Ordelheide v. Wabash R. Co

admits that the building of plaintiff was constructed on defendant's right of way under a contract in which plaintiff expressly stipulated that the plaintiff "would assume all risk of fire from any cause whatsoever'; that the warehouse was destroyed by fire negligently put out by defendant's servants. The stipulation is comprehensive enough to include within its terms fire caused by defendant's own negligence; but plaintiff insists that, however broad the language, it cannot cover defendant's negligence, because a common carrier cannot contract against its own negligence, such a contract being against public policy, and therefore void. In Insurance Co. v. C. & A. Ry. Co., 74 Mo. App. 89, Judge Smith, in a most satisfactory opinion, ruled that a contract of lease substantially like this was not violative of public policy. He says: "None of the property so destroyed was in process of transportation by defendant, none of it was awaiting delivery by the defendant to its consignees after transportation, and none of it has been received by the company for transportation. The elevator and warehouse and the property in it bore the same relation to the carrying business of the defendant that the store and contents of any merchant or commissionman would bear to it. Neither the lease, nor the relation of the property to the defendant, arose out of the discharge of any duty imposed upon it by its position as a common carrier, or by its character of a quasi public corporation. The fact that defendant is a common carrier has no place in this case." A similar contract was sustained in Rutherford v. Wabash Co., 48 S. W. 921, 147 Mo. 441. The Court of Appeals in this case, through Judge Bland, after a review of the authorities on this subject, held this contract did not contravene public policy; and this court in banc, in Wabash R. Co. v. Ordelheide, 72 S. W. 684, held this identical contract was not against public policy, not being a contract with a passenger, employee, or shipper with regard to a contract of carriage, nor contravening any duty devolved upon it by law to its employees. Section IIII, Rev. St. 1899, which renders every railroad company liable for damages, irrespective of negligence, to every person whose property may be injured or destroyed by fire communicated directly or indirectly by locomotive engines in use on said railroad, expressly authorizes the railroad companies to procure insurance against such damages. In Wabash R. Co. v. Ordelheide, 72 S. W. 684, this court in banc held that this contract was one of indemnity against loss occurring by fire set out by the engines of defendant, and it was not against public policy to allow it to make such a contract with plaintiff. We are satisfied with the reasoning and conclusions reached by the court in banc in construing this contract, and they must control this case also. The views therein expressed are in accord with the decision of the Supreme Court of Iowa in Griswold v. Ill. Central R. R., 57 N. W. 843, 24 L. R. A. 647, 57 Am. & Eng. R. Cas. 59, and Hart

Notes

ford Fire Ins. Co. v. Ry. Co., 70 Fed. 201, 17 C. C. A. 62, 30 L. R. A. 193, 16 Am. & Eng. R. Cas. 779; Stephens v. Ry. Co., 109 Cal. 86, 41 Pac. 783, 29 L. R. A. 751, 50 Am. St. Rep. 17. We deem it unnecessary, in view of these decisions, to repeat the reasons given at length. The company had the option to lease or to refuse to lease, and if it did lease to plaintiff, and stipulated for indemnity from damages caused by its negligence in firing the property of plaintiff placed upon its right of way by its permission, that contract in no way relieved it from the discharge of any duty to the public, or to any passenger or shipper or any employee, that the law or public. policy imposed upon it.

It results that the judgment of the circuit court must be, and is, reversed. All concur.

NOTES.

FIRES ALONG RIGHT OF WAY-WHETHER COMPANY MAY STIPULATE AGAINST LIABILITY FOR ITS

General Rule.

NEGLIGENCE.

The reasons for the rule which forbids a common carrier from stipulating with passengers or shippers against liability for injury or loss. resulting from its negligence, do not extend to the forbidding of a contract whereby a railway company stipulates with the owner of property near its track, or with persons desiring to erect structures upon its right of way, that it shall not be liable for the loss or injury of such property by fire resulting from its negligence or otherwise. Griswold v. Ill. Cent. Ry. Co., 90 Iowa 265, 57 Am. & Eng. R. Cas. 59, 57 N. W. 844, 24 L. R. A. 647, overruling 56 Am. & Eng. R. Cas. 100, 53 N. W. 295; American Cent. Ins. Co. v. Chicago, etc., R. Co., 74 Mo. App. 89; Wabash R. Co. v. Ordelheide (Mo.), 72 S. W. 684; Stephens v. Southern Pac. Co., 109 Cal. 86, 41 Pac. 783, 29 L. R. A. 751, 50 Am. St. Rep. 17 ; King v. Southern Pac. Co., 109 Cal. 96, 41 Pac. 786, 29 L. R. A. 755; Northern Pac. R. Co. v. McClure, 9 N. Dak. 73, 81 N. W. 52, 47 L. R A 149; Missouri, K. & T. Ry. Co. v. Carter (Tex.), 3 R. R. R. 538, 26 Am. & Eng. R. Cas.. N. S., 538, 68 S. W. 159; Hartford Fire Ins. Co. v. Chicago, etc., R. Co., 175 U. S. 91, 20 Sup. Ct. 33, 44 L. Ed. 84, 16 Am. & Eng. R. Cas., N. S., 779, affirming 70 Fed. 201, 30 L. R. A. 193, 62 Fed. 904. See also, Rutherford v. Wabash R. Co., 147 Mo. 441, 48 S. W. 921; Rood v. New York & E. R. Co., 18 Barb. 80.

Same-Property on Right of Way.

As to such a contract being forbidden by any reason of public policy in the case of one desiring to erect a warehouse, elevator, or coal yard, upon the right of way of the company, it may be answered, that without the permission of the company, no person has any right to place such structures upon the right of way; and if they are so placed without permission, it is a trespass, and the company owes no duty, save not to wantonly or wilfully injure the n. If, however, the company does give such permission, its liability changes, and it becomes subject to the new duty and burden of exercising ordinary care to prevent the burning of the buildings and property placed therein. But as there is no rule of law or public policy whereby the company is compellable to give its consent, it is competent for it to grant the permission upon terms. such as that it shall not be subject to any greater liability or risk than it was before; or, in other words, it may say to the party seeking the privilege, “You may erect your structure on my property on condition that, as between us, you become your own insurer against my negligence." Hartford Fire Ins. Co. v. Chicago, etc., R. Co., 175 U. S.

Notes

91, 16 Am. & Eng. R. Cas., N. S., 779, 20 Sup. Ct. 33, 44 L. Ed. 84, affirming 70 Fed. 201, 30 L. R. A. 193, 62 Fed. 904.

Again, no analogy can be drawn from the argument that a carrier on the one hand, and a shipper or passenger on the other, do not stand in equal relation. It is not the case of one party holding out terms which the other is bound to accept or go without. The company does not own all the land in the state, and there is no reason why the structure may not be placed elsewhere. Hartford Fire Ins. Co. v Chicago, etc., R. Co., 175 U. S. 91, 16 Am. & Eng. R. Cas., N. S., 779, 20 Sup. Ct. 33, 44 L. Ed. 84, affirming 70 Fed. 201, 30 L. R. A. 193, 62 Fed. 904.

And it does not matter that the erection and maintenance of the structure upon the right of way is of the greatest interest to the public, and with a view to its accommodation and convenience; or that the ultimate purpose of the railroad in entering into such contract is the promotion of its business as a common carrier, and that it exacts from the party erecting the same a guaranty that he will transact the business for which it is intended in a prompt and careful manner, at reasonable charges, and with a view to the public convenience. In neither case does the company contract as a common carrier, nor is there any rule of public policy rendering the contract invalid. Griswold v. Illinois Cent. Ry. Co., 90 Iowa 265, 57 Am. & Eng. R. Cas. 59, 57 N. W. 844, 24 L. R. A. 647, overruling 56 Am. & Eng. R. Cas. 100, 53 N. W. 295. Same Property Not on Right of Way.

Where the structure is off the right of way, and the owner, upon sufficient consideration, such as securing some benefit or privilege which he cannot otherwise enjoy, is willing to release the company from its duty to exercise ordinary care to avoid the destruction of his property, it is no more than a contract of insurance, and the owner and the company deal at arm's length, and upon equal footing; as where the owner of a sawmill near the right of way agreed, in consideration of the company's building a side track thereto, to assume all risk of damage by fire resulting from the company's negligence. Missouri, K. & T. Ry. Co. v. Carter (Tex.), 3 R. R. R. 538, 26 Am. & Eng. R. Cas., N. S., 538, 68 S. W. 159.

Rule Not Confined to Exemption from Liability for Fire.

This principle, that the company may contract against liability for its own negligence, is not confined to the single case of exemption from liability for loss by fire, but applies in other cases; as when the owner of lands adjoining the right of way agrees, upon sufficient consideration, to exempt the company from liability for the negligent killing of his stock, or agrees to build, maintain, or dispense with the fence which the company is required by statute to maintain. C. H. & D. R. Co. v. Waterson. 4 Ohio St. 434; Pittsburg, etc., R. Co v. Smith, 26 Ohio St. 124; Thomas v. Hannibal, etc., R. Co., 82 Mo. 538; Warren v. K. & D M. F. Co., 41 Iowa 484; McCoy v. So. Pac. R. Co.. 94 Cal 568, 56 Am & Eng. R. Cas. 132, 29 Pac. 1110; Louisville, etc., R. Co. v. Webster, 106 Tenn. 586, 22 Am. & Eng. R. Cas., N. S., 410, 61 S. W. 1018.

In a Virginia case, Johnson's Adm'x v. Richmond & Danville R. Co., 86 Va. 975, 11 S. E. 829, the principle involved was the same as that here, though the case was not one of injury by fire. There the company had contracted with a firm engaged in quarrying granite upon its right of way, that it should not be liable for the death or injury of any of the firm or its employees, whether occurring through the company's negligence or otherwise. It was a provision of the contract, however, that the trains of the company in passing the quarry, should move at a speed not exceeding six miles per hour. Plaintiff's decedent was killed by a train moving at a speed of twenty miles per hour. In holding the company liable, the court said: "Nothing is better settled, certainly in this court, than that a common carrier cannot by contract exempt himself from responsibility for his own or his servants' negligence in the carriage of goods or passengers for hire ; and the principle which vitiates a stipulation for exemption from liability for one's own negligence, is not confined to the contracts of carriers as such; it applies uni

* * *

Notes

versally." It will be observed, however, that this sweeping statement was obiter dictum merely, for the reason that at the time the deceased met his death, the company was violating one of the conditions, under which it was to enjoy exemption from liability for the negligence of itself or servants, by running its train past the quarry at a greater speed than six miles per hour. Therefore it was not material to the decision of the case whether the contract was valid or invalid, since the company had not complied with its terms so as to be able to successfully plead it in defense. See criticism of Justice Gray in Hartford Fire Ins. Co. v. Chicago, etc., R. Co., 175 U. S. 91, 16 Am. & Eng. R. Cas., N. S., 779, 20 Sup. Ct. 33, 44 L. Ed. 84.

Rule Not Affected by Statute Prohibiting Carriers from Limiting Their Liability.

It is hardly necessary to state that such a contract is not forbidden nor in any wise affected by a statute which prohibits railroads and other common carriers from limiting their liability as it exists at common law, or in any manner whatever; for, as shown in the foregoing, the company in entering into such an agreement does not contract as a common carrier; nor does such an agreement embrace property for which the company is liable as carrier. Missouri, etc., R. Co. v. Carter (Tex.), 3 R. R. R. 538, 26 Am. & Eng. R. Cas., N. S., 538, 68 S. W. 159; Griswold v. Illinois Cent. Ry. Co., 90 Iowa 265, 57 Am. & Eng. R. Cas. 59, 57 N. W. 843. 24 L. R. A. 647, overruling 56 Am. & Eng. R. Cas. 100, 53 N. W. 295.

Rule Not Affected by Statute Fixing Company's Liability for Fire.

Nor is such a contract forbidden by a statute which makes the company absolutely liable for fires started along its right of way. Such statute being for the protection of property owners along the right of way, a particular owner may waive its provisions as to himself. Griswold v. Ill. Cent. Ry. Co., 90 Iowa 265, 57 Am. & Eng. R. Cas. 59, 57 N. W. 843, overruling 56 Am. & Eng. R. Cas. 100, 53 N. W. 295; Wabash R. Co. v. Ordelheide (Mo.), 72 S. W. 684.

Liability to Third Persons.

Not only may one erecting a structure on the right of way of a railroad company, exempt the company from all liability for the loss by fire of his own property, but he may covenant to save the company harmless as to any loss which may result to third persons by reason of the burning of such property. Northern Pac. R. Co. v. McClure. 9 N. Dak. 73, 81 N. W. 52, 47 L. R. A. 149; McAdams v. Missouri, etc., R. Co., 19 Tex. Civ. App. 82, 45 S. W. 936.

Same-Contract Operative Only between Parties and Privies.

Such a contract is operative only between the parties and their privies, for the company cannot, of course, when sued by A. for the destruction of his property, defend that it is not liable because B. has agreed to save it harmless from the destruction of A.'s property. Its liability to A. remains the same, and its remedy in such case is by action over against B. for the breach of his contract. McAdams v. Missouri, etc., R. Co., 19 Tex. Civ. App. 82, 45 S. W. 936; Northern Pac. R. Co. v. McClure, 9 N. Dak. 73, 81 N. W. 52, 47 L. R. A. 149.

Thus it is liable to the agent of a warehouseman with whom it has such a contract, for the loss of the agent's goods stored in the warehouse; and this notwithstanding the agent had knowledge of the contract of exemption between the warehouseman and the company. King v. So. Pac. Co., 109 Cal. 96, 41 Pac. 786, 29 L. R. A. 755. Same-Notice Not Sufficient to Make Third Person a Party to the Contract.

The person whose goods are burned is not to be taken as consenting to the contract between the company and the warehouseman, or as becoming a party thereto, merely because he has knowledge thereof. King v. Southern Pac. R. Co., 109 Cal. 96, 41 Pac. 786, 29 L. R. A. 755 ; McAdams v. Missouri, etc., R. Co, 19 Tex. Civ. App. 82, 45 S. W. 936.

Notes

Same-Goods Placed in Warehouse without Knowledge of the Owner.

Nor is it a material circumstance that the goods were placed in the building without the knowledge of the owner thereof. Walker v. Missouri Pac. R. Co., 68 Mo. App. 465.

Same-Where Agreement Did Not Extend to Property of Third Per

sons.

And so where there was no contract exempting the company from liability for injury to the property of adjacent owners by fire, but one of such owners, finding his bogs on fire, and the employees of the company engaged in extinguishing the same, told them to let it burn, as he preferred that the bogs should burn, such action on his part was held not to release the company from liability to a third person to whose property the flames finally extended. The plaintiff could not be prejudiced by any arrangement between the company and another person. Simmonds v. New York, etc., R. Co., 52 Conn. 264, 23 Am. & Eng. R. Cas. 369.

Of course a contract between property owners along the right of way as to which shall assume the risk of loss by fire as to property placed near the track, does not inure to the benefit of the company. For example, where cotton on the platform of a compress company was destroyed by fire resulting from the negligence of the company, it was held to be no defense to an action against the railway company for the loss of the cotton, that there was a contract between the owner of the cotton and the compress company, to the effect that, as between the parties to such contract, the cotton was on the platform at the risk of the owner. Edwards v. Campbell, 12 Tex. Civ. App. 236, 33 S. W. 761. Same-Liability to Insurance Company Paying Loss.

A railroad company which has by contract exempted itself from liability for the loss of property burned through its negligence, is not liable to an insurance company which has been compelled, under policies held on the property, to make good the loss resulting from such cause. The simple reason is, that the insurance company in such case is only entitled to subrogation to the rights of the owner of the property, and he has no rights against the railroad company, for he has waived them by his contract of exemption. Griswold v. Illinois Cent. Ry. Co., 90 Iowa 265, 57 Am. & Eng. R. Cas. 59, 57 N. W. 843, 24 L. R. A. 647, overruling 56 Am. & Eng. R. Cas. 100, 53 N. W. 295; Hartford Fire Ins. Co. v. Chicago, etc., R. Co., 175 U. S. 91, 16 Am. & Eng. R. Cas., N. S., 779, 20 Sup. Ct. 33, 44 L. Ed. 84, affirming 70 Fed. 201, 30 L. R. A. 193. See also, Phoenix Fire Ins. Co. v. Erie, etc., Transp. Co., 117 U. S. 312, 6 Sup. Ct. 750, 1176.

Whether Contract Inures to Benefit of Reorganized or Consolidated Company.

As to whether lessees of a portion of the company's right of way, who have covenanted to save the company harmless from loss by fire resulting from the company's negligence, whether to their own property or that of third persons, are liable on such covenant to a reorganized company which has succeeded to all of the former company's rights and liabilities, it was held, in a case where the lease contained a stipulation that all of its covenants and conditions should be binding upon the assigns of both parties, and where there was a statute declaring that the assignee of the reversion should be entitled to the same remedies for nonperformance of any of the terms of the lease as the assignor, and where the lessees attorned to the reorganized company as the assignee of the reversion, that said covenant ran with the reversion, and inured to the benefit of the reorganized company, and that the lessees must save such company harmless from the loss of the property of third persons by fire resulting from its negligence. Northern Pac. R. Co. v. McClure, 9 N. Dak. 73, 81 N. W. 52, 47 L. R. A. 149. And so where the owner of a sawmill, in consideration of the company's building a side track to the mill for his convenience and accommodation,