintiff paid the said Meade Mercantile Company the reasonable value of the said insured property and then brought this suit, claiming that it had become subrogated to all the rights of the Meade Mercantile Company against defendant for the loss.

The defendant claims that under the provisions of the contract previously quoted it was exempt from liability for the loss sustained by the Meade Mercantile Company and therefore plaintiff’s claim is groundless. The plaintiff, on the other hand, contends that the provisions of said contract so relied on by defendant are contrary to public policy and therefore void, and whether or not this contention can be sustained is the dominating question which we are called upon to decide.

c°iTpoucy: pub’ court’s duty. A contract is void as against public policy if injurious to the interests of the public or if it contravenes some established interest of society. It is well settled in the law of contracts that the first purpose of the courts is to look to the welfare 0f the public and if the enforcement of the agreement would be inimical to its interests no relief shouldbe granted to the party injured, even though it might result beneficially to the party who made and violated the agreement. And so it has been said by a learned judge: “It is the duty of all the courts of justice to keep their eye steadily upon the interest of the public even in the administration of commutative justice; and where they find an action is founded upon a claim injurious to the public and which has a bad tendency, to give no countenance or assistance in foro civile.” Greenhood on Public Policy, 2; Crawford v. Wick, 18 Ohio St. 190. And it has been declared by numerous authorities that the common law will not permit individuals to oblige themselves by contract either to do or not to do anything where the thing to be done or omitted is in any degree clearly injurious to the public. G-reenhood on Public Policy, 2, and the authorities there cited.

Ccont°actoS7ers: neghg-ence. In the light of the foregoing definitions we shall now proceed to inquire whether the provisions in said contract, if carried into effect, would be injurious to any public interest or, which is in effect the same thing, whether the public has any interest in its provisions. It has been long settled in this state that a common carrier is not permitted to contract against its own negligence. Clark v. R’y, 64 Mo. 446; McFadden v. R’y, 92 Mo. 348; George v. R’y, 57 Mo. App. 358. There can be no doubt that a contract of a railway company with one of its employees, or with a-passenger, or with a shipper, to exempt itself from liability for negligence in operating its road is against public policy and void. To this the authorities are all agreed.

RAra«°.Afiresrn’ pubhc policy But under the provisions of section 2615, Revised Statutes, every railway company in this state is made an insurer absolutely responsible in damages to every person whose property maybe injured or destroyed by fire directly or indirecty communicated by its locomotive engines. It is not required in such cases to prove negligence on the part of the railway company in order to render it liable for the loss. Walker v. R’y, 68 Mo. App. 465. The plaintiff does not, in its petition, claim that the loss of the Meade Mercantile Company was occasioned by negligence of the defendant. Both the allegations of the petition and the proof conclusively show that the plaintiff seeks to hold the defendant liable under the statute for the loss. The defendant only contracted for exemption against a statutory liability where negligence is not a ground thereof. It is well settled in this state that where a railway passes through the inclosed fields of the landowner, he may, as far as he is concerned, contract away the right to have fences, inclosing the right of way through his lands, gates thereon, farm crossings, and the gates thereat, to which he is entitled under section 2611, Revised Statutes. Madison v. R’y, 60 Mo. App. 599; Berry v. R’y, 65 Mo. 172; Harrington v. R’y, 71 Mo. 384; Johnson v. R’y, 80 Mo. 620; Peddicord v. R’y, 85 Mo. 160. If these and other rights conferred by statute may be contracted away why may not that given by section 2615, Revised Statutes? It can not, with any sho;w of reason, be contended that such contracts are obnoxious to the rule that forbids a railway company from contracting against its own negligence.

The contract in issue here is not analogous to. that where a railway company contracts with one of its employees to exempt itself from liability for negligence in operating its railway, for the reason that the law imposes upon a railway company the absolute duty to operate its railway, to employ suitable men to operate it, to exercise ordinary care to furnish them with a reasonably safe place in which to render their services, and with reasonably safe machinery and appliances with which to perform them. Any breach of this duty is a violation of the law which imposes the duty. It is also an injury to the public interest because it endangers the lives and limbs of citizens which are of the highest value to the state. A contract which exempts the carrier from negligence in the discharge of these duties is void because it relieves it of the performance of an absolute duty which the law imposes upon it and immeasurably endangers the lives of employees and passengers. But the law imposes no duty upon a railway company to lease its right of way. In the former case public policy and the law imposes upon the carrier certain duties in order to protect its employees from injury, and therefore it may not contract to be relieved from the law and duty. The carrier has no choice. It must perform these duties or forfeit its charter. In the latter case no duty to lease is imposed. It has the option to lease or not, and if it does lease and stipulate for exemption from damages caused by fire communicated by its locomotive engines to the property of the lessee placed upon the leased premises by its permission that contract in no way relieves it from the discharge of any duty it owes the public that the law and public policy had imposed upon it. Nor is the contract here similar to that of a railway company with a passenger or shipper, for the reason that the law imposes upon a railway company also the absolute duty to accept passengers and freight when offered and to carry the former with the utmost and the latter with ordinary care. In making their contracts the latter do not stand on an equal footing with the former. They can not stop to negotiate and settle the terms of a contract- every time they desire to use a railroad. They would often prefer the abandonment of the contracts to such negotiations. The railway company with its trained employees, its monopoly of the transportation facilities sought has the ability and the power to exact the contract it desires. This inequality in the situation of the parties which would, if permitted, enable the railway company to obtain unfair contracts from passengers and shippers and the fact that contracts with them which exempt the company from liability for negligence, relieve it from an absolute duty imposed by law and thus violate it and at the same time increase the danger to the lives and property of the people from the operation of a railway, constitute the reasons for the decisions that have established the rule that such contracts are against public policy. R’y v. Lockwood, 17 Wall. 57; York v. R’y, 3 Wall. 107; Steam Co. v. Ins. Co., 129 Wall. 397; Express Co. v. Caldwell, 21 Wall. 264.

Here the defendant and Woodson, the lessee, stood upon an equal footing. The lessee was not compelled to lease of the defendant. Each party had the option to execute or refuse to execute the lease. The condition exempting defendant from liability for damages to the property of the lessee caused by fire communicated by defendant’s locomotive engines relieved the defendant from no duty it was required by law to perform, but simply provided that it should not assume an additional burden which it had the option to refuse. It is thus seen that all the reasons for the application of the rule avoiding contracts exempting carriers from liability for negligence fail in a case like the present.

Again the defendant’s quasi public character as a railway company, its position as a common carrier imposed upon it no duty to lease any part of its right of way to Woodson or any one else, nor had he or any one any right to the use of the leased premises before the lease was made. The property that was burned was the private property of the Meade Mercantile Company which was stored by it in the warehouse situate on the leased premises. None of the property so destroyed was in process of transportation by the defendant, none of it was awaiting delivery by the defendant to its consignees after transportation, and none of it had been received by the company for transportation. The elevator and warehouse and the property in it bore the same relation to the carrying business of the defendant that the store and contents of any merchant or commission man would bear to it. Neither the lease nor the relation of the property to the defendant arose out of the discharge of any duty imposed upon it by its position as a common carrier or by its character of a quasi public corporation. It seems to us that the fact that the defendant is a common carrier has no place in this case. The rights of parties dealing with common carriers and the duties of common carriers toward parties with whom they deal and toward the general public are elements foreign to any question here involved.

There is nothing in the record tending to show that the defendant ever had employed Woodson, the lessee, or the Meade Mercantile Company to deliver or store any of the goods of its shippers, but if so no reason is perceived why the contract of the lessee to take the risk of and to hold the defendant harmless from any damage to such property from fires caused by its locomotive engines would not have been valid. It is thus made plain that a railway company does not assume by a contract like the present to relieve itself of any of its essential duties as a common carrier or as a qtnsi public corporation. The.contract leaves it under the same duties and liabilities to which it was subject before it was made. It is bound by the same diligence, fidelity and care after the lease containing such contract is executed that it would have been required to exercise if no such contract had been made.

We therefore conclude that it was not a violation of any rule of public policy for Woodson, the lessee, to agree under the circumstances stated that if he was permitted to put his elevator and warehouse upon the right of way of the defendant, and to use the same thereon for storage purposes, the duties and liabilities of the latter to him and to the public should remain the same as they were before the lease was made and should not be increased by any additional burden. By reference to Griswold v. R’y, 57 N. W. Rep. 843, and Ins. Co. v. R’y, 70 Fed. Rep. 201, and Stephens v. R’y, 109 Cal. 86, it will appear that the reasoning of those cases, as far as deemed applicable, has been adopted in this.

discrimination statméght >ales' The plaintiff further contends the clause in said contract which provides that in consideration of the matters and things set forth in a clause thereof the defendant agreed to transport all grain in bulk which might be to it delivered by the lessee at said warehouse in quantities not less than one full car load at one time to other stations upon its railroad, at a rate which should be less by one cent per one hundred pounds for grain in bulk than the charges made by it to transient shippers who deliver grain to it by wagons or otherwise, is a violation of sections 2620, 2630 and 2632, Revised Statutes, and is therefore void. The question is, does this clause of the contract just referred to fall within any prohibitions of the statute, for if so it must be held invalid. “Any act which is forbidden eithqr by the common law or the statutory law — whether it is malum in se or merely malum prohibition-, indictable, or only subject to a penalty or forfeiture; or however otherwise prohibited by statute, or the common law — can not be the foundation of a valid contract; nor can anything auxiliary to, or promotive of, such act.” Bishop on Contracts [Ed. 1887], sec. 471; Friend v. Porter, 50 Mo. App. 89; Hatch v. Hanson, 46 Mo. App. 323; Chouteau v. R’y, 22 Mo. App. 286.

But we do not think the recitals in the clause of the lease now in question are subject to the plaintiff’s objection. The discrimination of a railway company between shippers over its line that is prohibited by said sections 2620 and 2630 is fully defined in section 2632, and the only effect of the latter seems to be to define the scope and meaning of the former. These sections are of course in pari materia and must be read together in order to understand the full purpose of the legislature in enacting them. The latter section provides that if the railway company shall “charge, demand, collect or receive from any person or persons, firm or corporation, a greater or less compensation, for any service rendered in the transportation of any kind of property upon such railroad within this State than it charges, demands, collects or receives from any other person, persons, firm or corporation for doing for' him or them a like service in the transportation of a like kind of property under substantially like circumstances and conditions, such common carrier shall be deemed guilty of unjust discrimination, which is hereby prohibited and declared unlawful.” The contract contained in the lease in question is not shown to have called for any greater or less compensation from the lessee than was to be called for from others by the defendant for “a like service * * * , under substantially like circumstances and conditions. ”

. From the face of the lease it very clearly appears that the service for which the rebate was to be allowed the lessee, and those claiming under it, was not the same nor as great as that afforded to the ordinary transient shipper. The transient shipper furnishes no warehouse for ’the storage nor any supervision of his grain nor the labor necessary to handle the same but 'these are supplied wholly by the carrier. Not so with the lessee of the carrier who constructs his own storehouse and also supplies at his own expense the supervision and labor necessary for the care, storage and loading of his grain, the carrier thereby escaping much expense that it must incur in the case of transient shipper. The exact provision of the lease complained, of is that the defendant will carry for the lessee “in quantities not less than one full ea/r load at one time, to other stations upon its railroad, at a rate which shall be less by one per cent per one hundred pounds for grain in bulk, than the regular tariff price of said first party, or than the charges made by said first party to transient shippers who deliver grain to said first party by wagons or otherwise.” • It is manifest from the provisions of the lease, that the 'lessee was to do a large business, and be eu regular and constant shipper over the road of the defendant. The rebate to be allowed was not “one per cent per one hundred pounds” below what was charged like shippers who provided the warehouses and labor at their own expense to care for and handle the shipments, but the. rebate was one per cent per one hundred pounds below what the freight cost “transient shippers,” a totally different kind and class of shippers, who saved the defendant none of the expense of caring for or handling their shipments. We can not for these reasons think the contract should be held invalid on the grounds of unlawful discrimination.^

IjieNnam:Rsubfd iSsIgument01 It will be remembered that Woodson, with the assent of defendant, made an assignment of the lease to Bridges, who was then a director of the Meade Mercantile Company. Bridges conferred with the directors before he procured the assignment. The assignment was procured by him with its knowledge and for its benefit. After he procured the assignment he turned over the possession of the elevator and warehouse to it. He was employed by it to manage and operate the same. It paid the lessee the rent and received of the defendant the rebates. It thereby became to all intents and purposes as much the sublessee of the property as was Bridges. It was clearly estopped to assert as against either the defendant or Woodson that it was not in possession under an assignment of the lease. On the .other hand the defendant was equally estopped to deny its assent to the assignment. The defendant recognized and treated the Meade Mercantile Company, as an assignee of the lease. How could the Meade Mercantile Company, after entering into the use and enjoyment of the property under the lease; after receiving from the defendant the rebates provided in the lease; and after having paid to Woodson the monthly rent agreed by Bridges to be paid to him for the property during the term of the sub-letting, be heard to claim 'that it was not an assignee of the lease or that it did not occupy identically the same relation to the defendant that Woodson and Bridges did, even though there was no formal assignment of the lease shown in evidence. It seems obvious to us that by reason of the facts already adverted to that the Meade Mercantile Company was the successor to all the obligations arising on the original lease between the defendant and Woodson and must be so regarded in disposing of the present controversy. Light v. R’y, 89 Mo. 108; Thomas v. R’y, 82 Mo. 538; Stone v. Pennock, 31 Mo. App. 544; Imboden v. Ins. Co., 31 Mo. App. 321; Nolen v. R’y, 23 Mo. App. 353; Herman on Estop., see. 1039; Bigelow on Estop. [4 Ed. ] 456, and note 4 thereto. The lease contract was not therefore, as the plaintiff insists, res inter alios acta. It follows from the foregoing considerations that the rights and duties of the Meade Mercantile Company and the defendant must be ascertained and determined by the provisions of the lease.

If the plaintiff in this action, as it contends, stands in the shoes of the Meade Mercantile Company, it is certainly in no better situation than the latter company would be were it suing to recover for the loss. Ins. Co. v. Water Works Co., 42 Mo. App. 118; Ins. Co. v. Transportation Co., 117 U. S. 321. Since the contract for exemption contained in the lease was valid it afforded defendant a complete defense to any action brought against it by either the Meade Mercantile Company or the plaintiff to recover damages for the loss of the property covered by the policy of insurance issued by plaintiff.

In the view of the case taken by us it has become unnecessary to notice the other points suggested and discussed by the defendant’s counsel in his brief.

The judgment will be affirmed.

All concur.