Cyclopedia of Commerce, Accountancy, Business Administration, v. 03 (of 10)

by American School of Correspondence

CARRIERS

256. Carriers Defined. Carrier is the term applied to individuals or companies engaged generally or specially in carrying goods or passengers from place to place. The business of carriers has grown rapidly with the development of this country. The business of steamboat, railway, express, and electric package companies forms an important part of present day affairs. Carriers are usually classified as common or private. Both common and private carriers may carry either passengers or goods. Carriers of passengers are discussed in a separate chapter.

257. Common Carriers of Goods. A common carrier of goods is one who represents himself as engaged in the business of carrying goods from place to place for anyone who desires to employ him. A common carrier of goods is liable as an insurer of the goods. By reason of this exceptional liability attaching to a common carrier, it is important to know who are common carriers. Everyone who carries goods from place to place is not a common carrier. To constitute a person a common carrier, there must be a representation on his part of a willingness to carry goods belonging to anyone who desires to employ him for that purpose. A common carrier need not necessarily hold himself out as willing to carry all classes of goods. He may limit his business to carrying a peculiar class of goods, and still be a common carrier. It may be stated as a rule that anyone who holds himself out as willing to carry goods of any person is a common carrier. Common examples of common carriers are railroad companies, express companies, public transfer companies, and electric package companies. An express company, in holding itself out as willing to carry goods of any person, is a common carrier.

If persons carry goods only on special contract, and choose their customers, they are private carriers, and are not liable as insurers of the goods entrusted to their care. Anyone may engage in the business of a private carrier, and so long as he does not hold himself out as a common carrier, he cannot be compelled to accept for carriage goods against his will, neither is he liable as an insurer of the goods. A private carrier is an ordinary bailee. If he agrees to carry for compensation, he must exercise ordinary care, and is liable for ordinary negligence. The business of a common carrier is said to be one of the exceptional mutual benefit bailments. The exceptional liability of a common carrier is discussed under a separate section.

258. Implied Liability of a Common Carrier. In early days when pirates infested the seas and stagecoach robberies were common, it was an easy matter for a common carrier to conspire with robbers and thieves, in unjustly depriving the owner of the goods entrusted to the carrier's care. By reason of the opportunity given a common carrier fraudulently to deprive a shipper of his goods, the law at an early time placed the exceptional liability of an insurer upon a common carrier. The relation between a shipper and a carrier, after goods are placed in the hands of the carrier, is one of mutual benefit bailment. The liability of a common carrier, however, is not limited to the liability of an ordinary mutual benefit bailee. Common carriers and innkeepers are said to be exceptional mutual benefit bailees. This exceptional liability is placed on them by reason of the opportunity given them fraudulently to deprive the owners of their goods, and to compel the carriers to protect the goods against robbery and theft.

A common carrier is liable as an insurer of the goods entrusted to his care. He cannot avoid liability by acting as an ordinarily prudent man would act under the circumstances in protecting and caring for the goods, but he must actually protect them or be liable to the owner for their loss or damage. There are a few exceptions discussed under a separate section. If A employs B to keep, feed, and care for his horse for six months, for fifty dollars, and B puts the horse in his stable, where it is stolen, together with B's own horse, B is not liable to A for the loss of the horse, if he acted as an ordinarily prudent man would act under the same conditions. If, however, A delivers his horse to B, a railroad company, to be shipped from Buffalo to Chicago, and the horse is stolen from B's possession, B must pay A the value of the horse. He is not permitted to say that he exercised ordinary care in the protection of the horse. This is what is meant by the exceptional liability of a common carrier. While the reason for this exceptional liability of a common carrier has largely passed away by the practical extermination of highway robbers and pirates, the exceptional liability of common carriers remains as a part of the law. This exceptional liability is not a matter of express contract between the shipper and the carrier, but is impliedly a part of the contract.

259. Exceptions to the Liability of a Common Carrier as an Insurer. A common carrier of goods is not absolutely liable as an insurer of the goods entrusted to his care. If the goods are lost, injured, or destroyed by an Act of God, by a public enemy, by negligence of the shipper, by the inherent nature of the goods, or by the exercise of public authority, the carrier is not liable as an insurer.

By Act of God is meant an inevitable act arising without the intervention or aid of a human agency. A loss of goods by a storm, by lightning, or by earthquake is an example. If the goods are lost or injured as a result of any act of the shipper, the carrier is not liable as an insurer. A carrier is permitted to adopt and enforce reasonable regulations relating to the packing and shipment of goods. If the shipper negligently packs goods so that they are injured by reason thereof, the carrier is not liable as an insurer. If the shipper improperly addresses packages, and they are lost by reason thereof, the carrier is not liable as an insurer. If the shipper accompanies live stock, and injury occurs by reason of the carelessness of the shipper, the carrier is not liable as an insurer.

By public enemy is meant a power at war with a nation. This includes pirates. Mere insurrections, robberies, thefts, mobs, and strikes are not included in this class of public enemies. If a loss of goods occurs by means of public enemy, a carrier is not liable as an insurer of the goods. If the loss occurs through the inherent nature of the goods, without the negligence of the carrier, the latter is not liable as an insurer. For example, if fruit spoils as a result of warm or cold weather, if the carrier is not in any way at fault, he is not liable as an insurer, since the loss occurs on account of inherent defects of the goods. If animals injure themselves while in the carrier's possession by reason of their viciousness, or fright, which injury could not have been prevented by reasonable care on the part of the carrier, the latter is not responsible.

If the goods are lost or injured by reason of the exercise of public authority, the carrier is not liable as an insurer. If the goods, while in the possession of the carrier are seized upon attachment, or by levy on execution by the creditors of the shipper, the carrier is not liable if he promptly notifies the shipper.

260. Limiting Common Law Liability by Special Contract. The common law liability of a common carrier of goods is that of an insurer. It matters not how the loss or injury occurs, whether without, or through the carelessness of the carrier, the latter is liable for the loss, if it does not come within the recognized exceptions. Carriers commonly endeavor to limit their exceptional liability by making a special contract with a shipper, by the terms of which the carrier limits his exceptional liability in case of loss.

There is considerable conflict of authorities between the different states as to whether a carrier may limit his exceptional liability at all by special contract. Where permitted to limit this liability, there is considerable controversy as to the extent to which a carrier may limit his liability by special contract. The courts of most jurisdictions agree that a common carrier cannot limit his exceptional liability by special contract as to his own negligence or the negligence of his servants. This special contract by which a common carrier limits his exceptional liability as an insurer is usually in the form of a written contract signed by the shipper or in the form of stipulations in the bill of lading given to the shipper and called to his attention.

If a carrier accepts a carload of hay for shipment, without limiting his common law liability by special contract, and the hay is destroyed by fire, the carrier must respond in damages for the loss, regardless of his negligence. If, however, the carrier enters into a special contract with the shipper to the effect that the carrier shall not be liable for loss by fire, and the hay is destroyed by fire without negligence of the carrier or his agents or servants, the carrier is not liable in damages.

261. Limiting Common Law Liability by an Agreed Valuation. Common carriers frequently attempt to limit their liability for loss or injury to goods by stipulations in a bill of lading, that in case of loss, the valuation shall not exceed $50.00, or some specified amount. If the shipper does not notify the carrier that the valuation is a greater amount, the amount mentioned in the bill of lading is the valuation fixed by special contract. In case of loss there is a great variety of holdings as to whether a carrier may limit his liabilities to the amount mentioned in the contract. Probably the courts in the majority of cases hold that such a stipulation is valid in case of losses arising not by reason of the negligence of the carrier or his agents. The courts of a few jurisdictions hold that the stipulation as to valuation is good even as against the negligence of the carrier or his agent.

So far as interstate shipments are concerned, the question is settled by the Federal Interstate Commerce Act of 1906. This act provides that as to shipments from one state to another, such a stipulation is not valid. The language of the Interstate Commerce Act relative to this question is as follows:

A common carrier receiving property for interstate transportation shall issue a receipt or bill of lading therefor, and be liable to the holder for any loss, damage or injury to the property, and no contract, receipt, etc., shall exempt the carrier from the liability thereby imposed.

At present, so far as interstate shipments are concerned, a common carrier cannot limit his common law liability by a special contract.

262. Bills of Lading and Shipping Receipts. Bill of lading, or shipping receipt is the term applied to the receipt given a shipper by a carrier, when goods are delivered into the latter's possession. A bill of lading serves two purposes. It is a receipt of the shipper from the carrier for the goods delivered to the latter, and it is a contract representing the agreement between the shipper and the carrier. It is usually held that the terms printed on the bill of lading are binding on the shipper, even though the bill is not signed by him. A bill of lading represents the title to the goods. It may be transferred like a negotiable instrument. A purchaser takes the position of the shipper. A bill of lading is negotiable in the sense that it represents title or ownership of the goods, and in the sense that a purchaser takes the right of the shipper in the goods. But it is not negotiable in the sense that a purchaser takes a better position than the original holder had.

263. Title to Goods After Delivery to Common Carrier. In the absence of special agreement to the contrary, where a party in one town purchases goods from a party in another, the goods to be delivered by common carrier, title to the goods passes to the purchaser when the goods are delivered to the carrier properly packed and addressed. This kind of a sale is commonly called a sale F. O. B. place of purchase, "F. O. B." means "free on board." Careful business people, in making sales or purchases, specify whether the goods are to be F. O. B. place of shipment, or F. O. B. place of delivery. If the sale is F. O. B. place of delivery, title does not pass to the purchaser until the goods are delivered at the place specified. If the goods are lost by the carrier, the loss falls on the shipper or carrier, and not on the purchaser. If goods are shipped F. O. B. place of shipment, or if no agreement is made about shipment or payment of freight, title passes to the purchaser when the goods are properly delivered to the carrier. If the goods are lost, the loss falls on the carrier or purchaser, and not on the seller. Where no stipulation is made relative to payment of freight or carrier's charges, the law presumes that the purchaser is to pay the carrier's charges. Sales are sometimes made in which it is specified that the freight charges are to be allowed. This means that the shipper is to pay the carrier the freight charges. If the goods are lost, the loss falls on the purchaser. If there is an express stipulation that the goods are to be delivered at the place of delivery by the seller, this means that title does not pass to the buyer until the delivery is made at that place, and the shipper or seller stands the risk of loss in transit.

264. Duty of Common Carrier to Accept Goods for Carriage. A common carrier of goods holds himself out to the public as ready to carry the goods of anyone who desires to employ him. The carrier may demand payment of reasonable charges in advance. He may also enforce reasonable regulations relating to the packing, delivery, and addressing of goods. Carriers are not obliged to carry goods other than the kinds they purport to carry. For example, an express company representing itself to the public as a carrier of light packages cannot be forced to accept heavy machinery for carriage. A carrier cannot be compelled to accept goods not belonging to the class it represents itself as being in the business of carrying. But a carrier must accept for carriage goods of the class it purports to carry, no matter by whom tendered. If the bill of lading offered by the carrier contains stipulations not agreeable to the shipper, the latter may demand the carrier to carry the goods under the terms of the implied common law liability of a carrier. The carrier is excused from accepting goods in the event of a great and unexpected bulk of business. He must, however, furnish sufficient equipment to meet the general requirements of business.

265. Stoppage in Transitu. Where goods sold on credit have been delivered to a carrier, if the vendor learns that the purchaser is insolvent, he may order the carrier to withhold delivery of the goods. This is called stoppage in transitu. This question is also discussed in the chapter on sales. The vendor may compel the carrier to withhold delivery of goods by giving him written or oral notice to that effect. To be effective, this notice must be given before the carrier has surrendered possession of the goods to the purchaser. If the carrier delivers the goods to the purchaser after receiving notice from the seller to withhold shipment, he is liable in damages to the seller. If the purchaser has received possession of the bill of lading, and has sold it to a bona fide purchaser, as to the latter, the seller cannot exercise the right of stoppage in transitu. If the carrier is in doubt about who is entitled to possession of the goods, he may file a petition with a court, called an interpleader, asking the court to determine who is entitled to possession of the goods.

266. Delivery of Goods by a Carrier. The manner of delivery of goods required of a common carrier, depends largely upon usage and custom. In large cities, express companies and carriers of small packages usually make deliveries to residences and places of business. In small towns, and in the country they usually deliver at their depots or store rooms only. Persons dealing with common carriers are bound by their customs, and by reasonable regulations of the carriers. Carriers by water and rail ordinarily deliver at their depots and warehouses only. The purchaser is obliged to call for his goods. The carrier is obliged to give the purchaser notice that the goods have arrived. If the purchaser fails to call within a reasonable time thereafter, the exceptional liability of a common carrier ceases, and the liability of a warehouseman attaches. A warehouseman is obliged to exercise only ordinary care in the protection of the goods, while a carrier is an insurer of the goods.

If a carrier delivers goods to the wrong person, he is liable in damages to the owner. If the consignee refuses to accept the goods, the carrier should notify the shipper of this fact. The carrier's liability then becomes that of a warehouseman.

Goods are frequently delivered to a carrier C. O. D. (collect on delivery). A carrier, in this event, is required to collect a specified amount from the purchaser before delivery. The purchaser is entitled to inspect the goods. Title to goods sent C. O. D., is in the purchaser, the possession only being reserved by the owner for the purpose of collecting certain charges, ordinarily the purchase price.

267. Charges and Lien of Common Carrier. A common carrier usually stipulates by special contract with a shipper the amount of charges for carriage. In the absence of special contract, the carrier is entitled to a reasonable amount for this service. The United States Congress has the right to regulate charges for interstate carriage. The states may, through their legislatures, regulate the rates within their respective jurisdictions. A carrier has a lien on the goods carried for his charges, and may retain possession of the goods until these charges are paid.

268. Discrimination by Common Carrier. A common carrier represents himself as willing to carry the goods of anyone who desires to employ him. Business depends to a large degree upon the facilities offered by carriers, notably by railroads. If certain business men or interests are favored by carriers, competition in the same line is eventually destroyed. For this reason, the law prohibited discrimination on the part of a common carrier. All persons shipping under the same conditions must be treated alike. The policy of the law is to promote competition. There are cases which hold that a carrier is permitted to charge one person a less rate than another, if the latter is not charged an unreasonable rate. But this rule does not apply where the parties are competitors and where the difference in rate charged is for the purpose of destroying competition. The matter of discrimination is now regulated largely by interstate commerce legislation discussed under a separate section.

269. Carriers of Mail. The Constitution of the United States gives Congress the power to establish postoffices and post roads. Under this provision, the postoffice department has been created. It is a department of the government. While the postoffice department carries mail for compensation, it is a department of the government and not a common carrier. The government cannot be sued without giving its consent. It is an elementary principle that a government or sovereign power cannot be sued by its citizens. If the mail is lost, the government cannot be sued for damages. The government employs postal clerks, postmasters and mail-carriers to operate the postal system. These agents or servants of the government are required to give bond to the government. If they violate their contract, or neglect their duties, the government may collect its losses on these bonds. A person whose mail is lost cannot sue a postoffice agent on his bond. If, however, a person whose mail is lost can trace the loss to the carelessness of a particular postmaster or mail-carrier, he may sue such postmaster or carrier for damages sustained.

270. Interstate Commerce Act. The United States Constitution gives Congress the power to regulate interstate commerce. The United States Congress enacted interstate commerce regulations in 1887, 1889, 1891, 1895 and in 1906. The present United States interstate commerce regulation is commonly known as the Interstate Commerce Act of 1906. This act provides for an interstate commerce commission, consisting of seven members. Each member receives a salary of $10,000 a year. The act compels carriers engaged in interstate or foreign commerce to publish a schedule of charges for carrying property. Carriers who give rebates or offset, or discriminate between shippers in any way, are subject to heavy fines, and the officers and agents are subject to imprisonment. The commission is authorized to investigate the profits and charges of carriers, and to fix the maximum and minimum rates for carriage as well as the proportion of through rates to which each of several carriers is entitled. Persons discriminated against may make complaints to the commission. The commission may investigate these complaints as a court by summoning witnesses, and by taking testimony. The commission may award damages to the party injured. If the carrier refuses to comply with the orders of the commission, the latter may invoke the machinery of the United States courts to enforce its order. When matters are removed to a United States court, the finding of the commission makes out a prima facie case.

Section 20 of the act prevents carriers doing interstate or foreign commerce business from relieving themselves from liability by special provision in the bills of lading. This is a very salutary act, since it was the common custom of carriers to place many provisions in their bills of lading by which they endeavored to evade their liability as common carriers. It was practically impossible for a shipper to comprehend all the printed stipulations contained in a bill of lading. This provision of the act compelling a common carrier doing an interstate or foreign commerce business to issue a bill of lading by which he is liable, in case of loss, for the real value of the goods lost, is as follows:

"Any common carrier, railroad or transportation company receiving goods for transportation from a point in one state to a point in another shall issue a receipt or bill of lading therefor, and shall be liable to the lawful holder thereof for any loss, damage or injury to such property caused by it, or by any common carrier, railroad or transportation company to which such property may be delivered, or over whose lines such property may pass, and no contract, receipt, rule or regulation shall exempt such common carrier, railroad or transportation company from the liability hereby imposed; provided, that nothing in this section shall deprive any holder of such receipt or bill of lading of any remedy or right of action which he has under existing law."

The act also provides that every person or corporation, whether carrier or shipper, who shall knowingly grant, give, solicit, accept or receive any such rebates, concession or discrimination shall be deemed guilty of a misdemeanor, and on conviction thereof shall be punished by a fine of not less than one thousand dollars ($1,000.00), nor more than twenty thousand dollars ($20,000.00).

The act also provides that the willful failure, upon the part of any carrier, to file and publish the tariff or rate and charges required by said act, or the failure strictly to observe such tariffs until changed according to law, shall be a misdemeanor, and upon conviction thereof, the corporation offending shall be subject to a fine of not less than $1,000.00 for each offense, nor more than $20,000.00 for each offense.

The act also provides that agents or officers of a corporation convicted of violating the act may be imprisoned not more than two years in addition to the fine. A person delivering property to a carrier for transportation to another state or to a foreign country who shall accept a rebate or offset from the regular scheduled charge shall, in addition to the above described penalties, forfeit to the United States a sum of money three times the amount received from the carrier.