Northern Pacific Railway Co. v. American Trading Co.

195 U.S. 439 (1904)

NORTHERN PACIFIC RAILWAY COMPANY
v.
AMERICAN TRADING COMPANY.

No. 24.

Supreme Court of United States.

Argued October 26, 27, 1904. Decided December 5, 1904. APPEAL FROM THE UNITED STATES CIRCUIT COURT OF APPEALS FOR THE SECOND CIRCUIT.

Mr. Charles W. Bunn for appellants.

Mr. F.B. Jennings, with whom Mr. Howard Van Sinderen was on the brief, for appellee.

MR. JUSTICE PECKHAM, after making the foregoing statement of facts, delivered the opinion of the court.

The objections to the recovery herein, made on the argument, were:

(1.) That no contract was shown on the part of the receivers to assume any responsibility for the transportation of the lead beyond the line of the railway in their charge.

(2.) That there was no proof that the court had authorized the receivers to assume any such responsibility, and they could not do so without any such authority.

(3.) That if Fitch, the agent, made such agreement it was not within his authority, real or apparent.

(4.) That the bill of lading is the controlling contract, and by its terms the receivers were not liable beyond their own line.

(5.) That the damages were caused solely by the act of the collector, representing the authority of the United States, and the receivers are not liable for damages so caused.

In regard to the first objection, we think the facts agreed upon clearly show a special agreement for the transportation of the lead to Yokohama by the steamship of the Northern Pacific Steamship Company, which was to leave Tacoma on October 30, 1894. The opening of the negotiation was made by the American Trading Company, which applied to Fitch for a rate upon the proposed shipment from New York to Yokohama, Japan. The trading company knew nothing of his steamship agency, and he was informed that it was of vital importance that the lead should be transported promptly and go forward by the earliest possible steamer without delay, in order to enable the trading company to fulfill a proposed agreement which it was about to make for the sale of the lead in Japan, and which would require its delivery there at a fixed date. Fitch thereupon named a rate, and undertook to forward the lead from New York to Yokohama, on or before September 29, via the Northern Pacific steamer sailing from Tacoma October 30, 1894. The trading company thereupon made its proposed agreement through its agents at Yokohama. Although Fitch, the agent, was not thereafter specially informed of the fact that the proposed agreement had been made, yet he was informed that the company intended to make it if a rate could be agreed upon for the transportation of the lead, it is clear that his furnishing of the rate was with reference to the proposed agreement, and that he understood that if his terms were accepted he was entering into an agreement to transport to Japan the lead in question over the Northern Pacific Railroad to Tacoma, and by the steamship which would leave Tacoma on October 30, 1894. His letter of September 19, 1894, to the trading company, confirming the rate, is a plain agreement, not alone to deliver the lead in time for the sailing of the steamer, October 30, but an agreement that the lead should be forwarded from Tacoma, Washington, via the Northern Pacific steamer sailing on that day. Fitch in that letter asked the trading company to forward their acceptance of this proposed agreement as early as possible. On the next day, September 20, the trading company, by letter, did accept the rate "for a shipment of pig lead, to consist of not less than four hundred thousand pounds, to be forwarded from New York to Tacoma, and from Tacoma via the Northern Pacific steamer sailing from that port October 30." There is no doubtful expression in these letters. They form a clear and specific contract. It is entirely different from Myrick v. Michigan Central Railroad Company, 107 U.S. 102. The receipt in that case was plainly not one which established a contract for transportation on the part of the railroad company (defendant) beyond its own line. This court held that while a company might by a contract to that effect be held liable for the transportation and delivery of freight beyond its own line, yet the contract to do so must be clear, and that the mere stating of a through fare on the receipt of the freight does not establish such contract or liability.

In the case at bar we hold that a special agreement is set forth in the statement of facts, to forward to Yokohama by the steamer leaving Tacoma on October 30, 1894. If it had been made by the proper officer of a railroad company in the general course of business, we have no doubt, under the authorities, of the validity of the contract. Railroad Company v. Pratt, 22 Wall. 123; Railway Company v. McCarthy, 96 U.S. 258; Myrick v. Michigan Central Railroad Company, 107 U.S. 102. Whether the fact that it was made by an agent of the receivers of a railroad company makes any difference will be discussed later.

Appellant urges, however, that as Fitch was also agent for the steamship company, his contract, if there was one, to forward by the steamship sailing October 30, was in behalf of the steamship company. Fitch had never received any direct or independent appointment or authority from the Northern Pacific Steamship Company to act as its agent. His only authority as agent of that company was created by the contract made between the two companies. By that agreement the railroad company was to have the exclusive right (with certain exceptions) to appoint agents in the United States, etc., and the steamship company thereby authorized the railroad company and its appointed agents to act as agents for the steamship company, and to issue bills of lading and passenger tickets, and to make and name rates on all traffic for Asiatic points, etc. The trading company did not know what company operated the steamships between Tacoma and Yokohama, or that the steamship company was a separate and independent company, or that there was any contract between the receivers and the steamship company. When the trading company, therefore, applied to Fitch for a rate, they applied to him as the agent of the receivers of the railroad company. The letter of Fitch of September 19, confirming the rate already given orally that day, is written on the paper used by the receivers of the railroad company, which paper is headed by the names of the receivers under the words "Northern Pacific Railroad Co.," and in it Fitch describes himself as "general eastern agent," and his department as the "Traffic Department in New York City," and he signs his name and adds the words "G.E. Agent." In his letter of September 29, 1894, to the steamship agent at Tacoma, Washington, he writes on the same kind of paper, with the same heading, and describes himself as "general eastern agent," and in the letter he says "As I have previously advised you I have made contract guaranteeing delivery of this shipment at Yokohama by our S.S. Tacoma sailing October 30. Will you kindly see that this connection is made, without fail." He signs his name and adds the letters G.E.A., meaning, of course, thereby "general eastern agent." It is contended that by the statement of facts it appears that Fitch was acting for two principals, and that the plaintiff must establish that Fitch made the alleged guaranty on behalf of the receivers. We do not think he was acting in behalf of two principals. From all the facts we think it plain that he was acting for the receivers of the railroad company. He was their general eastern agent; he was applied to and he made his rates as such, and as such he signed the letter confirming those rates and containing the agreement to forward the lead on the steamship as already stated. Subsequently, and on the twenty-ninth of September while acting and signing himself as the general eastern agent of the receivers, he writes to the steamship agents at Tacoma the letter in which he says he has guaranteed delivery at Yokohama by our steamer sailing October 30. All this shows the fact that he was acting as agent for the receivers.

We have no difficulty in determining the capacity in which Fitch acted, nor that he made the special agreement, as contended by the trading company.

(2.) Neither do we doubt that the court had authorized the receivers to make such a contract.

Under the modern methods of foreclosing railroad mortgages it has been the custom to appoint receivers to take charge and conduct the business of the railroad mortgagor, during the pendency of the suit. The possession of such receivers frequently lasts for years. It would be in the highest degree disadvantageous to all interested in the railroad company, as well as to the public having occasion to do business with it, if the same power which the company possessed to make special contracts for transportation should not be given to and exercised by the receivers of the company in continuing to run the road in substance as a going concern, so far as these kinds of contracts are concerned. Such contracts are not of the character spoken of by Mr. Justice Jackson in Chicago Deposit Vault Company v. McNulta, 153 U.S. 554, as so extraordinary or unusual as not to be included in the authority to carry on the business of the company. On the contrary, this contract is one of that class which we regard as so included.

(3.) We are also of opinion that Fitch had the right to make the agreement in question, and if there could be any doubt on that point, nevertheless the agreement was in fact thereafter ratified by the officers representing the receivers, who had power so to do. Goodrich v. Thompson, 44 N.Y. 324.

A railroad company has the power, as we have seen, to make such a contract of carriage beyond its lines. A general agent would be presumed to have such power. If the company have the power some individual must exercise it. It would not be supposed that the board of directors would be consulted and authority given by it every time such a contract was to be made. Who is a more proper or fit person to make the contract than the general agent of the company? He must necessarily have large powers in order to conduct the business of his office, and, prima facie such power is within the scope of such agency. When the railroad company passes into the hands of a receiver, appointed by the court in a foreclosure suit, and the receiver is directed to conduct and continue the business of the company, the power to appoint general agents necessarily goes with the order to conduct the business of the company, and when the general agent is appointed by a receiver he will be presumed to have the general powers of such an officer when acting for the railroad itself. The words "General Eastern Agent" for a Western railroad company only limit the exercise of the agency to the place so described.

(4.) It is urged that the bill of lading constitutes the sole contract. But there was a plain valid contract existing between the parties before the lead was shipped and before any bill of lading was issued. That special contract was to forward the lead by the steamship leaving Tacoma on October 30. The next day after the lead was shipped at Newark, a bill of lading was delivered to one of the clerks of the trading company, and that bill of lading contains the absolutely inconsistent statement that the carrier is not to be liable for any loss not occurring on its own road, and that the contract as executed is accomplished and all liability thereunder terminates upon the delivery of the property to the steamship.

It is said that the trading company, by receiving this bill of lading and obtaining money on it as the representative of the property therein described, has acquiesced in the total abolition of the special contract the company made with Fitch, and has agreed that the railroad company shall be under no liability after the delivery of the lead to the steamship.

We regard it as entirely clear that no such effacement of the original contract was meant by the receipt of the bill of lading. The railroad company has no power alone to alter that contract, and it could not alter it by simply issuing a bill of lading, unless the other party assented to its conditions and thereby made a new and different contract.

At the time when the bill of lading was issued the lead had been shipped at Newark and had departed for its destination. It was impossible for the trading company to recall it. The particular conditions in the bill are set out in subdivision three and subdivision twelve of the conditions printed in small type and they form part of numerous other printed conditions in regard to the freight received.

Where the acceptance of the bill of lading, under these circumstances, is sought to be made an equivalent to an assent to the change of contract, it is proper to look at these facts in order to determine what weight should be given to such acceptance. At the time it was received the lead was out of the possession of the trading company, on its way West. That company needed the bill of lading as evidence of title to the property described in it, upon the security of which it desired to raise money, which it could not do without the possession of the bill. Under these circumstances we refuse to hold that the trading company, in accepting the bill of lading, thereby consented to the complete alteration of its original contract, and, without any consideration whatever, agreed to release the railroad company from all liability on that contract and to take in its stead the reduced liability provided for in the bill of lading.

Of course the company expected a bill of lading, for such an instrument is the usual accompaniment in shipping merchandise. The bill showed the amount of the lead, the marks and numbers, etc., and so identified the goods as to enable the shippers to show their amount and general value, and to enable them to negotiate the bill and obtain money on its security.

It is agreed in the statement of facts that this bill of lading was received by a clerk of the trading company without stated objection to its terms, but was not read or examined by him or by any officer of the company, and was immediately hypothecated with a bank as collateral security for the money borrowed thereon by the trading company. We do not state the fact that the bill of lading was not examined, for the purpose of insisting that an examination of such an instrument must always be shown before a contract can be predicated thereon. But where there is a valid contract already in existence, and it is urged that such contract has been abrogated or changed by the receipt of a bill of lading, after goods have passed from the control of the shipper, we think it is important, upon the question of whether such original contract has, in fact, been abrogated, to show that the bill was never read in fact; that the conditions abrogating the original contract were among a number of other conditions printed in the bill in smaller type than the rest of the bill, and that the alleged acquiescence of the trading company in the change of the contract, by virtue of these conditions, is based upon the mere reception of the bill of lading by a clerk without any knowledge of the existence of these conditions and without evidence of any authority in him to consent to a modification of the contract already made by his employer. The fact that, in such ignorance, that company hypothecated the bill of lading, adds nothing to the alleged acquiescence. What the contract meant as between the railroad company and the bank or other assignee of the bill of lading is not important here, but upon these facts we are unable to see that the receipt and holding of the bill of lading changed the original contract as claimed by the railroad company. See Bostwick v. Railroad Company, 45 N.Y. 712, where it was held, under the circumstances of that case, the mere acceptance of a bill of lading did not alter a previously made oral contract in relation to the shipment.

(5.) Even if the receivers of the railroad company contracted to forward the lead by the steamer sailing from Tacoma, October 30, it is still insisted that the action of the deputy collector, at Tacoma, in refusing to grant a clearance to the steamship while the lead was on board, made the performance of the agreement not only impossible but unlawful, and for that reason the receivers were absolved from their agreement to forward by that vessel. The contract was not unlawful when made. It may be assumed that the lead was contraband of war, but that fact did not render the contract of transportation illegal nor absolve the carrier from fulfilling it. It is legal to export articles which are contraband of war, but the articles and the ship which carries them are subject to the risk of capture and forfeiture. The Santissima Trinidad and the St. Ander, 7 Wheat. 283, 340. Neither any law of the United States nor any provision of international law was violated by the making of this contract, nor by an attempt to export the lead pursuant to its provisions. The case does not come within the principle of Brewster v. Kitchell, 1 Salk. 198, where it was said that if one covenants to do a thing which is lawful, and an act of Parliament comes in and hinders him from doing it, the covenant is repealed.

No act of Congress was passed, subsequently to the making of the contract, which made it unlawful, and it was lawful when made. It is true that the sailing of the vessel without a clearance would have been unlawful, and the deputy collector refused to grant that necessary document while the lead was on board the steamship. But that did not render unlawful the contract to transport. He had the power to refuse to grant the clearance, and he did refuse unless the lead were taken off. In so doing he undoubtedly violated his duty. He was not justified in exacting any such condition for granting the clearance.

Upon the facts in this case we are of opinion that this refusal of the deputy collector constituted no defense to the action on the contract. It is not within the exception referred to by Mr. Justice Jackson, in delivering the opinion of the court in Chicago, Milwaukee & St. Paul Railway Company v. Hoyt, 149 U.S. 1. This contract, in view of all the facts, we think was made in contemplation of trouble arising from the character of the lead as contraband of war.

The statement of facts shows that the question of whether the lead might not be excluded from transportation as contraband in view of the war then existing between China and Japan, was fully understood before the contract was made, and after it was made and the steamship refused to carry the lead, the trading company, upon being so informed by Fitch, notified him that they would hold the receivers responsible for failure to fulfill the contract, and thereafter, with the attention of all the parties directed to the subject, it was finally agreed that the lead should be received and transported, and the refusal was then withdrawn.

It is true that the special and particular difficulty was first made by the steamship company which refused to transport the lead, yet, still, the attention of all the parties was, from the very first, directed to the peculiar character of the freight as contraband of war, and whether the contract should on that account be made, or, having been made, whether the shipment should not be refused. The receivers, therefore, knew that there might be difficulty in relation to the transportation, and yet, after full knowledge on the subject, they agreed to and did withdraw their refusal, and they thereupon took the lead for transportation under the contract.

Under these circumstances it ought not to be held that the mistaken action of the deputy collector in refusing to give the clearance should operate as an excuse for the non-performance of the contract, which was not thereby rendered illegal. It cannot be affirmed that such possible refusal was not within the contemplation of the contracting parties when the contract was made. Many causes, it was known, might operate to obstruct the transportation of articles contraband of war. This particular form of impediment may not have been actually within the minds of the parties to the contract, but there was, as the agreed facts show, present to their minds the fact that there might be trouble in procuring the transportation of the lead, because of its character as contraband of war, and in the light of those facts the contract was made and, in substance, ratified after it was made. The railroad receivers took the risk of this, as of other obstructions, in making the contract, and they ought to be held to it.

As the act of the deputy collector was an erroneous one and a clearance should have been given while the lead was on board the steamship, we think his refusal should not be at the expense of the shippers who had obtained this contract for transportation while all parties actually knew the difficulties that might concern the exportation of the lead from Tacoma. The State had not intervened to prevent the performance of the contract, as was the case in Touteng v. Hubbard, 3 B. & P. 291, where Lord Alvanley held that in such circumstances the party will be excused. In that case there was an embargo laid by the British Government, after the contract was made, on all Swedish vessels.

Here there was no intervention of the Government of the United States. The exportation of lead was never prohibited by the Treasury Department during the war between China and Japan. There was no change in the law or the policy of this Government subsequently to the making of the contract, by which its performance was excused. The exportation of the lead was legal when the contract was made and continued to be so after the execution of such contract, although the deputy collector mistakenly refused to grant the clearance unless the lead was taken off the vessel. Such mistaken decision did not render the original loading of the lead on the ship unlawful, nor would it have been unlawful for the ship to proceed with the lead on board provided the clearance had been had. It was not an act of the State, therefore, which prevented the sailing of the vessel within the true meaning of such a term, but a mistaken act of a subordinate official not justified by law and not sufficient as an excuse for the non-performance of the contract in question under the circumstances already detailed. If the bill of lading were regarded as applicable for this purpose, the refusal of the clearance did not constitute a "restraint of princes, rulers or people," within that clause of the bill.

It was one of the contingencies of which the receivers undertook by their special contract of transportation to take the risk. It was not a contract that they should violate the law, but they took the risk of its misapplication, believing, of course, that such contingency was most remote and that if the steamship company would receive the lead for transportation the chief obstacle to the fulfillment of the contract would be thereby removed.

After the lead had been unshipped, and within half an hour after the sailing of the vessel, the telegram which the deputy collector had sent to the collector in regard to the matter was answered by the latter in such terms that, undoubtedly, if the ship had been still in port, the lead would have been placed thereon and transported to Japan. The master, however, as soon as the determination of the deputy collector was given, immediately and without appealing to the collector, unshipped the lead and sailed for his destination at once. The result of the failure thus to carry the lead on that vessel was that it did not arrive in Yokohama until on or about January 4, 1895, instead of on or about November 18, 1894, which it would have done had it gone forward as contracted for. In the meantime, the war between China and Japan ceased, the value of the lead fell, and the trading company was damaged as stated in the finding of facts.

We think the objections made to this recovery are untenable, and the decree of the court below is, therefore,

Affirmed.