Strong v. Grand Trunk R. R.

15 Mich. 206, 1867 Mich. LEXIS 6

• Court: Michigan Supreme Court
• Decided: January 14, 1867
• Status: Published

Opinion

Cooley J.

This case presents questions regarding the proof and validity of a mercantile custom, by which an intermediate consignee is authorized to deduct from the back freight earned, any deficiency in. the cargo, as shown by a comparison of the bill of lading with the measurement of the carrier receiving it.

It appears that the plaintiff’s vessel, the schooner Swallow, took- on board a quantity of corn at Chicago, consigned to the Bank of Montreal, Coburg, and stated in the bill of lading to be 20,034-f$- bushels. This was the measurement of the elevator at Chicago, and was supposed at the time to be correct. On the delivery of the cargo to the defendants as intermediate consignees, at Sarnia, a deficiency of 205-f$ bushels was discovered, and the defendants, thereupon, refused to pay the freight upon the amount actually delivered, except subject to a deduction of the value of this deficiency; justifying their refusal upon the custom mentioned. The evidence of the master of the vessel, if trustworthy, would show very clearly that the apparent deficiency was in consequence of erroneous measurement at Chicago; and as the supposed custom makes no exception of the case where the master is not in fault, we must consider its validity on the assumption that the facts are as claimed by the plaintiff.

It may be well to see at the outset what the rights of the parties would be in the absence of any such custom, and what the changes are which it proposes to make in the law.

There can be no doubt that although the bill of lading specifies the ' amount received, it is, notwithstanding, like other receipts, open to explanation, and the carrier is at liberty to show that the actual amount which came to his hands is different from that stated: Wolfe v. Myers, 3 Sandf S. C. 7; Ward v. Whitney, Id. 399; Dickerson v. Seelye, 12 Barb. 99; Backus v. Schooner Marengo, 6 McLean, 487; Blanchard v. Page, 8 Gray, 287. And see Bilis v. Willard, 9 N. Y. 529. The qualification of this rule is where third persons have acquired rights by purchase or advance of money, based upon the statement contained in the bill of lading, and relying upon its accuracy: the extent of which qualification, and when and against whom applicable, it does not become important to discuss here, inasmuch as it is not claimed that any such rights have intervened.

Although the consignee of property is authorized to recoup from the freight earned any losses properly chargeable to the carrier, it is well settled, and indeed follows logically from the rule before stated, that he is not entitled to deduct as deficiencies any difference between the amount delivered to Mm, and that receipted by the bill of lading, where the carrier can show an error in the bill, and that he actually delivered all that he received. Bissell v. Price, 16 Ill. 408; Ryder v. Hall, 7 Allen, 456; Meyer v. Peala, 33 Part: 532; S. C. 28 N. Y 590; Sears v. Wingate, 3 Allen, 103. See for the same principle Bowman v. Silton, 11 Ohio, 303; Lee v. Salter, Palor, 163. That the carrier has a lien upon the cargo for the freight earned is not disputed; 3 Sent, 214; Clvitty on Carriers, 220; Pars. Merc. P. 212; and an intermediate consignee by whom the property is received subject to the charges, is liable to an action therefor in case of neglect or refusal to make payment. — Abbott on Shipping, 421; Canfield v. Northern R. R. Co. 18 Parb. 586.

The custom alleged, if valid, changes the .settled law in several important particulars. Firstly: It precludes the carrier, as between himself and the intermediate consignee, from explaining the bill of lading and showing any error that may have occurred in stating the quantity; and this without regard to the question of intervening equities. Secondly: It gives to the intermediate consignee the right not only to deduct the deficiencies chargeable to the carrier, but also all such discrepancies between the bill of lading and the actual amount delivered by the latter, as have resulted from erroneous measure or count, and consequently are not deficiencies in any proper or legal sense, and could not, in a suit between the carrier and the ultimate consignee, be recouped at all. Thirdly: As to any amount thus deducted, and not properly chargeable to the carrier, he is deprived of his lien upon the cargo, and if he has any remedy for it, he is obliged to resort to the personal responsibility of the party liable to him, in lieu of the security which he took into his own hands when the cargo was received. Meantime the value of the supposed deficiency is paid over to the ultimate consignee, who has no claim to it whatever if, in fact, he receives all that was consigned to him.

Before proceeding to discuss the custom upon principle, we shall examine the cases cited upon the argument, and which are supposed to have some hearing upon the question of its validity. There are several cases where it has been held to be the duty of an intermediate carrier to protect the interests of the consignee in the property carried, and where certain powers for the adjustment of damages actually sustained have been recognized as vested in him. In Bissell v. Price, 16 Ill. 414, it is said that, “While the warehouseman or carrier is authorized to advance for, and on account of the consignee, previous charges upon the goods, he is bound to act in good faith towards, and to carefully watch the interests of the owner, whoever he may be. He is bound to do this to the same extent that a prudent man would were he present, and acting for himself. He must see that the goods are in apparent good order, as described in the previous bill of lading, or, if not, use reasonable exertions to ascertain how they became damaged, and the party liable therefor. So, also, to the same extent he must see that the previous charges are reasonable before he is authorized to pay them.”

There is nothing in this indicating that an intermediate carrier is or may be vested with greater powers than those possessed by the owner himself; or that the prior carrier, in dealing with him, can be subjected to demands against which he would have a complete defense as between himself and the ultimate consignee. On the contrary the court hold the intermediate carrier to be vested, as respects the property carried, only with certain powers of the owner, and bound on his behalf to exercise them with diligence and good faith.

The facts in The Fitchburg and Worcester R. R. Co. v. Hanna, 6 Gray, 539, were, that several carriers, whose operations constituted one continuous line of transportation from Fitchburg to New York, and who, by mutual agreement divided between them, in certain specified proportions, the freight earned upon the whole route, had carried property for the defendant, and in a suit brought by one of them to recover the charges, the defendant sought to recoup damages to the property, occurring somewhere on the route, but not shown to have occurred, upon that portion over which the operations of the plaintiff extended. The court held the recoupment allowable, but at the same time said:■ “If this service had been performed, and no special agreement had been made in relation to the terms upon which it should be done, each of the several parties who contributed towards it would have been entitled to a reasonable compensation, in proportion to the service which they respectively rendered, and would have been liable only for such failures and delinquencies as occurred on their own portions of the line.” It is obvious that the facts as stated have no analogy to those now before us, while the general rule stated by the court, in the absence of any joint undertaking, is the one which the defendants in this case seek to avoid by proof of the custom.

The case of Davis v. Pattison, 24 N. Y. 317, which was supposed on the argument to be most directly in point, does not seem to us, on careful' examination, to be even analogous. It appeax-s that one Davis received at Oswego three thousand seven hundred bushels of wheat to be carried by canal and delivered to the defendant as intermediate consignee at Troy. He delivered all but thirty bushels, which he either converted to his own use, or lost. The defendant offered to pay the freight if Davis would deduct the value of this deficiency; but he refused to do so, and action was brought to recover the whole amount. The court held that the defendant had a right to make the deduction. Now it is quite evident that that ease differs from the present iix all its legal bearings. It was not claimed there that any custom had changed the law of carriers applicable to the case, but tbe defense was rested upon general principles. It does not appear from the report that Davis disputed the deficiency being properly chargeable to him, and it was, therefore, clearly a case where the deduction could have been made, by way of recoupment, had the action been brought against the owner himself. And it was not held or intimated in that ease that the carrier was liable to have deduction made for deficiencies for which, as carrier, he was not insurer against, or that the intermediate carrier had greater privileges in respect to deductions than were possessed by the owner. On the contrary, the whole reasoning of the case shows that the court considered the intermediate consignee as standing, in respect to the suit, in the place of the owner; bound to protect his interest, and entitled to all his defenses, but no more. In short, this case decides that a carrier suing to recover freight may collect the amount earned by him, less any loss occurring to the property while in his hands and properly chargeable to him as carrier; and the question whether, by custom, he might be charged with other losses, or with supposed deficiencies, not existing in fact, was not before the court, and there was no expression of opinion upon it.

The case of Canfield v. The Northern R. R. Co. 18 Barb. 586, is more nearly like the present in its facts than any other which has been reported, and it was there held that the intermediate carrier had no right to deduct from the freight earned, the amount of a discrepancy between the bill of lading and the amount delivered to him, where it was shown that the discrepancy occurred by mistake in stating the amount in the bill of lading. But as the defense there was not rested on evidence of usage, the case can not be considered an authority on the point now involved, and we have been unable to find any other that bears very directly upon it. We must, therefore, consider the custom in question upon general principles, and see whether it is capable of being sustained by them.

There are many customs which, to a certain extent, are convenient, but to which the law does not allow a compulsory force, either because they have never been generally acquiesced in, or because, to give them general application, would in some cases violate fundamental principles and rights. The law has established certain rules which are to test the legal validity of a custom; and we shall now examine the one alleged, in the light of the standard thus afforded.

1. Before any custom can be admitted into the law, it must appear that the usage has been general and uniform, the custom peaceably acquiesced in, and not subject to contention and dispute. — Broom's Legal Maxims, (5 Am. Ed.) 828 ; see Oelricks v. Ford, 28 How. 49. It is not very clear that the evidence in this case establishes any such custom. The testimony of witnesses shows that the questipn of shortage is frequently the subject of dispute. Capt. JLlsie says: “The custom is sometimes acquiesced in by the captains of vessels, and sometimes disputed. If the shortage is small, they generally pay it; if it is large, they generally dispute it, and leave it to be settled by the owners.” Mr. Stephenson, the general freight agent of the defendants, says: “ I have known captains refuse to pay the shortage, but we always have the freight in our own hands before we settle. We invariably refuse to pay the captains until the two principals are agreed.” Capt. Montgomery, after testifying that the custom is universal, says: “ I have known the question of shortage disputed at least a hundred times.” Several other witnesses give evidence that the custom is general, but the impression which the whole evidence leaves upon our minds is, that the deduction of shortage is submitted to when the carrier concedes that it is his fault, or where the amount is not beyond what is usual and incident to transportation ; but that it is disputed in other cases. A custom varying the common law must be clearly proved; but we do not find clear evidence in this case that ship owners concede their liability to have deductions made from freight earned, for the value of property receipted for by mistake. That the railway companies assert the right, is fully shewn; but it must be generally assented to, as well as asserted, before the custom can be established.

2. Another essential to a good custom is, that it be certain. The evidence of usage in this case does not inform us whether, under it, the carrier is to have any remedy for the freight deducted, and if he is, whether that remedy is left to common law rules, or is provided for by the custom itself. We will not assume that the carrier is to be deprived of all remedy, for that would be so manifestly unjust and unreasonable that it could not be seriously urged that the law should sanction it. And if he has any remedy, it must be either, 1. Against the consignor; or, 2. Against the intermediate consignee; or, 8. Against the owner or ultimate consignee. And it may be well to examine the grounds upon which either of the three may be held liable, as well as the reasonableness of remitting the carrier to a remedy against one, rather than the others.

If the consignor was not himself the owner of the property, and had made no express contract with the carrier either for the payment of freight, or for the delivery of any specific quantity, and that which was delivered was, by the bill of lading, deliverable to the consignee on payment of charges, the consignor could not be liable over to the carrier in a case like the present, except by the application of some rule unknown to the common laws — Pars. Merc. L. 352 and note; Chitty on Carriers, 208; Barker v. Havens, 17 Johns. 234; Drew v. Bird, M. and M. 156. It might perhaps be suggested that the consignor, having undertaken to ship a certain quantity to the consignee, any payment to the latter for deficiencies may be recovered for, as a payment made to the use of the former; but any. liability upon this theory must fall to the ground, if, in fact, the consignor was under no contract obligation to forward a specific quantity to the consignee, or if, being under such obligation, he would still be in time under his contract to forward the balance afterwards. And while the consignor is still entitled to fulfill his contract, by delivery of the grain instead of paying its value, we do not perceive how any third party can be authorized, in correcting an error in part performance, to compel the consignee, who is entitled to grain, to accept, instead, its price at a distant point. Such a case would require ratification by both the consignor and the consignee before the former could be made liable to the carrier; and in the absence of ratification, the latter must seek his remedy elsewhere.

That the consignee or owner would be liable, where the amount deducted from the freight by the intermediate carrier had been forwarded to and received, by him, there can be no doubt. If he receives all the property shipped to him, a sum of money paid in addition, for a supposed deficiency not existing in fact, is paid without any consideration, and he can have no claim to retain it. But if this alleged custom is legal and compulsory, and the carrier is remitted to the owner of the property for his remedy, we shall have heie, perhaps, the first instance in' the law where a person is required, by legal compulsion, to make a payment, or submit to an exaction, and then empowered immediately to sue and recover it back from the very person to whose use he has paid it.

But while the owner would be liable, in *such a case, after the money has been paid to him, it is equally clear that, at t.he common law, the intermediate consignee would, also be liable, at least until he had paid over the money, or in some manner changed his legal position relative to the owner, with respect to the money, after making the deduction. His position would be that of an agent to whom money had been paid for a principal not entitled to it; and that an action is maintainable against 'the agent under such circumstances is well settled. — Parker v. Bristol & Exeter Railway, 7 E. L. & E. 528; Snowden v. Davis, 1 Taunt. 359; Edwards v. Hodding, 5 Id. 815; Hearsey v. Pruyn, 7 Johns. 179; La Farge v. Kneeland, 7 Cow. 456; 1 Pars, on Cont. 79; Smith's Mer. L. B. 1, C. 5, § 7. And treating this custom as perfectly valid, we do not see why this action is not properly brought against these defendants, if the deduction was made under protest, and they had not accounted with the owner of the corn when suit was commenced. Customs of this description are to be strictly construed, and we are not to assume that they change the common law beyond what expressly appears. — Broom's Legal Maxims, 5 Am. Ed. 829. Assuming that defendants had the right to make the deduction at the outset, but that this does not deprive the plaintiff of all remedy, we have only to see against whom the common law would give that remedy; and we can not doubt that these defendants would be liable, either as consignees who had received property subject to charges, or as agents who had exacted money for a principal who has no right to retain it. The anomaly of allowing them to make the deduction, and then have it recovered back from them, is no greater than to allow a similar recovery from the ultimate consignee on whose behalf the deduction is made.

But we do not propose to place our judgment upon this ground exclusively, as we are clearly satisfied the custom itself can not be enforced in the law.

3. All customs must be reasonable. If the one in question were confined to vesting in the intermediate consignee the same power to refuse to pay freight in cases in which the owner would be justified in doing so, it would not exceed the reasonable province of a mercantile usage. But it goes very much further when it makes the bill of lading conclusive in favor of the intermediate carrier, and allows him to make deductions for supposed deficiencies, not in fact existing, which the owner himself would not be permitted to make. And it is specially unreasonable if it deprives the carrier of his lien, and remits him to a personal responsibility which he never relied upon, whether he is given a remedy in all cases against the consignor, or required to follow the money to the hands of the owner, who will usually reside at a point distant from the place where the exaction was made, and frequently in a foreign country. That such a custom may be convenient, and operate justly in most cases, is very true, but it can only rest for its observance on the consent of parties.

The courts are frequently required to hold a custom unreasonable and void, notwithstanding strong reasons urged in favor of it, as a rule of convenience, by the class by whom it has been adopted, and where the hardships in any case would not be greater than in this. The case of Leuckhart v. Cooper, 3 Bing. N. C. 99, is an illustration of such cases. The usage given in evidence there was, for public warehousemen in London to have a general lien on all goods from time to time housed with them for and in the name of the merchants or other persons by whom they were employed, for all moneys or balances due from such merchants or persons for expenses incurred about goods consigned from abroad, and irrespective of the ownership of the goods upon which the lien was claimed. In Bryant v. Commonwealth Ins. Co. 6 Pick. 131, a custom for the master of a vessel stranded, to sell the cargo without necessity, was held void. In Bowen v. Stoddard, 10 Met. 380, a custom among merchants of New Bedford and Fair-haven, engaged in the whaling trade,' to accept the bills of their masters, drawn for supplies furnished abroad, failed to receive the sanction of the court, on the ground that a usage could not be reasonable which put at hazard the property of the owner at the pleasure of the master. And see Jordan v. Meredith, 3 Yates, 318; and Spear v. Newell, referred to in 23 Vt. 159. Some of the cases cited were more liable to work injustice generally, than the present; but as a custom, if good at all, is compulsory on all cases falling within it (1 Bl. Com. 78), we are not at liberty to regard it exclusively in the light of its effects in the majority of cases. Special customs are so liable to create confusion of legal rules in directions not contemplated in their adoption, that they are admitted into the law with great reluctance; and it is not often a hardship to parties to reject a custom, so long as they are left free to make their own bargains, and can incorporate it in their contracts if they see fit to do so.

We have not deemed it necessary to consider how far, if the custom were certain and valid, an adjustment between the two carriers for an actual loss or conversion could be binding on the owner in the absence of ratification by him; or how far a similar adjustment for a supposed deficiency which did not exist at all, could bind either the consignor or the consignee. It is sufficient that there are in the usage elements which prevent its being accepted in the law as a compulsory custom. We think the circuit judge erred in holding it valid, and the judgment. must be reversed, and judgment entered for the plaintiff in this court for the amount claimed, with interest.

The other Justices concurred.