Hays v. Western Union Tel. Co.

48 S.E. 608, 70 S.C. 16, 1904 S.C. LEXIS 154

• Court: Supreme Court of South Carolina
• Decided: October 4, 1904
• Status: Published

Opinions

The opinion of the Court was delivered by

Mr. Justice Woods.

The plaintiffs, R. M. Hays & Brother, were dealers in horses and mules at Greenwood, S. C. A. C. Hays, the junior partner, was sent to the St. Eouis stock market with the understanding that he should purchase only after he had telegraphed prices and received instructions from his senior, R. M. Hays. On January 1, 1901, A. C. Hays delivered to the defendant, Western Union Telegraph Company, in St. Louis, for transmission to R. M. Hays at Greenwood a telegram in these words: “Fourteen half hands, ninety-five; fifteen hands, one hundred and five; fifteen half hands, one hundred seventeen fifty; pair for self, sixteen hands, two sixty; all little less quality than before.” As delivered to R. M. Hays the telegram read 'one hundred and seven fifty, instead of one hundred and seventeen fifty, as written; and R. M. Hays was thus led to believe that mules fifteen and one-half hands high could be bought for $107.50 instead of $117.50. Acting on this impression, he telegraphed his partner ff> buy twenty-four mules of that size. R. M. Hays testified he was induced by the price to purchase mules of fifteen and a half hands, instead of the cheaper mules of fifteen hands, and that he could have sold in Greenwood the cheaper mules at about the same price, the market price there for the two classes of mules' being about the same. The plaintiffs claimed of the defendant damages of $10 for each of the twenty-four mules purchased, being the difference between the price stated in the telegram as delivered and the price actually paid.

In sending the messages, plaintiffs agreed to the printed contract: “That the company will not be liable for damages or statutory penalties in any case where the claim is not presented in writing within sixty days after the message is filed with the company for transmission.” The claim was not presented in writing until more than sixty days had elapsed.

The defendant moved for a nonsuit; first, .because there was no' proof of any direct loss to' the plaintiffs arising from the mistake of transmitting the telegram, but only of loss of profits; and, second, because plaintiffs did not present claim in writing within sixty days after the filing' of the message for transmission, as stipulated in his agreement. The refusal of the motion for a nonsuit is made the first ground of appeal.

1 In Howard v. Stilwell etc. Manufacturing Co., 139 U. S., 199, 35 L. ed., 147, the Supreme Court of the United States, after stating the rule that contingent or remote profits are not recoverable, says: “But it is equally well settled that the profits which would have been realized had the contract been performed, and which have been prevented by its breach, are included in the damages to be recovered in every case where such profits are not open to the objection of uncertainty or of remoteness', or where from the express or implied terms of the contract itself, or the special circumstances under which it was made, it may be reasonably presumed that they were within the intent and mutual understanding of both parties at the time it was entered* into.” The general doctrine is well expressed in Griffin v. Colver, 69 Am. Dec., 718 (N. Y.) : “The broad general rule in such cases is that the party injured is entitled to recover all his damages, including gains prevented as well as losses sustained; and this rule is subject to' but two conditions : the damages must be such as may fairly be supposed to have entered into' the contemplation of the parties when they made the contract — that is, must be such as might naturally be expected to follow its violation; and they must be certain, both in their nature and in respect to the cause from which they proceed.” See, also, Jenkins v. Railway Co., 58 S. C., 373, 36 S. E., 703. The principle thus clearly stated is generally recognized, but there is often great difficulty in its application. In the case now under consideration, the telegram which defendant undertook to transmit indicated on its face the purpose to give information of the price of live stock by size, for the word “hands,” as a term of measurement, is not usually applied otherwise. Such a message also gives notice that it will be used as a basis of business action or non-action, and that loss or profit is liable to result. Indeed, the sole purpose of such telegrams is obviously to make profit by purchase and sale, and this purpose was within the understanding of the plaintiffs and the telegraph company when it undertook to deliver the message. Accordingly the rule as to telegraph companies is thus stated in 27 A. & B. Ency. Law, 1069 : “When a message announcing prices, sent in contemplation of a trade, is erroneously transmitted, the party injured through acting upon the erroneous message may recover the amount of his actual loss caused by the decrease in the price he obtained, or, in case he is a purchaser, the increase in price he is obliged to pay in consequence of the error.” Western Union Telegraph Co. v. Dubois, 128 Ill., 248, 15 Am. St. Rep., 109.

These views are not inconsistent with Sitton v. McDonald, 25 S. C., 68, where the profits claimed were not in the contemplation of the parties; nor with Mood v. Telegraph Co., 40 S. C., 524, 19 S. E., 67, where the special damages were held not sufficiently alleged; nor with cases like Western Union Telegraph Co. v. Hall, 124 U. S., 444, 31 L. ed., 479, where there was failure to deliver the telegram and hence no purchase based thereon, leaving it entirely conjectural whether the plaintiff would have purchased if the tele gram had been delivered and would have subsequently sold on the rising market.

Here there was evidence of an actual purchase on the faith of the telegram, and an actual loss of a profit which would have been made if the telegram had been correctly transmitted.

In Wallingford v. Telegraph Company, 53 S. C., 410, 31 S. E., 275, the facts were entirely different, and that case is applicable only by analogy. There the defendant demurred to a complaint for damages, which alleged sale of a carload of mules would have been directed by one partner in answer to a telegram from' another stating offer of purchase, if the telegram had been delivered; whereas, by reason of the failure to deliver the telegram, the firm was forced to hold the mules for some time at considerable expense, and then to sell for less than the price mentiond in the telegram: The mules were at Sheridan, Indiana, and the undelivered telegram related to an offer in that market. The Court said: “The measure of damages in such a case as this is the difference between the market value of such mules on the same terms at the time the message should have been delivered, and the price offered, in case such market value was less than the price offered. By market value is meant the price that could have been obtained in open market on fair competition on similar terms at Sheridan, Indiana, or, if there was no market price there, at any convenient market for mules, where there was at the time a market price.” It is not necessary that the plaintiff should bring home to the defendant knowledge of the market conditions. In the case now under consideration, the market price of the mules in St. Bouis, given in the telegram as delivered, was $10 less for each mule than the actual market price in St. Louis which plaintiffs had to pay. There was evidence to the effect that plaintiffs would not have bought the mules they did buy if the telegram had been correctly transmitted, but would have bought the smaller mules at a price $10 lower for each, which would have answered the same purpose in the conduct of the plaintiffs’ business, as they were worth in the Greenwood market, where they were to be sold, as much as the larger mules. This means that the plaintiffs paid out $240 on the faith of the telegram, and that they derived no substantial profit or advantage from the payment of this sum. Therefore, whether we regard the effect on the plaintiffs as a loss of profit, or the fruitless expenditure of money on the faith of the telegram, the result is the same. The difference in the price paid and the price stated in the telegram, as delivered was, under the facts of this case, the true measure of damages.

The nonsuit could not have been granted on the second ground, because the plaintiffs had the right to' prove in reply waiver or estoppel as to the stipulation that the claim should be presented in writing within sixty days. Copeland v. Insurance Co., 43 S. C., 26, 20 S. E., 764.

The charge of the Circuit Judge on the subject of profits was in accordance with the views above expressed in considering the motion for nonsuit, and was, therefore, not erroneous.

2 The Circuit Judge refused the motion to direct a verdict made on the ground that it was affirmatively proved that the claim had not been presented in writing within sixty days, and that there was no' evidence of waiver. The jury were instructed that the contract requiring the claim to be presented in writing within sixty days was valid, and they were left to decide whether there was sufficient evidence of waiver of the stipulation. The question is, whether there was any evidence of waiver, for if there was no such evidence the jury should have been instructed to find for the defendant.

Waiver is a voluntary relinquishment of a known right, and it does not require a new contract upon consideration to be effectual against the stipulation that the claim should be presented within sixty days. Kingman v. Insurance Co., 54 S. C., 599, 32 S. E., 762.

The transactions relied on as constituting’ waiver were altogether between the plaintiffs and Calhoun, the agent of the defendant at Greenwood, and hence it is necessary to determine how far the defendant should be bound by his course of conduct. A mere local telegraph operator whose duty is confined to the receipt, delivery and transmission of messages, cannot bind his principal by waiving its rights as to claims presented against it. Railway Co. v. Brown, 24 S. W., 918 (Texas); 13 A. & E. Ency. Law, 392; 4 Elliott on Railroads, sec. 1524. This is in accord with analogous cases in this State. Petrie v. R. Co., 27 S. C., 63, 2 S. E., 837; Garrick v. R. R. Co., 53 S. C., 448, 31 S. E., 334. In this case, Calhoun describes himself as “manager of the Western Union Telegraph Company at Greenwood.” While too much importance should not be attached to an official designation, he testifies to the important fact that the company entrusted to him the duty and responsibility of getting up all possible information in such cases. After this claim was presented in writing', the company corresponded with him about it, but gave no special instructions to' obtain further information. This correspondence furnished ample opportunity for the company to notify him' not to exercise his usual duty of obtaining additional information from the plaintiffs. In the absence-of such instructions, Calhoun was fully justified in acting on his general authority to seek information as to the merits of the claim as agent of the company, and defendant will be chargeable with the result of his action in that regard.

Waiver of contracts of forfeiture similar fe> this have been placed on several different grounds: (1) If some statement or proof has been furnished indicating the nature and grounds of the claim within the time prescribed, good faith requires notice of the defect relied on, so that it may be remedied in time, and failure to give such notice is waiver of the defect. McBryde v. Insurance Co., 55 S. C., 589, 33 S. E., 729; Davis Shoe Co. v. Kittanning Insurance Co.,21 Am. St. Rep., 904; Rheims v. Standard Fire Insurance Co., 20 S. E., 670 (W. Va.) (2) The party to be charged waives the forfeiture if, with knowledge of all the facts, he requires the claimant to do some act or incur some trouble or expense inconsistent with the position that the contract had become inoperative in consequence of the breach of its conditions. Madsden v. Phoenix Fire Ins. Co., 1 S. C., 24; Kingman v. Insurance Co., 54 S. C., 603, 32 S. E., 762; Trippe v. Provident Fund Society, 22 L. R. A., 432 (N. Y.); Hudson v. Northern Pacific Ry. Co. (Ia.), 54 Am. St. Rep., 550. In this proposition there is also the element of estoppel, and it is applicable to all contracts for forfeiture. (3) Where the statement or proof is presented after the time limited by the contract, and the claimant thereafter does nothing, and incurs no expense or trouble in consequence of any demand of the party to; be charged, yet waiver of the form of the claim and of the time limit will be implied, if the statement or proof is retained and considered on its merits without notice that the time limit, or a lack of written demand in proper form, will be relied on. McBryde v. Insurance Co., 55 S. C., 593, 33 S. E., 729; Western Union Telegraph Co. v. Stratemeier, 32 N. E., 871 (Ind.); Illinois Central R. R. Co. v. Bogard, 27 South., 879 (Miss.); Wabash R. R. Co. v. Brown, 39 N. E., 273 (Ill.); Commercial Assurance Co. v. Hocking, 115 Pa. St., 407, 2 Am. St. Rep., 562.

It is to> be borne in mind that stipulations as to the form of such claims and the time within which they shall be presented, do not relate to the merits. They do not affect the consideration or condition upon which liability or risk is assumed, nor are they contracts of exemption from particular risks or liabilities. These things, the consideration, the exemption from' liability, and the conditions of liability, form the very basis of the contract and are of its substance, and it is not reasonable to suppose known rights as to them will be lightly relinquished. Therefore, in many such cases waiver is based on the fact that the claimant has changed his position as a result of the conduct of the party to be charged. In this view, it was held in Joye v. Insurance Co., 54 S. C., 375, 32 S. E., 446, that the promise of the president of an insurance company to pay the loss did not constitute waiver, as it was followed by another letter, denying liability because the consideration of the policy had not been paid, no change in the condition of the insured having taken place in the meantime. On the contrary, provisions as to the form of claims and the time of presentation are intended only to secure the orderly conduct of the business of the company by giving it an opportunity to investigate while the facts may be ascertained, and hence any indication given to the claimant of its election to consider the claim- on its merits will be regarded evidence of waiver.

There was evidence here that before the expiration of sixty days, the plaintiffs notified defendant’s agent and manager at Greenwood of the loss, and that they would hold the company liable unless it should turn out that Calhoun, the Greenwood ag'ent, had made a mistake. In these circumstances, long after the verbal notice, and when the telegraph company had had the written claim in hand eight or ten days-, Calhoun, on behalf of the company, sought of the plaintiffs further information about the merits of the claim. The evidence does not disclose any expression of intention to claim- the time limit during these negotiations or at any time until the answer was filed. The failure of the defendant to- object that the first notice was- not in writing, its subsequent receipt and retention of the written claim without objection after the time had expired, and the request for further information as to the merits while it had the written claim in hand, taken together, furnished evidence of waiver sufficient to; go to the jury.

Under the views above expressed as to the scope of the duties and responsibilities imposed by defendant on Calhoun, its Greenowod agent, it was manifestly competent for the plaintiffs to prove the notice and presentation to- him- of the claim, and his demand for information concerning it.

The judgment of this Court is, that the judgment of the Circuit Court be affirmed.