Railroad v. Cabinet Co.

104 Tenn. 568

• Court: Tennessee Supreme Court
• Decided: May 21, 1900
• Status: Published

Opinion

Cai.dweui., J.

This is an action of damages by a shipper against a common carrier.

On the 26th of February, 1S98, the Southern Seating & Cabinet Company, of Jackson, Tenn., entered into a contract with W. A. R. Goodwin, rector to manufacture and put up certain pews in St. John’s Episcopal Church, at Petersburg, Ya., for the sum of $524. The contract contained a provision that the company “shall forfeit $10 per day for every day it fails to have pews in place after May 6, 1898,” but that provision was subsequently so changed as to waive the forfeiture if the pews should arrive at Petersburg by the third day of that month.

The pews were manufactured, and by the contracting company delivered to the Illinois Central Railroad Company, at Jackson, Term., on the 20th of April, 1898, for shipment to the purchaser at Petersburg, Ya.

The representative of the manufacturing and selling company at the time of delivering the pews for transportation, said to the railway agent: “I wish you would forward this car as quick as you can; this is a penalty contract.” The railway agent expressed assent to the request, and promptly executed a bill of lading, properly stating the name of the consignee and the destination of the pews. Nevertheless, the. car remained in Jackson two days after the issuance of the bill of lading, and when it left, the waybill, through some inexcusable mistake of the railway agent, called for Parkersburg, W. Va., as the destination of the pews. The car reached the latter point on the 27 th of April, and there remained until the 13 th of May, when, by direction of - the defaulting carrier, it was started to Petersburg, Ya., its true destination, where it arrived on the 21st of May — twenty-four days later than it would probably have arrived but for the misdirection in the waybill, and eighteen days after the contract limit for arrival of the pews had expired.

The purchaser accepted the pews, but in doing so required a deduction of $180 from the contract price, and paid only the balance of $344. He says he deducted that sum, not upon the mere ground that he had the right to do so under the forfeiture clause of the contract, but because he considered it “just compensation” for the inconvenience . and expense resulting from the delay, and for the damage done to the pews in the transportation, and that he would not have received the pews in their damaged condition and after he had suffered the inconvenience and expense of the delay without that deduction from the contract price.

In December, 189S, the Southern Seating & Cabinet Company commenced this action against the Illinois Central Railroad Company before a Justice of the Peace, whose warrant stated the nature and ground of suit, as follows: “Eor damages caused by the delay in shipping and delivering certain goods consigned by the plaintiff to W. A. R. Goodwin, Petersburg, Va., April 20, 1898, on account of which delay the said goods were damaged and the plaintiff damaged in the sum of $180, forfeited by it tinder its contract for the delivery of said goods, of which the defendant had notice.”

The Justice of the Peace pronounced judgment in favor of the plaintiff, and the defendant appealed to the Circuit Court, where verdict and judgment were rendered for the plaintiff for $180, with interest. From the latter judgment the railway company has appealed in error to this Court, and here assigned several objections to the proceedings below, on account of which a reversal and new trial are sought.

In the course of his charge the trial Judge instructed the j ury as follows:

“If the goods were shipped and it was the fault of the railroad company in making a misdirection or missipment that caused the delay after the 3d day of May, 1898, and if the plaintiff in this case, through its agents and representatives, notified Mr. Peavis or Col. Dinkins, or both of them, and they were representatives of the railroad company in receiving and shipping the goods, that it was a forfeit contract, that it was a penalty contract, and they received it with the knowledge that there was a penalty attached to the contract, then it would have been the duty of the railroad company to have shipped the goods, and if it accepted them that way and was guilty of negligence in not getting them to Petersburg in tlie time stated in the contract, and it had ample time to have done so, then it would be liable for the damages the plaintiff has sustained because of the penalty contained in the contract. Now, the burden of proof is upon the plaintiff to show that the railroad employees did receive the goods for the purpose of shipping them, had notice of the penalty, and it was a penalty contract; if it. did have notice of the penalty contract, and the goods were accepted by it to be shipped, and it was the fault of the railroad company that they were not delivered by that date, to wit, the 3d day of May, 1898, the railroad company would be responsible for the penalty of the contract for the time the goods were not delivered, if the delay was caused by the fault of the railroad company.”

The first assignment of error is directed against that instruction, the point of the objection being that it makes the loss sustained by the plaintiff under the penalty clause of its contract with Goodwin, and not the actual injury and depreciation of the pews by the delay, the measure of the defendant’s liability.

Compensation is the primary principle underlying the law of damages; and, where one of two contracting parties breaches his obligation, he is ordinarily liable to the other party, according to the nature and purpose of the contract, for all loss suffered by him as the natural consequence of the breach.

In the case of Hadley v. Baxendale, 9 Exch., 341, where a carrier was sued in damages for negligent delay in the transportation of a mill shaft, the Court, referring to the rule for the ad-measurement of damages, said: “Where two parties have made a contract, which one of them has broken, the damages which the other party ought to receive in respect of such breach should be, either such as may fairly and reasonably be considered as arising naturally (i. e., according to the usual course of things) from such breach of contract itself, or such as may reasonably be supposed to have been in contemplation of both parties, at the time they made the contract, as the probable result of the breach of it. Now, if the special circumstances under which the contract was actually made were communicated by the plaintiff to the defendant, and thus known to both parties, the damages resulting from the breach of such contract, which they would reasonably contemplate, would be the amount of injury which would ordinarily follow from a breach of contract under the special circumstances so known and communicated. But, on the other hand, if these special circumstances were wholly unknown to the party breaking the contract, he, at the most, could only be supposed to have had in his contemplation tbe amount of injury which .would arise generally, and in the great multitude of cases not by any special circumstances, from such a breach of contract.”

This rule has been adopted in cases too numerous to mention at this time. It was quoted approvingly by this Court in McDonald v. Unaka Timber Company, 88 Tenn., 43.

.Where property is shipped to market for general sale to such purchasers as may be obtained, and the carrier unreasonably and negligently delays the transportation, the measure of damages for that default is the depreciation in salable quality and market value of the property at the place of destination between the time when it should have arrived and when it did in fact arrive (Railroad v. Hale, 85 Tenn., 69; Hutchinson on Carriers, sec. 771; 3 Wood’s Railway Law, 1607); but if the property is sold at an advantageous price before • shipment, on condition that it 'be delivered within a certain time, and ■ the carrier, with knowledge of that fact, undertakes the transportation, and, through negligence, fails to make the delivery in time, and the conditional purchaser declines to receive the property on account of the delay, the liability of the carrier is measured by the difference between the market value of the property when it arrived at the place of destination and the price at which it was conditionally sold before shipment. Denning v. Grand Trunk Railway Company, 48 N. H., 455 (S. C., 3 Am. Rep., 267); Hutchinson on Carriers, sec. 772.

The difference between the modes of measuring the carrier’s liability in the two cases is due to the difference between its obligations and the consequences of their breach. In the former case, the obligation is general, and the loss and liability are general, vliile in the latter case the obligation is special, and the loss and liability are special.

Referring to the carrier’s responsibility for breach of a special contract, by delay, a distinguished author has said:

“But if the intended use and application of the goods to be 'carried was expressly brought to the notice of the company’s servants at the time they received them, or could be reasonably inferred from the circumstances known to them, so that the special use or application might be fairly considered to be within the contemplation of both the parties to the contract, the consignor is entitled to recover the damages naturally resulting from his so being unable to rise or apply the goods, since both parties may be said to have made this the basis of the contract.” 3 Wood’s Railway Law, 1607.

The contract breached by the defendant now before the Court wap undoubtedly a special one. 'Che pews in question were manufactured after a peculiar design, for a particular church, under a particular contract, of which the defendant was distinctly notified at the time it accepted them for carriage. The contract of carriage being special, the liability for its nonobservance was likewise special, and the plaintiff was entitled to recover all damages naturally resulting from the breach, whatever the amount may have been.

The trial Judge, in that portion of the charge heretofore quoted, instructed the jury, in substance, that the proper measure of the plaintiff’s recovery, if any should be allowed, would be the penalty of its contract with the 'Consignee for the period the pews were delayed beyond the time therein stipulated as the required date of delivery, which the record shows amounted to $180, the sum actually deducted by the consignee from the purchase price of the pews. That was certainly the amount of the plaintiff’s real loss; and, in view of the notice given at the time • of the shipment, it may fairly and reasonably be assumed to be the exact extent of the injury which the plaintiff and the defendant contemplated as the natural result of so long a delay in the delivery of the pews, and, therefore, the true measure of damages recoverable for the breach.

In opposition to this view it might be said, with force and plausibility, that what is denominated the penalty clause of the plaintiff’s contract of sale was against public policy, and therefore not enforceable, and that, for that reason, the carrier. though fully informed of that feature of the contract, would not be legally responsible for the deduction made and permitted thereunder; but that suggestion, if made, could not prevail in the end; for, while contractual penalties, as such, are now rarely enforceable, either in law or equity, provisions like that in this contract, whatever called v by the parties, when deemed reasonable, as this one must be,' are, by the Courts, treated and enforced as stipulations for liquidated damages.

If the contract is for a matter of uncertain value, and a reasonable sum is fixed by the par-lies as the amount to be paid on breach, that sum, though actually called a penalty in the instrument, is recoverable as liquidated damage if the obligation be not in fact performed. Clark on Contracts, 600, 601; 1 Pomeroy’s Eq. Jur., sec. 4-40; Tennessee Manufacturing Company v. James, 91 Tenn., 154.; Kemble v. Farren, 6 Bing., 147; Jacquith v. Hudson, 5 Mich., 123; 10 L. R. A., note 826, et seq; 3 Parsons on Con., 156-7.

It is not uncommon in building contracts, to which class this one belongs, for the contractor to bind himself to pay a stipulated daily or weekly sum for delay beyond the time appointed for completion, and such sum, when reasonable — that is, not excessive — -is generally, if not universally, held to be recoverable as liquidated damages, if there be a breach. Clark on Con., 600, note; 30 Am. Rep., 31, 32. 35, note.

The enforcement of such a rule against the carrier, with full notice, cannot operate as a hardship upon him, because the sum stipulated by consignor and consignee must be reasonable to be enforceable between them, and for the same reason it must be so before it can be made the measure of responsibility on the part of the carrier. If it be unreasonable or excessive, the stipulation, however named, is a penalty, and only actual damages, to be ascertained in the ordinary way, can ,be recovered.

“According to the better opinion, the parties, even if they intended to fix upon the amount stipulated as liquidated damages, will, nevertheless, be limited to the recovery of actual damages, if the amount stipulated for is so greatly in excess of the actual daruages that it is, in effect, a penalty.” Clark on ' Con., 601; 2 Story’s Eq. Jur., sec. 1318; Baird v. Tolliver, 6 Hum., 187; 3 Parsons on Con., 157, 161; Wood’s Mayne on Damages, 203, note.

The Illinois Central Railroad Company, as initial carrier, issued a through bill of lading for the pews, and routed them 'over its own line to Louisville, Ky., and thence over that of the Chesapeake, Ohio & Southwestern Railroad Company, as ultimate carrier, to Petersburg, Ya. In the bill of lading' it limited liability for loss or damage to that line on which it should occur; but that limitation, though valid in law (Bird v. Railroad, 99 Tenn., 719) is of no avail in this case, because the injury complained of unquestionably resulted from the negligent misdirection in the waybill, made out by the initial carrier before the go.ods were started upon their journey. The ultimate carrier delivered the ‘ goods at the destination for which they were billed, in ample time to meet the terms of the contract between the consignor and ' consignee, but that was not the true destination; and hence not a compliance with the shipping contract. It may be, as suggested in argument and as implied from special instructions requested by the initial carrier and refused by the trial Judge, that the ultimate carrier received notice of the misdirection in time to have sent the goods from Parkersburg, W. Ya., to Peters-burg, Ya., sooner than it did, and thereby to have prevented some of the loss to the consignor; yet, if that were established as a fact, it would at most only fix joint liability upon the ultimate carrier, and would not lessen the liability of the initial carrier for the consequences of its negligence. No limitation can have tbe effect of relieving a carrier from responsibility for its own negligence. Bird v. Railroad, 99 Tenn., 719, and citations.

Tbe Court below peremptorily instructed tbe jury to allow interest on whatever amount tbe plaintiff should be found entitled to recover as damages, and tbe jury accordingly included in its verdict $14.31 as interest. This instruction was erroneous. The plaintiff’s demand was not within either tbe letter or tbe spirit of tbe statute (Shannon’s Code, § 3494) enumerating tbe debts that bear interest as a matter of law. Indeed, it was not for a debt at all, 'but only for damages.

None of tbe other assignments of error are well tahen.

Plaintiff may remit tbe $14.31 and have an affirmance as to the balance of tbe 'judgment, otherwise a reversal will be entered.

Accepting the alternative suggested in tbe opinion delivered in this case on a former day of tbe term, tbe Southern Seating & Cabinet Company remitted tbe item of $14.31 interest, and took an affirmance as to $180, tbe amount, of damages found below. Tbe entry thereof made on tbe minutes of the Court concludes with an adjudication of all costs against tbe railroad company; and tbe railroad company now asks tbe Court to modify tbat entry .and adjudge tbe costs of tbe appeal in error against the Southern Seating & Cabinet Company. The modification is asked upon tbe ground tbat “an appeal was necessary to get rid” of tbe effect of tbe erroneous instruction on tbe subject of interest.

Had tbe railroad company acquiesced in tbe recovery for damages and limited its appeal in error to tbe item, of interest alone, it would undoubtedly be entitled to tbe modification sought, for in tbat event it would have been tbe successful party in the fullest sense; but having brought tbe whole case up and been unsuccessful as to everything except the small item of interest, and tbat item being eliminated by release, tbe other party is successful, and, being so, is entitled to recover costs.

If this were a suit in chancery, tbe Court might, in its discretion, adjudge a part of tbe costs against each party, on tbe ground that the recovery below has been decreased here. That course, however, though often pursued in equity causes, is not allowable in a law case like tbat now before the Court.

Tbe motion to modify is overruled.