The case of Ward v. Hudson River Bldg. Co. (1891) 125 N. Y. 230, 26 N. E. 256, is not an authority for the contention in question. Equitable relief was sought in that case against the enforcement of a stipulation, which the court, however, held to be liquidated damages, and binding on the parties. True, the court did say, on page 235, N. E. p. 257, that "where, however, a sum has been stipulated as a payment by the defaulting party, which is disproportioned to the presumable or probable damage, or to readily ascertainable loss, the courts will treat it as a penalty, and will relieve, on the principle that the precise sum was not of the essence of the agree ment, but was in the nature of a security for performance." There is nothing, however, in this excerpt, to countenance the claim that where it is clear from the terms when this contract was executed, must be the light of a penalty. There are many disregarded despite the evident intention of cases in the English books in which this the parties to treat the sum named as esti- question has been very fully examined and mated and ascertained damages for a breach considered, but it would be an unprofitable of the covenant to return the yacht. That consumption of time to go over them with the courts of the state of New York do not a view or expectation of extracting any uselend any support to such a contention-ful general principle that could be applied which it was strenuously argued at bar they to this case. The following are the leaddo we will make evident. ing cases: Astley v. Weldon, 2 Bos. & P. 346; Barton v. Glover, Holt, N. P. 43, and note; Reilly v. Jones, 1 Bing. 302; Davies v. Penton, 6 Barn. & C. 216; Crisdee v. Bolton, 3 Car. & P. 240; Randall v. Everest, 2 Car. & P. 577; Kemble v. Farren, 6 Bing. 141. In our court are the following: Dennis v. Cummins, 3 Johns. Cas. 297, 2 Am. Dec. 160; Slosson v. Beadle, 7 Johns. 72; Spencer v. Tilden, 5 Cow. 144, and note, p. 150; Nobles v. Bates, 7 Cow. 307; Knapp v. Maltby, 13 Wend. 587. From a critical examination of all these cases and others that might be referred to, it will be found that the business of the court, in construing this clause of the agreement, as in respect to every other part thereof, is to inquire after the meaning and intent of the parties; and when that is clearly ascertained from the terms and language used, it must be carried into effect. A court of law possesses no disof the contract that the precise sum was pensing powers; it cannot inquire whether of the essence of the agreement, and was the parties have acted wisely or rashly, in the agreed amount of estimated damages, respect to any stipulation they may have no fraud or imposition having been prac- thought proper to introduce into their agreetised, either a court of equity or of lawments. If they are competent to contract might rightfully decline to give effect to within the prudential rules the law has fixed the stipulation. Nor does the quoted state as to parties, and there has been no fraud, ment support the further claim that a court circumvention, or illegality in the case, the of law, in an action on a contract to recover court is bound to enforce the agreement. a stipulated sum as damages, might let in Men may enter into improvident contracts evidence to establish that a mere dispropor- where the advantage is knowingly and striktion existed between the agreed sum and the ingly against them; they may also expend actual damage, for the purpose of avoid- their property upon idle or worthless obing the stipulation. The meaning of the jects, or give it away if they please withcourt is made clear by the following state- out an equivalent, in spite of the powers or ment, appearing on the same page with the interference of the court; and it is difficult above excerpt: "We may, at most, say that to see why they may not fix for themselves where they have stipulated for a payment by agreement in advance, a measure of comin liquidation of damages, which are in pensation, however extravagant it may be, their nature uncertain and unascertainable for a violation of their covenant (they surewith exactness, and may be dependent upon ly may after it has accrued), without the extrinsic considerations and circumstances, intervention of a court or jury. Can it be and the amount is not, on the face of the an exception to their power to bind themcontract, out of all proportion to the prob- selves by lawful contract? We suppose able loss, it will be treated as liquidated not; and regarding the intent of the pardamages." An inspection of the opinion ties, it is not to be doubted but that the sum in the Ward Case also shows that the New of $3,000 was fixed upon by them 'mutually York court approvingly referred to prior and expressly,' as they say, 'as the measure decisions of the courts of that jurisdiction of damages for the violation of the cove(Dakin v. Williams, 17 Wend. 447, and 22 nant, or any of its terms or conditions.' If Wend. 201), where it was emphatically rec-it be said that the measure is a hard one, ognized that parties might embody in their contract an agreed valuation of property or any other quantum of damages, where the damage was uncertain in its nature. We quote in this connection from the opinion as reported in 17 Wend., delivered by Chief Justice Nelson, afterwards a member of this court. It was said (p. 454): it may be replied that the defendants should not have stipulated for it; or, having been thus indiscreet, they should have sought the only exemption, which was still within their power; namely, the faithful fulfilment of their agreement." Chancellor Walworth, in the opinion rendered in the same case by the court for the correction of errors, embodied in his opinion the following (22 Wend. 213): "The next question presented upon the above conclusion is whether the sum of $3,000 is to be viewed as damages liquidated "In Huban v. Grattan, Alcock & N. 389, by the contract of the parties, or only in 'in which an action was brought to recover *670 699. *671 *The court then quoted approvingly_the' prior decision of the supreme court in Dak in v. Williams, 17 Wend. 447, and concluded as follows (p. 475, Am. Dec. p. 717): "The case at bar seems to me to fall within the sixth rule, the damages being wholly uncertain, and depending entirely on proof aliunde the instrument declared on." And in connection with the New York cases it becomes pertinent to notice the case of Gay Mfg. Co. v. Camp (1895) 13 C. C. A. 137, 25 U. S. App. 134, 65 Fed. 794, on rehearing, 15 C. C. A. 226, 25 U. S. App. 376. 68 Fed. 67, much relied upon in argument. As we have previously observed, language is employed in that opinion which, broadly interpreted, seems to countenance the idea that if a jury can ascertain the damages suffered by the breach of a stipulation, an agreement by the parties, emhodied in a written contract, fixing such damages, will be treated as a nullity. This deduction appears to have been drawn from certain rules of construction respecting the stipulated damages which the defendant | tain damages to which the courts allude in had agreed to pay if he did not remove a the third rule” lime kiln adjacent to the plaintiff's premises, Bushe, Ch. J., says: The stipulation consists of two parts, one affirmative that the lime kiln should be prostrated before a particular day, the other negative that the assignee shall not at any future time erect another lime kiln; and upon those the breaches are assigned. Both bear on one object, to be relieved from the lime kiln altogether, and both are essential to that object being accomplished; and both parties agree in measuring beforehand the damages consequent upon a breach of either agree ment. Such stipulations as to damages are upheld by courts of law upon two grounds: 1st. Because a man may set a value, not only upon matters connected with his property, which value is capable of being estimated, but also upon matters of taste or fancy, such as prospect or ornament, which he alone can appreciate; and, 2dly, because even in matters capable of ascertainment great difficulties might occur in some cases; and in all cases it is prudent in both parties to provide against the trouble and ex-liquidated damages and penalties enuncipense of a future investigation. The cases ated by the trial judge in Bagley v. Peddie, which seem to have interfered with such 5 Sandf. 192, 194, the judgment in which compacts are those in which the subject case, it is proper to remark, was reversed matter of the stipulation shows that, what- by the appellate court in 16 N. Y. 469, 69 ever the form of it may be, the parties could Am. Dec. 713, already referred to. We do not have contemplated anything more than not think, however, the interpretation we a penalty to secure against actual damage." have noticed as having been put upon the So, also, the case of Bagley v. Peddie rules in question was warranted; at least, (1857) 16 N. Y. 469, 471, 69 Am. Dec. 713, as we have shown, such a doctrine is alto makes clear the fact that the New York gether untenable. Nor do the other authorcourts recognize the right of parties to agree ities cited in the opinion in the Gay_Case beforehand upon damages to be sustained lend support to the asserted doctrine. Those by the breach of a contract, and that evi-authorities were Harris v. Miller, 6 Sawy. dence aliunde the instrument declared on cannot be received respecting the amount of damage. The last two of what were termed "artificial rules" on the subject of liquidated damages and penalties, recited in the opinion as being peculiar to contracts of this character, were as follows: "Sixth. If, independently of the stipulated damages, the damages would be wholly uncertain and incapable of being ascertained except by conjecture, in such case the damages will be considered liquidated, if they are SO denominated in the instrument. Seventh. If the language of the parties evince a clear and undoubted intention to fix the sum mentioned as liquidated damages in case of default of performance of some act agreed to be done, then the court will enforce the contract, if legal in other respects." Following a review of several decided cases in England, the court said (p. 474, Am. Dec. p. 716): "The above cases will serve to illustrate the kind of certainty as to the sum to be paid as damages for breach of an agreement in order to hold the larger sum agreed to be paid on such breach a mere penalty. They are cases where the lesser sum is named specifically in the instrument itself, or depends on the award of arbitrators. These and similar cases are the cases of cer 319, 11 Fed. 118, 121, and a note to Spencer v. Tilden (1825) 5 Cow. 144, 150. Harris v. Miller is referred to because of the statement by Judge Deady that the courts, "instead of giving effect to the contract of the parties according to their intentions, it assumes to control them according to its standard of justice." The note to 5 Cowen need not be commented upon, in view of the reference we have made to later decisions of the courts of New York. •672 It may, we think, fairly be stated that when a claimed disproportion has been asserted in actions at law, it has usually been an excessive disproportion between the stipulated sum and the possible damages resulting from a trivial breach apparent ones the face of the contract, and the question of disproportion has been simply an ele ment entering into the consideration of the question of what was the intent of the parties, whether bona fide to fix the damages, or to stipulate the payment of an arbitrary sum as a penalty, by way of security. In the case at bar, aside from the agree ment of the parties, the damage which might be sustained by a breach of the covenant to surrender the vessel was uncertain, and the unambiguous intent of the parties was to ascertain and fix the amount of such damage. In effect, however, the effort of the petitioner on the trial was to nullify the stipulation in question by mere proof, not that the parties did not intend to fix the value of the yacht for all purposes, but that it was improvident and unwise for its agent to make such an agreement. Substantially, the petitioner claimed a greater right than it would have had if it had made application to a court of equity for relief, for it tendered in its answer no issue concerning a disproportion between the agreed and actual value, averred no fraud, surprise, or mistake, and stated no facts claimed to warrant a reformation of the agreement. Its alleged right to have eliminated from the agreement the clause in question, for that is precisely the logical result of the contention, was asserted for the first time at the trial by an offer of evidence on the subject of damages. they declare, in distinct and unequivocal terms, that they have settled and ascertained the damages to be $500.00, or any other sum, to be paid by either failing to perform, it seems absurd for a court to tell them that it has looked into the contract and reached the conclusion that no such thing was intended; but that the intention was to name the sum as a penalty to cover any damages that might be proved to have been sustained by a breach of the agreement." As the stipulation for value referred to was binding upon the parties, the trial court rightly refused to consider evidence tending to show that the admitted value was excessive, and the circuit court of appeals properly gave effect to the expressed intention of the parties. The law does not limit an owner of prop- The decree of the Circuit Court of Appeals erty, in his dealings with private individ-was right, and it is therefore affirmed. uals respecting such property, from affixing his own estimate of its value upon a sale thereof, or, on being solicited, to place (183 U. S. 621) PANY, Plff. in Err., v. EMIL REISS et al. goods Liability of connecting carrier the property at hazard by delivering it in- TEXAS & PACIFIC RAILWAY COM. to the custody of another for employment in a perilous adventure. If the would-be buyer or lessee is of the opinion that the value affixed to the property is exorbitant he is at liberty to refuse to enter into a contract for its acquisition. But if he does contract, and has induced the owner to part with his property on the faith of stipulations as to value, the purchaser or hirer, in the absence of fraud, should not have the aid of a court of equity or of law to reduce the agreed value to a sum which others may deem is the actual value. And, as pertinent to these observations, we quote from the opinion delivered by Wright, J., in Clement v. Cash, 21 N. Y. 253, where it was said (p. 257): 1. 2. Cotton unloaded by a connecting carrier at its pier without giving any notice of its arrival to the succeeding carrier does not await further conveyance, within the meaning of a clause in the bill of lading relieving the carrier from liability other than as a warehouseman "while the said property awaits further conveyance." A hidden or obscure meaning will not be Bought for a particular clause of a bill of lading because Its obvious meaning provides for contingencies which are also provided for by other clauses of the same bill. [No. 77.] Argued November 27, December 2, 3, 1901. IN ERROR to the United States Circuit Court of Appeals for the Second Circuit to review a judgment which affirmed a judg ment of the Circuit Court for the Southern District of New York entered upon a directed verdict for plaintiffs in an action to recover the value of cotton destroyed by fire. Affirmed. "When the parties to a contract, in which the damages to be ascertained, growing out of a breach, are uncertain in amount, mutually agree that a certain sum shall be the damages, in case of a failure to perform, and in language plainly expressive of such agreement, I know of no sound principle or rule applicable to the construction of contracts that will enable a court of law to say that they intended something else. Where the sum fixed is greatly disproportionate to the presumed actual damage, probably a court of equity may relieve; but a court of law has no right to erroneously construe the intention of the parties, when clearly expressed, in the endeavor to make better contracts for them than they have made for themselves. In these, as in all other cases, the courts are bound to ascertain and carry into effect the true intent of the parties. I am not disposed to deny that a cause may Statement by Mr. Justice Peckham: arise in which it is doubtful, from the lan- This action was brought in the circuit guage employed in the instrument, whether court of the United States for the southern the parties meant to agree upon the measure district of New York by the plaintiffs, who of compensation to the injured party in case are defendants in error here, and are resiof a breach. [See Kemp v. Knickerbocker dents of Liverpool, England, to recover the Ice Co. 69 N. Y. 45.] In such cases, there value of some 200 bales of cotton destroyed would be room for construction; but cer- by fire at Westwego, Louisiana, opposite the tainly none where the meaning of the par- city of New Orleans, November 12, 1894, ties was evident and unmistakable. When'at a pier on the west bank of the Missis See same case below, 39 C. C. A. 149, 98 Fed. 588; 89 C. C. A. 680, 99 Fed. 1006. *623 *622 sippi river, owned by the plaintiff in error. | This is the same fire which is mentioned in Texas & P. R. Co. v. Clayton, 173 U. S. 348, 43 L. ed. 725, 19 Sup. Ct. Rep. 421. Upon the first trial the court directed a verdict in favor of the defendant, but the judgment entered thereon was reversed by the circuit court of appeals (39 C. C. A. 149, 98 Fed. 533), and a new trial granted. Upon the second trial the court, following the opinion of the circuit court of appeals, directed a verdict for the plaintiffs for the value of the cotton, and the judgment entered upon that verdict having been affirmed by the circuit court of appeals on the authority of its former opinion (39 C. C. A. 680, 99 Fed. 1006), the railway company brings the case here by writ of error. The defense of the company is based upon a clause in the bill of lading which will be set out hereafter. portion of the through route, nor after said property is ready for delivery to the next carrier or to consignee. "11. No carrier shall be liable for delay, nor in any other respect than as warehousemen, while the said property awaits further conveyance; and in case the whole or any part of the property specified herein be prevented by any cause from going from said port in the first steamer of the ocean line above stated leaving after the arrival of such property at said port, the carrier hereunder then in possession is at liberty to for. ward said property by succeeding steamer of said line, or, if deemed necessary, by any other steamer. and payable by the steamship company." The usual method of handling cotton upon its arrival at the pier of the company at Westwego, Louisiana, is stated, as both counsel in this case agree, with substantial accuracy_in_Texas & P. R. Co. v. Clayton, 173 U. S. 348, 352, 43 L. ed. 725, 727, 19 Sup. Ct. Rep. 421, 423, as follows: "12. This contract is executed and accomplished, and all liability hereunder terminates, on the delivery of the said property to the steamship, her master, agent, or serv ants, or to the steamship company, or on the The cotton had been shipped at Temple, steamship pier at the said port; and the inin the state of Texas, on the Missouri, Kan-land freight charges shall be a first lien due saa, & Texas Railway, to be carried over its road and the defendant's road to New Orleans, and from that port to Bremen. It arrived at New Orleans at the pier of the railway company November 6, 1894. One hundred and sixty bales were unloaded on November 7, and the balance soon there after, but on what day is not certain. One hundred and twenty bales were unloaded "The mode in which the railway company and placed at one point, and two different and the steamship company transacted busilots of forty bales each were deposited at ness was as follows: Upon the shipment other points, thus leaving the cotton at of cotton, bills of lading would be issued in three different points on the pier of the rail- Texas to the shipper. Thereupon the cotway company. At this time the pier was ton would be loaded in the cars of the railquite full, there being over 20,000 bales de- way company, and a waybill indicating the posited upon it and some 8,000 bales in cars number and initial of the car, the number waiting to be unloaded. The pier was built, of the bill of lading, the date of shipment, owned, and in the exclusive possession of the the number of bales of cotton, the consignor, railway company. The bill of lading which the consignee, the date of the bill of lading, was issued at Temple, in the state of Texas, the number of bales forwarded on that by the Missouri, Kansas, & Texas Railway, particular waybill, the marks of the cotton, expressed on its face to be on behalf of that the weight, rate, freights, amount prepaid, company, and also the defendant company etc., would be given to the conductor of the and the steamship company. It was an train bringing the car to Westwego. Upon elaborate document, and purported to be the receipt of the waybill and car at West"an export bill of lading approved by the wego, a skeleton' would be made out by the permanent committee on uniform bill of clerks at that place for the purpose of unlading." It acknowledged the receipt of the loading the car properly. It contained the cotton consigned as marked, and to be car- essential items of information covered by ried to the port of New Orleans, Louisiana, the waybill, and had also the date of the and thence by the Elder, Dempster, & Com-making of the skeleton. When this skeleton pany's steamship line to the port of Bremen, had thus been made out and the car had Germany. It had conditions which are been pushed in on the side track in the rear stated to be: of the wharf, it would be taken by a clerk "(1) With respect to the service until de-known as a 'check clerk,' and with a gang livery at the port of New Orleans, Louisi ana. "(2) With respect to the service after delivery at the port of New Orleans, Louisi ana. There are 12 clauses relating to the service until delivery and 15 clauses relating specifically to the service after delivery at the port of New Orleans. Those clauses which are specifically referred to in this case are numbered 3, 11, and 12 in the bill of lading. They read as follows: "3. No carrier shall be liable for loss or damage not occurring on its own road or its of laborers, who actually handled the cot ton and were employed by the railway company, the car would be opened; and as the cotton was taken from the car bale by bale the marks would be examined to see that they corresponded with the items on the skeleton, and the same were then checked. The cotton thus taken from the car was deposited at a place on the wharf designated by the check clerk, and it would remain there until the steamship company came and took it away. After the checking of the cotton in this way to ascertain that the amounts, marks, and general information of connecting carrier, at page 106, L. ed. p. 326, Sup. Ct. Rep. p. 429, said: "If the road of the company connects with other roads, and goods are received for transportation beyond the termination of its own line, there is superadded to its duty as a common carrier that of a forwarder by the connecting line; that is, to deliver safely the goods to such line,-the next carrier on the route beyond." As between intermediate carriers, the duty of the one in possession at the end of his route is to deliver the goods to the succeeding carrier or notify him of their arrival, and the former is not relieved of respon the waybill were correct, the skeleton would be transmitted to the general office of the Texas & Pacific Railway Company in New Orleans, which thereupon would make out what was designated as a 'transfer sheet' that contained substantially the information contained in the waybill, and which being at once transmitted to the steamship company or its agents was a notification understood by the steamship company's agents that cotton for their line was on the wharf at Westwego ready for them to come and take away. Upon the receipt of these transfer sheets the steamship company would collate the transfers relating to such cotton as was destined by them for a particu-sibility by unloading the goods at the end lar vessel, advise the railway company with the return of the transfers that this cotton would be taken by the vessel named, and would thereupon send the vessel with their stevedores to the wharf at Westwego. The clerk at Westwego would go around the wharf and, by the aid of the transfers re turned from the steamship agents, point out to the master or mate of the vessel, or the one in charge of the loading, the particular lots of cotton named in the transfers and designated for his vessel, and the stevedores and their helpers would thereupon take the cotton and put it on board the ship. In connection with the loading upon the vessel, or after the cotton was pointed out in lots, the master or mate would sign a mate's receipt for this cotton. The stevedores and all men employed in loading the vessel were wholly in the employ of the steamship company. The time of coming to take cotton from the wharf was entirely in the control of the steamship company. They sent for it as soon as they were ready." At the time of the fire it is conceded that no transfer or skeleton sheets had been sent to the steamship company, or notice given it of the arrival of this cotton at the pier of the railway company. Messrs. Rush Taggart and Arthur H. Masten for plaintiff in error. Messrs. George Richards, Frederick E. Mygatt, and Treadwell Cleveland for de fendant in error. Mr. Justice Peckham, after making the foregoing statement of facts, delivered the opinion of the court: In this case there had been no delivery of the cotton by the railway company prior to its destruction by fire. The cotton had arrived at the pier of the railway company, but no notification of its arrival had been given to the steamship company, nor was it In fact in the possession of, nor had it been delivered to, the latter company. It was still under the absolute control and in the possession of the railway company, and nothing had been done to terminate its common-law liability at the time the fire occurred. In Myrick v. Michigan C. R. Co. 107 U. S. 102, 27 L. ed. 325, 1 Sup. Ct. Rep. 425, Mr. Justice Field, delivering the opinion of the court, and speaking of the duty of a' of his route, and storing them in his warehouse, without delivery or notice to or any attempt to deliver to his successor. McDonald v. Western R. Corp. 34 N. Y. 497; Congdon v. Marquette, H. & O. R. Co. 55 Mich. 218, 21 N. W. 321. In the latter case it is held that the duty of the connecting carrier is not discharged until it has been imposed upon the succeeding carrier; and this is not done until there is delivery of the goods, or at least until there is such a notification to the succeeding carrier as according to the course of business is equivalent to a tender of delivery. Within these cases it cannot be claimed that this defendant had either actually or constructively delivered the cotton to the steamship company at the time of the fire. The defendant is compelled, therefore, to have recourse to the clauses in the bill of lading in its attempt to rid itself of liability consequent upon the destruction of the cotton by a fire while at its pier and in its possession. The bill of lading itself is an elaborate document, bearing on its face evidences of care and deliberation in the formation of the conditions of the liability of the companies issuing it. The language is chosen by the companies for the purpose, among others, of limiting and diminishing their common-law liabilities; and if there be any doubt arising from the language used as to its proper meaning or construction, the words should be construed most strongly against the companies, because their officers or agents prepared the instrument, and as the court is to interpret such language, it is, as stated by Mr. Justice Harlan, in delivering the opinion of the court in First Nat. Bank v. Hartford F. Ins. Co. 95 U. S. 673, 679, 24 L. ed. 563, 565, "both reasonable and just that its own words should be construed most strongly against itself." To the same effect is London A8sur. Co. v. Companhia de Moagens do Barreiro, 167 U. S. 149, 159, 42 L. ed. 113, 120, 17 Sup. Ct. Rep. 785, and The Queen of the Pacific, 180 U. S. 49, 52, 45 L. ed. 419, 420, 21 Sup. Ct. Rep. 278. 420, We come then to an examination of the bill of lading for the purpose of determining whether the railway company has been exempted from liability by any of its provisions. We do not understand it is contended that either clause 3 or 12 applies, because, as is #626 |
