SECTION 3.-CONTRACTS LIMITING THE LIABILITY OF BAILEES AND OTHER PERSONS

INLAND COMPRESS CO. v. SIMMONS.

(Supreme Court of Oklahoma, 1916. 59 Okl. 287, 159 Pac. 262.)

HOOKER, C. * * * About the only question presented by this appeal is whether the cotton tickets executed by the company and delivered to the plaintiff at the time the cotton was delivered by him to the company * * * is a legal contract and enforceable in the courts of this state, it being contended by the plaintiff in error that the cotton tickets did constitute a contract, and that under the terms of the contract it is not liable for loss by damage, fire, flood, or other agencies unless by the willful act or gross negligence. The facts in the instant case show that the plaintiff in error received this cotton for the purpose of compressing the same, for which it received compensation, and that the storage of the cotton was an incident of the business in which it was engaged of compressing the same. * * *

In the case of Union Compress Co. v. Nunnally, 67 Ark. 284, 54 S. W. 872, the Supreme Court of that state said: * * * "When a bailment is reciprocally beneficial to each party, the bailee is answerable for want of ordinary care."

Applying the rule to the evidence in the instant case, we are of the opinion that the plaintiff in error was a bailee for hire of the cotton in question, and, as such, was subject to the same responsibility and duties; and, for the failure to exercise that degree of care of the property in its possession that the law requires of a bailee for hire, it is responsible for whatever damages that said property suffers as the proximate result caused by the failure of the company to exercise such care. That being true, it must have been the duty of the compress company in this case to have exercised reasonable care in the storing of the property of the defendant in error, and for its failure so to do it must be held liable, unless the provision of the cotton tickets, which sought to limit its liability to injuries caused by the willful act or gross negligence of the company, should prevail.

Section 1109 of the Revised Laws of 1910 provides: "A bailee for hire must use at least ordinary care for the preservation of the thing bailed." The writers on bailments seem to agree that the parties to a bailment contract may regulate the responsibilities of the bailee by special contract, but it is also universally agreed that the terms which public policy and legislation of the state impose are not to be overleaped by contractual relations and, if so, the contract will be disregarded and declared void, and the bailee held in the same manner and to the same extent as if such contract never existed.

The public policy of a state must be determined by reference to its Constitution, the acts of its Legislature, and the judicial decisions. of its courts. It is universally agreed and acceded to in this state that common carriers, on account of the relation that they occupy towards the public and the duty that they owe to the public generally, are prohibited by law from contracting against their own negligence. The reason for this requirement is apparent, and it would seem that the same cause which prohibits contracts of this character from being

made by a common carrier would likewise prohibit contracts of like nature from being made by other enterprises which serve the public, and which conduct and carry on such a large and important part of the public business, which business is so essential to the commercial life of the people of the state. The Legislature of this state, by the provision of our statute above quoted, has provided that a bailee for hire must use at least ordinary care for the preservation of the thing bailed, and while this provision of the statute may be considered as a declaration of the general law on the subject of bailment, yet it also indicates the fixed, definite, and declared policy of the state with reference to the degree of care that all bailees for hire must use towards property intrusted to its care.

In this state cotton occupies such an important relation to the business life of the people of the state, and cotton compresses perform such an important duty to the general public, that it may be said that courts take judicial knowledge of the fact that compresses are in their nature, or rather in a sense, quasi public institutions. In fact the business of compressing cotton, by reason of its nature, the extent and the necessity therefor, is such that the public must use it, and it is of such public consequence, and affects the community at large to such an extent, that it is a public business, and as such should not be permitted to relieve itself from liability by contracts of the kind involved here. It will not suffice to say that this contract was a voluntary contract, and that the defendant in error was compelled to have his cotton compressed, for the same objection could be urged with the relation of the public to the railroads, the express companies and to other public utilities. It is said in volume 6, Corpus Juris, p. 1112, § 44: "The parties to a bailment may diminish the liability of the bailee by special contract, the principle being that the bailee may impose whatever terms he chooses if he gives the bailor notice that there are special terms and the means of knowing what they are; and, if the bailor chooses to make the bailment, he is bound by them, provided the contract is not in violation of law or of public policy, and that it stops short of protection in case of fraud or negligence of the bailee."

While it cannot be contended that the plaintiff in error is a public warehouseman within the provisions of our statute, yet, as a circumstance indicating the public policy of this state, it might not be amiss. to notice section 8302 of the Revised Laws of 1909, which prohibits public warehousemen from inserting in the receipt any language limiting or modifying the liability or responsibility as imposed by the law of the state. Third volume, Enc. of Law (2d Ed.) p. 750, states the rule as follows: "To what extent a bailee may limit his liability by special contract is not clear. It has been said by good authority that the bailee might contract not to be liable for any degree of negligence not amounting to gross neglect, for, the latter being regarded as equivalent of fraud, the law will not tolerate such an indecency, as that a man may contract to be safely dishonest. But negligence in any degree being a wrong, the distinction is not apparent, and the better doctrine supported by authority would seem to be that a bailee cannot stipulate against liability for his own negligence." Lancaster County Nat. Bank v. Smith, 62 Pa. 47. * * *

We conclude that it would be against public policy in this state to permit the defendant in this case as a bailee for hire to contract in such manner as to relieve it of any responsibility for its own negligence,

and that, the provision of the receipt issued to the plaintiff in error attempting to relieve the company from any liability on account of damage, the result of its negligence is void as against public policy. Therefore the court did not err in instructing the jury to the effect that such provision of the contract would not protect the defendant against its own negligence.

The judgment of the lower court is affirmed.

WELD et al. v. POSTAL TELEGRAPH CABLE CO.

(Court of Appeals of New York, 1910. 199 N. Y. 88, 92 N. E. 415.) Action by Stephen M. Weld and others against the Postal Telegraph Cable Company, for damages for loss occasioned by error in the transmission of a telegraph message.

In submitting the case to the jury the learned trial court held as matter of law that the conditions printed upon the defendant's blank used in sending the message were reasonable, and created a contract which bound the plaintiffs and exempted the defendant from liability for loss occasioned by its slight or ordinary negligence, but that it did not exempt the defendant from the consequences of its gross negligence. The court then defined to the jury the legal meaning of gross negligence as distinguished from ordinary negligence, and left it to the jury to say, as a matter of fact, whether, under the evidence adduced, the defendant was guilty of gross negligence. The jury rendered a verdict in favor of the plaintiffs for $10,000, and the judgment entered thereon having been unanimously affirmed by the Appellate Division, the defendant has appealed to this court. * * The action is brought * * WERNER, J. * ́ * to charge the defendant with the damages sustained by the plaintiffs through the alleged negligence of the former in transmitting a telegraphic message sent by the latter from New York to New Orleans. The message as written by the plaintiffs was: "Ellis N. O. Sell 20 thousand Mch. 12.70. Weld"-and as received by the New Orleans representative of the plaintiffs it had been so changed and transposed as to read: "Sell twenty thousand March 1207. Well." The import of the message as sent was well understood by the plaintiffs, their correspondents, and the operators of the defendant. It contained at direction to sell twenty thousand bales of cotton for March delivery at 12.70 cents per pound, which was understood by all concerned to mean a sale at 12.70 cents or more. The message as received was quite as clearly understood to mean a sale of twenty thousand bales of cotton for March delivery at 12.07 cents or more. The New Orleans representative of the plaintiffs followed the instructions set forth in the message as received, sold the designated number of bales at various prices below 12.70 cents and when the error was discovered by the plaintiffs they directed their representatives to purchase at once 20,000 bales of cotton for March delivery at the best price obtainable. This was done in the New Orleans market at prices below 12.70 but above the prices at which the plaintiffs' representatives had previously sold, and the net result was a loss to the plaintiffs of $27,565.

As the original message was not "repeated" the learned trial court charged the jury that the conditions printed on the blank or form

upon which it was sent were binding upon the plaintiffs, and absolved the defendant from liability for damages unless they were occasioned by the defendant's gross negligence. Under the unanimous affirmance of the Appellate Division of the judgment recovered by the plaintiffs, the defendant's gross negligence must be deemed to have been conclusively established, and the only question in that behalf which we have power to consider is whether the rule of liability given to the jury by the trial judge correctly states the law.

The liability of telegraph companies in respect of the business which they carry on is regulated by two things: (1) By contract. (2) By the nature of their quasi public employment. In the absence of any special contract limiting or regulating their liability, they do not insure the safe and accurate transmission of messages, but they are bound to transmit them with a degree of care and diligence adequate to the business which they undertake. The liability which a telegraph company assumes under this general rule, may, however, be limited by special contract, and that is today the universal practice. As it is a business requiring employés of peculiar skill, so it is also subject to atmospheric and physical disturbances which may set at naught the greatest care and skill. It is, therefore, but right that telegraph companies should have the power to limit their liability in cases where mistakes occur through no fault on their part, or for such mistakes of their employés as will occur through ordinary negligence in spite of the most stringent regulations or the most vigilant general oversight. But manifestly this power cannot be extended further without placing the public absolutely at the mercy of those engaged in transmitting telegraphic messages. This is the reason of the rule, long since established in this state, that individuals and corporations engaged in this quasi public business cannot contract to absolve themselves from liability for their own willful misconduct or gross negligence. They may protect themselves by contractual limitations that are reasonable, but beyond that they may not go. That is the law as laid down by this court in a number of cases. * * * The cases ** * hold that a regulation limiting the liability of a telegraph company for a mistake in an “unrepeated" message to the price paid for sending it is reasonable, but that it does not relieve such a company against the consequences of its gross negligence. The charge of the trial court. in this respect was, therefore, clearly correct.

* * *

We now turn to a series of requests made by defendant's counsel which we think should have been charged. Defendant's counsel asked the court to charge: "That, if the jury find as a fact that when plaintiffs sent the message to Ellis & Co. to sell 20,000 bales, March cotton, the plaintiffs did not intend to deliver cotton, and that it was the plaintiffs' intention that one party to the sale was to pay to the other only the difference between the prices named and the market price of the cotton at the date fixed for executing the contract, then the whole contract constituted nothing more than a wager, and the plaintiffs are entitled to a verdict for only sixty cents.' * * *

As bearing upon the nature of the transactions between the plaintiffs and those who dealt with them through Henican, one of the plaintiffs' New Orleans correspondents, Henican testified that there was no delivery of cotton, and that the transactions consisted entirely of a "settlement of differences." This testimony was supplemented by an account of sales, from which the jury might have drawn the

inference that it was not the intention of the parties to these contracts to sell and deliver actual cotton, but simply to record the market fluctuations upon the basis of which settlements were to be made between the parties. This testimony, although meager and perhaps inconclusive, was hostile to the legal presumption that the transactions were lawful, and was sufficient to create an issue of fact upon which the defendant had the right to a charge embodying the substance of the requests above quoted. If the transactions between the plaintiffs and their clients or customers were mere wagering contracts, they are void under the statutes of this state and the general law of the land. The generally accepted rule upon this subject can be very simply stated. A man may lawfully sell goods or stocks for future delivery, even though he has none in his possession, if he really intends and agrees to deliver them at the appointed time. Such a transaction constitutes a valid contract, which is enforceable in the courts. a man may not, under the guise of such a contract, enter into a naked speculation upon the rise or fall of prices, in which there is to be no delivery of property, and no payment except such as may be necessary to provide for differences arising purely from market fluctuations. Such a transaction is a mere wager, which is condemned alike by statute and public policy. * * *

But

For the failure of the learned trial court to charge in substance as requested upon this branch of the case, the judgment herein must be reversed and a new trial granted, with costs to abide the event.

*

SECTION 4.-GAMBLING CONTRACTS

WELD et al. v. POSTAL TELEGRAPH CABLE CO.

(Court of Appeals of New York, 1910. 199 N. Y. 88, 92 N. E. 415.) See ante, p. 326, for a report of the case.

OLSON v. SAWYER-GOODMAN CO.

(Supreme Court of Wisconsin, 1901. 110 Wis. 149, 85 N. W. 640, 53 L. R. A. 648.)

BARDEEN, J. It is admitted that the plaintiff worked 166 days for the defendant at $1 per day. It is also admitted by plaintiff that during that time he personally received goods and supplies from the company amounting to $12.53, and that the defendant paid his railroad fare home, and for other expenses amounting to $3.35. The defendant claims to be entitled to an additional credit of $65.40, arising out of the following circumstances: The defendant kept a supply department in its camp, under the charge of one Riley, who was also defendant's timekeeper and bookkeeper. A number of the men amused themselves playing poker. A banker kept account of the game, and at the end of each game he would report who had lost and won, and the amount. There was no money in the camp with which these balances could be liquidated, so it was agreed between the players that the debts should be paid from the camp store; that is, the winner could go to