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.