Story Case

The New Albany and New York City Express Company was engaged in a heavy motor truck service between New York City and northern points in the same state. James Mynard engaged the company to carry two hundred barrels of cement from New Albany to Syracuse, New York. The contract between the parties contained the following stipulation: "In consideration that the said express company, at our request, has agreed to transport said cement at said reduced rates, we do hereby agree to, and do hereby release and discharge the said company from all claims, demands, and liabilities of every kind and character whatsoever, for, or on account of, or connected with, any damage or injury to the loss of said cement, or any portion thereof from whatsoever cause arising."

Owing to the negligence of employees of the express company in failing to protect the cement during a heavy rain storm, much of it was ruined. Mynard brings this action to recover for this loss, contending that the contract did not provide against his recovery when the negligence of the company caused the loss. Is this correct?

Ruling Court Case. Swindler Vs. Hilliard, Volume 2 Richardson's Law, South Carolina Reports, Page 286; Volume 45 American Decisions, Page 732

Hilliard was the owner of a steamboat, which he used as a common carrier in transporting goods. Swindler delivered a consignment of cotton to Hilliard. In the contract of shipment, it was agreed that Hilliard, as a common carrier, should not be held liable for unavoidable losses arising from navigation and fire. Without any negligence on the part of Hilliard, the steamboat on the trip down caught fire and burned. This was an action brought by Swindler for the value of his cotton lost in the fire.

He contended that the agreement was not binding, because it is contrary to public policy to permit a common carrier to relieve itself of its duties and liabilities as such.

Mr. Justice Evans said: "It is admitted in this case, that but for the provisions in the contract of shipment, Hilliard, as carrier, would be liable for the loss in question, even though he was not negligent, since the fire was not an act of God. But may he escape liability for unavoidable losses, not caused by acts of God, by contract ? The court was of the opinion that a carrier may limit his liability by a special contract. He may relieve himself of liability for unavoidable losses, but he cannot relieve himself of liability for losses arising from his own negligence or the negligence of his servants. Such contracts contradict public policy and are void." Judgment was given for Hilliard.

Ruling Law. Story Case Answer

The ordinary bailee for hire can, if he chooses and his bailor consents, make a contract stipulating that he shall not be liable for any loss occasioned by his own negligence. Thus, a blacksmith, in shoeing a horse, may so provide, before taking possession of the animal. It has been pointed out, in another connection, that a carrier is an insurer of the safe transportation of goods. A number of jurisdictions do not permit the carrier to limit this liability in any manner. Thus, a clause in the bill of lading, freeing the carrier from responsibility when loss occurs by fire or robbery, has been held void, on the ground of public policy. Kentucky, Iowa, Nebraska, and Texas have passed laws forbidding common carriers from limiting their liability as it existed at Common Law.

The Supreme Court of the United States has held contrary to the above rule, and established the law that a carrier may, by special contract, limit its liability. Thus, it may contract against liability for losses caused by fire, robbery, and strikes. This rule is followed by nearly all the state courts. The provision in the contract must, however, be brought to the actual knowledge of the shipper, and assented to by him; that is, it must be done by special contract; a mere notice posted in a freight office is not sufficient, and, it seems there must be some definite consideration stated for such a stipulation, since the carrier is already bound to carry the goods at the customary rate.

All the courts agree that a carrier is not permitted to contract against loss caused by the negligence of its servants. Such a limitation is considered directly contrary to public welfare. When general words are used, limiting the liability, as in the Story Case, it will be held that the words were not intended to free the carrier from responsibility for loss caused by its own negligence. Therefore, the express company, in the Story Case, is liable for the loss.