Gilbert C. Halsted et al., Appellants, v. Postal Telegraph Cable Company, Respondent

Gilbert C. Halsted et al., Appellants, v. Postal Telegraph Cable Company, Respondent. 1. Telegraph Company — Extent op Liability. A telegraph company performs public functions and is under obligation to carry on its business and discharge its duties incident thereto with reasonable diligence, and with due care for the rights and interests of those concerned in its operations, but it is competent for it to make reasonable rules and regulations for the conduct, and to protect itself against the hazards of its business, and by contract to limit its liability for mistakes, delajrs or non-delivery of messages, when not caused by gross negligence. 2. Request to Repeat Message a Reasonable One. Where the receiver of a message has by special request procured it to be sent by telegraph, he is bound by any reasonable contract made by the sender with the telegraph company for its transmission, and the requirement contained on the blank on which the message is written that the sender of a message shall order it repeated, and that in case he fails to do so the company will not be liable for mistakes, delays or non-delivery is a reasonable one. 3. Receiver oe Message Bound by Contract with Sender. When a message is written upon a blank of the company containing such a stipulation, that contract is binding upon the receiver and he cannot recover by reason of a mistake in transmission where there is no evidence of negligence on the part of the company other than the fact that changes were made therein between its delivery to the company and its receipt. Halsted v. Pastal Telegraph Cable Co., 120 App. Div. 433, affirmed. (Argued October 22, 1908; decided November 10, 1908.) Appeal from an order of the Appellate Division of the Supreme Court in the second judicial department, entered June 7,1907, which reversed a judgment in favor of plaintiffs entered upon a verdict, and an order denying a motion for a new trial and granted a new trial. The plaintiffs brought this action to recover from the defendant the damage occasioned to them by the alleged negligence of the latter in erroneously transmitting to them a telegraphic message. The plaintiffs, being manufacturers of beef bags, in the city of New York, received from Armour & Company, of Chicago, a letter, asking the lowest “ ¡Drice on 25,000 sets of bags,” and they replied that they would telegraph them a price at a later time. The plaintiffs then requested the Cannon Manufacturing Company, of Concord, North Carolina, as they allege, “ to send them by wire the price for 200,000 yards each of the narrow and wide light beef cotton goods.” On July 27,1903, they received through the defendant a telegram from Concord, addressed to them ; which read : “Delivered commencing about August fifteenth light narrow two eighth wide three eighth net,” and was signed “ Cannon Mfg. Co.” Thereupon and on the same day, the plaintiffs telegraphed and wrote to Armour & Company a price, which was based on the quotations of the Cannon Manufacturing Company, as they were given in the telegram. Armour & Company, the same day, telegraphed, in reply, an order for the bags and the order was entered by the plaintiffs. On July 28th, plaintiffs ordered, by telegram, from the Cannon Manufacturing Company 175,000 yards of the narrow and 150,000 yards of the wide cloth and, at the same time, wrote a letter to the company confirming the telegram. On July 29tli, plaintiffs received a letter from the Cannon Manufacturing Company, inclosing a copy of the telegram, which it had delivered to the defendant, and it then appeared that the message should have read: “ Deliveries commencing about August fifteenth light narrow two eighty wide three eighty net.” The difference between the telegraphic message, as delivered to the defendant, at Concord, and as it was received by the plaintiffs, at New York, was that the word “ deliveries ” had become changed to “ delivered ” and that the two words “ eighty ” had become “ eighth.” It was shown that these quotations, which might not be very intelligible to the ordinary person, are well understood in the trade. The mistake' made in the transmission of the quotations affected the contract made by the plaintiffs with the Armour Company and caused a loss to them in the transaction. The plaintiffs endeavored to procure a cancellation of the contract with the Armour Company, by reason of the mistake in the telegram from the Cannon Manufacturing Company, upon which it had been based; but they were unsuccessful. The Cannon Manufacturing Company refused to assume the liability for the mistake. The damages demanded in the complaint were in the amount of the loss to the plaintiffs on the Armour contract. The telegram from the Cannon Manufacturing Company was written upon one of defendant’s blank forms, which read: “ Send the following message subject to the terms on back hereof, which are hereby agreed to.” That was followed by the plaintiffs’ address, the quotations of prices and the signature of the Cannon Manufacturing Company. Below were the words: “ Read the notice and agreement on back.” One of the terms of the agreement, referred to, reads as follows: “ To guard against mistakes or delays, the sender of a message should order it repeated ; that is, telegraphed hack to the originating office for comparison. For this one-half the regular rate is charged in addition. It is agreed between the sender of the following message and this Company, that said Company shall not be liable for mistakes or delays in the transmission or delivery, or for non-delivery, of any bneepeated message, beyond the amount received for sending the same.” There was, also, a stipulation limiting the liability of the telegraph company in the case of a repeated message, unless specially insured in accordance with a- provision for such insurance. The defense of the defendant, beyond a denial of the negligence alleged with respect to the transmission of the telegram from Concord, was based upon the terms of the contract between it and the sender of the message. There was no evidence of negligence in the transmission of the message, other than in the changes made in the message between its delivery to the defendant and its receipt by the plaintiffs. There was evidence that atmospheric and electrical conditions and disturbances might affect the accurate transmission of a telegraph message; although the possibility of such changes being caused thereby in the symbols, or signals, as were effected in this case, was somewhat in dispute upon the evidence of the experts. Motions of the defendant to dismiss the action, at the close of the plaintiffs’ case and at the close of the whole case, were denied and the trial court submitted to the jury the question whether the defendant was guilty of gross negligence in the performance of its undertaking. The court, upon a request of the defendant further to instruct the jury that “ the terms and conditions on the blank * * * are reasonable and valid and constitute a contract between the parties,” ruled that they were' reasonable and valid and constituted a contract between the company and the sender, “ but not with the plaintiffs.” To which ruling the defendant excepted. A verdiet was rendered for the plaintiffs for the amount claimed. Upon appeal to the Appellate Division, that court, by a divided vote of the justices, upon questions of law only, reversed the judgment, which the plaintiffs had recovered, and granted a new trial. The plaintiffs have appealed to this court from the order of reversal. George D. Beattys for appellants. Defendant owed plaintiffs, as addressees, a duty imposed by law, arising out of the exercise of a public franchise, and the terms of the contract between defendant and the sender of the message in question did not relieve defendant from liability for failure to properly perform this duty to the addressees. (Will v. P. T. Co., 3 App. Div. 22; Lowery v. W. U. T. Co., 60 N. Y. 198; Tyler v. W. U. T. Co., 68 Ill. 421; Pearsall v. W. U. T. Co., 124 N. Y. 256; Elwood v. W. U. T. Co., 45 N. Y. 549; Rose v. U. S. Tel. Co., 3 Abb. Pr. [U. S.] 408; Elsey v. P. T. Co., 20 N. Y. S. R. 97; Curtin v. W. U. T. Co., 16 Misc. Rep. 347; Wolfskehl v. W. U. T. Co., 46 Hun, 542; De Rutte v. N. Y. T. Co., 1 Daly, 547.) A public service corporation can limit its liability only by contract and not by notice merely. (Pearsall v. W. U. T. Co., 124 N. Y. 256; Curtin v. W. U. T. Co., 16 Misc. Rep. 347; Will v. P. T. Co., 3 App. Div. 22; Applington v. Pullman Co., 110 App. Div. 250; Jennings v. G. T. R. Co., 127 N. Y. 438.) Plaintiffs made out a prima facie ease of negligence by show ing the error in the transmission of the message. (Pearsall v. W. U. T. Co., 124 N. Y. 250; Tel. Co. v. Griswold, 37 Ohio St. 301; Tyler v. W. U. Tel. Co., 60 Ill. 421; Bartlett v. W. U. T. Co., 62 Me. 209; Julian v. W. U. T. Co., 98 Ind. 327; Turner v. H. T. Co., 41 Iowa, 458; Tel. Co. v. Crall, 38 Kan. 679; Cogdell v. Tel. Co., 135 N. C. 431; W. U. Tel. Co. v. Du Bois, 128 Ill. 248; W. U. Tel. Co. v. Short, 53 Ark. 434.) The jury were fully justified in finding that defendant was guilty of gross negligence. (Nolton v. W. R. Co., 15 N. Y. 444; M. & S. P. R. R. Co. v. Arms, 91 U. S. 489; Campe v. Weir, 28 Misc. Rep. 243, 245; Reiser v. Met. Express Co., 45 Misc. Rep. 632, 633; Will v. P. T. Co., 3 App. Div. 22; Dixon v. W. U. T. Co., 3 App. Div. 60; N. Y. C. R. R. Co. v. Loakwood, 84 U. S. 357; Hart v. W. U. T. Co., 66 Cal. 579; Stover v. Gowen, 18 Me. 177; New World v. King, 16 How. [U. S.] 470.) Charles F. Brown, Thomas B. Jones and William W. Cook for respondent. The message in question was transmitted- under terms and conditions expressly limiting the liability of the defendant in the event of error to the amount received for transmitting said message, the message being an unrepeated message. (Kiley v. W. U. Tel. Co., 109 N. Y. 231; Breese v. U. S. Tel. Co., 48 N. Y. 132; Bennett v. W. U. T. Co., 18 N. Y. S. R. 777; Riley v. W. U. T. Co., 26 N. Y. Supp. 532; Altman v. W. U. T. Co., 84 N. Y. Supp. 54; Primrose v. W. U. T. Co., 154 U. S. 1; Hart v. W. U. Tel. Co., 36 Cal. 579; Camp v. W. U. Tel. Co., 1 Metc. [Ky.] 164; Birney v. N. Y. Tel. Co., 18 Md. 232; U. S. Tel. Co. v. Gildersleeve, 29 Md. 232.) The terms and conditions on the telegraph blank are binding upon the addressee as well as upon the sender of the message. (Ellis v. A. T. Co., 95 Mass. 226; Findlay v. W. U. T. Co., 64 Fed. Rep. 459; Whitehill v. W. U. T. Co., 136 Fed. Rep. 499; Coit v. W. U. T. Co., 130 Cal. 657; Poteet v. W. U. T. Co., 55 S. E. Rep. 113; Squires v. N. Y. C. R. R. Co., 98 Mass. 239; Brooke v. W. U. Tel. Co., 46 S. E. Rep. 826; Frazier v. W. U. Tel. Co., 78 Pac. Rep. 330; Rawlings v. Bell, 1 C. B. 951; Omrod v. Huth, 14 M. & W. 651.) The sender of the message was requested by plaintiffs to send this particular message, and hence the plaintiffs were the principals, and the sender of the message acted as the agent of the plaintiffs, at the plaintiffs’ request and for the plaintiffs’ benefit, in sending the message sued on, and hence plaintiffs are bound by the terms and conditions. (W. U. T. Co. v. James, 90 Ga. 254; Mannier v. W. U. T. Co., 94 Tenn. 442; Coit v. W. U. T. Co., 130 Cal. 657; Curtin v. W. U. T. Co., 16 Misc. Rep. 348; Aiken v. W. U. T. Co., 5 S. C. 371; De Rutte v. N. Y., etc., T. Co., 1 Daly, 556.) The defendant is not under the obligations of a common carrier, and is not liable as an insurer of the correctness of an unrepeated message. (Schwartz v. A. & P. T. Co., 18 Hun, 157; Breese v. U. S. T. Co., 48 N. Y. 140; Kiley v. W. U. T. Co., 109 N. Y. 231; Ayers v. W. U. T. Co., 65 App. Div. 149; Grinnell v. W. U. T. Co., 113 Mass. 299; W. U. T. Co. v. Carew, 15 Mich. 525.) There was no evidence of gross negligence. (Primrose v. W. U. T. Co., 154 U. S. l; Baldwin v. W. U. Tel. Co., 45 N. Y. 744; Jones v. W. U. Tel. Co., 18 Fed. Rep. 717; Bennett v. W. U. Tel. Co., 18 N. Y. S. R. 777; Breese v. U. S. Tel. Co., 48 N. Y. 132; Young v. W. U. T. Co., 65 N. Y. 163; Kiley v. W. U. T. Co., 109 N. Y. 231; Altman v. W. U. Tel. Co., 84 N. Y. Supp. 54; Ayres v. W. U. Tel. Co., 65 App. Div. 149; Riley v. W. U. Tel. Co., 28 N. Y. Supp. 581.) [MAJORITY — Gray, J.] Gray, J. It is the plaintiffs’ claim that the defendant is liable to them, as the addressees of the telegraphic message, for the failure to properly perform its duty; from which liability it was not relieved by the terms of its contract with the sender of the message. The argument is made that the defendant, as a public service corporation, “ owes a duty to the public, for the breach of which, a party injured has a right of action, which is unaffected by any contract of limitation, to which the injured person is not a party;” notwithstanding the duty was undertaken by reason of such contract. So far as the plaintiffs’ claim was predicated upon the alleged gross negligence of the defendant, in the performance of the undertaking to transmit to them the telegraphic message from the sender in FJorth Carolina, it is sufficient to say that the evidence wholly failed to make out any case for the jury on that theory. It showed, simply, the commission of an error, which, so far as material in its consequences, occurred in the change of the word “ eighty ” to “ eighth.” The letter “y” was changed to the letter “h” in two instances. Whether such changes were the inadvertent, or mistaken, act of the receiving operator, or of any operator at the relay station, or whether they were the result of atmospheric disturbances, or of perturbations of the electric fluid, to which, concededly, the transmission of telegraphic messages is more or less subject, is not material. The nature of the undertaking by a telegraph company suggests the possibility, if not the probability, of peculiar risks affecting it, whether in the one, or the other, way. However occurring, if by no willful misconduct, a mere mistake, or error, in the transmission of a message would not warrant a jury in finding that there had been more than ordinary negligence. (See Breese v. U. S. Tel. Co., 48 N. Y. 132; Primrose v. W. U. Tel. Co., 154 U. S. 1.) The hazards attending upon the accurate performance by telegraph corporations of their function of transmitting messages are obvious and the prudential character of such regulations, as this defendant had adopted in order to guard against inaccuracy in transmission and to prevent mistakes from any cause, is evident. The importance of accuracy to the parties cannot always be apparent to the operator; but it is to the sender. Where the wording of a message is such as to be obscure in its meaning, or unintelligible to the ordinary reader-, mistakes are reasonably possible in the transcribing. In any case, the regulations of the telegraph company afford the means of making accuracy reasonably certain, or of effecting insurance against mistakes. The question in this case must be, what legal relation did the defendant sustain to the plaintiffs; or what was the measure of the duty owing by the defendant and of its responsibility for a failure in performance ? Was the duty an absolute one, as claimed by the appellants; or was the undertaking one within the terms of the contract with the sender ? In my opinion, the contract was binding upon the appellants and relieved the defendant of any liability beyond that stipulated for. In the Appellate Division, it was held by a majority of the learned justices, in effect, that the defendant had the right to make the regulations, which prescribed its liability in accepting messages for transmission, and that “ whether the action is deemed to rest upon the contract of the sender, or to result from a breach of duty, the limitation of the amount of damages to be recovered being reasonable, the plaintiff has no standing to maintain this action unless he is the real principal in the action, and then only to the extent of the amount paid for the transmission of the message.” The dissenting justices took the view that, as the contract of the defendant with respect to its liability was only with the sender of the message, the plaintiffs, as the receivers, were not bound by it and that their action rested on a negligent breach of the duty owing by the defendant to deliver the message as received. It was said that “ telegraph companies, being under a public duty to receivers of messages, senders of messages cannot, by contract, lessen, or do away with, that duty. They may only do so in respect of the duty due to themselves.” For the decision of this case, it is unnecessary that the court should go as far as did the Appellate Division, in the prevailing opinion, in defining the general responsibility of the defendant towards the addressee of a message. It was alleged, in this complaint, that the “ plaintiffs requested the Cannon Mfg. Co. * * * to send them by wire the prices ” for the goods and such was shown to be the fact by the evidence of the plaintiffs. The Cannon Mfg. Co., therefore, in transmitting the information requested by means of the telegraph, was made the agent of the plaintiffs for that purpose. The plaintiffs, not desiring to await a communication from the Cannon Co. in the ordinary way of a letter, availed themselves of the latter’s services, and authorized them, to employ the telegraph system for sending a reply. In doing so, the sender was, either, the plaintiffs’ agent in making the contract with the defendant; or it made the contract for their benefit. While, in either view, the result would be the same, in so far that the plaintiffs would come under the obligation of the contract with the defendant, it is, probably, the more correct view that the Cannon Mfg. Co. acted as the agent of the plaintiffs in contracting for the conveyance of its message by a telegraph line. If that be true, the plaintiffs must be concluded by the act of their agent. The Cannon Mfg. Co. had a reasonable latitude of action in entering into such a contract and that the terms of the contract, as made, were reasonable must be regarded as settled upon authority. The defendant, while it may be likened to a common carrier, in its occupation of conveying messages from, and to, all persons, unlike a common carrier of goods, does not become an insurer in their transmission. Its duties are performed in a different way. The reasons for making common carriers of goods insurers of their value do not apply in the case of telegraph systems; for there is no custody of goods, and the conveyance of messages is subject to the contingencies of extraneous disturbances beyond the control of the telegraph owner, or to the fallibility of operators in transcribing by signals, or symbols, or in comprehending the message itself as written. By reason of the franchises and powers accorded to it, a telegraph corporation performs public functions and it comes under that general obligation, to which all quasi-public corporations are subject, to conduct its corporate business, and to discharge the duties incident thereto, with reasonable diligence and with a due care for the rights and interests of those concerned in the corporate operations. But, however strictly held to this general obligation, it is competent for it to make such rules and to prescribe such regulations for the conduct of its business as are reasonable. It is entitled to protect itself against the incidental hazards of operation and, by contract, to limit its liability for mistakes, or delays, or nondelivery, caused by the negligence of its servants, if not gross. (Breese v. U. S. Tel. Co., 48 N. Y. 132; Young v. W. U. Tel. Co., 65 ib. 163; Kiley v. W. U. Tel. Co., 109 ib. 231; Pearsall v. W. U. Tel. Co., 124 ib. 256-267; Primrose v. W. U. Tel. Co., 154 U. S. 1-15.) In each of the above-cited cases, except the Pearsall case, the contract with the telegraph company was upon printed blanks, similar to the one which the sender of the message in question made use of. In the Pearsall Oase, (supra), the question passed upon was whether the sender of a message was chargeable with constructive notice of resolutions of the defendant, limiting its liability for an unrepeated message. While holding that mere notice was ineffectual to limit the liability for a failure to accurately transmit — and upon that there was a sharp division in the court — the right of a telegraph company to contract for such limitation was considered to - be settled. The stipulations upon these blanks have, invariably, been held in this state to be reasonable; as they have been by the United States Supreme Court and in many of the states. The decision in the case of Ellis v. Amer. Tel. Co., (95 Mass. 226), largely quoted from in the prevailing opinion below, turned upon the general right of the receiver of a telegraphic message to hold a telegraph company responsible for the damage resulting from material errors occurring in the transmission of the message. In that case, as in this, there was an error in the quotation of a price. The Massachusetts Supreme Court held that the liability of the telegraph company to the receiver of the message was, generally, limited by the contract upon the blank to the amount received by the company from the sender, where the message had not been repeated. It was held there, in effect, that the regulation adopted by the telegraph company for the repetition of a message, in order to guard against mistakes, was a most reasonable requisition and that, notwithstanding the receiver had entered into no express contract with the company, and could not be held to have made any express stipulations with it, he could not claim any higher, or different, degree of diligence than was stipulated for between the sender of the message and the telegraph company. This case was cited with approval, as to the general rule, in Pearsall v. W. U. Tel. Co., (124 N. Y. at p. 210). If it were necessary, in this case, to determine the measure of liability of the defendant, generally, to the receiver of a message for the loss occasioned by some mistake, or error, in its transmission, my personal judgment would incline me to agree with the view of the Massachusetts court. The English GfíW'te Jiftyq rqfqsec] recognize a right 9f option ip fyhq addressee of a telegraphic message for a failure to accurately transmit it, for want of any privity of contract, (Dickson v. Reuter's Tel. Co., L. R. [2 C. P. Div.] 62), and, while that right is accorded here for negligence in performing a duty, I fail to perceive any sufficient reason why, in a case of a failure not due to gross negligence, the telegraph company should be held to a higher degree of diligence and care, than was stipulated for with the sender. But the facts of this case do not make it necessary to go so far and our decision is limited to those facts. It is our judgment that where the receiver of a message has, by a special request, procured it to be sent by the telegraph, he becomes bound by any reasonable contract made by the sender with the telegraph company for its transmission and is limited in his claim for any damages for a loss occasioned by error, or mistake, in transmission, where the stipulations for the repetition, or for the insurance, of the message have not been availed of, to the amount stipulated in the contract. In the two cases in this court, to which' our attention is directed by the appellants, nothing in their decision authorizes, or even points, to a different view of the question. In the case of Elwood v. W. U. Tel. Co., (45 N. Y. 549), the action was brought by the receiver of the message and the defendant was shown to have been guilty of gross negligence. There was no error, nor mistake, in the message transmitted ; but the fault of the telegraph company was in delivering a message purporting to be from the cashier of a bank, when it was known by the operator that that officer had not signed the telegraphic message. The telegram directed the payment of money to a person named and, when first transmitted, the message was signed, simply, in the name of the bank. The plaintiffs, to whom the message was addressed, called the attention of the telegraph company to the fact that the name of the officer of the bank was wanting. It was sent back for repetition and, as repeated, bore the name of the cashier. It was shown that the operator knew that both messages were written by a person, who was not the cashier of the ¡bank and who was known by the same name as that of the person to whom the telegram authorized the payment of the money. In the case of Lowery v. W. U. Tel. Co., (60 N. Y. 198), the plaintiff was the receiver of a message and sued the defendant for a loss occasioned by reason of a change in the figures of a sum of money, which the sender asked of him. Upon receiving a larger sum from the plaintiff the sender of the telegram misappropriated it and absconded. The plaintiff recovered a judgment for his loss ; which, eventually, was reversed in this court, upon the ground that the defendant’s negligence was not the natural and proximate cause of the loss sustained by the plaintiff, as the embezzlement did not naturally result from the wrong of the defendant. The terms of the sending do not appear in the report of the case and no reference is made to the subject. The appellants’ reference to the printed record shows a contract governed by the law of Illinois, according to the determination made below, which differed from the law in this state. The case is of no authority upon the determination of the question in this case. The contention of the appellants that the printed blank was insufficient to limit the defendant’s liability for negligénce is quite untenable. It was not necessary that the word “negligence ” should be used in the stipulations of the contract. It was a sufficient protection to the defendant that the contract required a repetition of the message, or an insurance, in order to make the defendant liable for mistakes, or delays, in the transmission, or delivery, beyond the amount received for sending the same. Such mistakes, or delays, whether caused by the negligence of the defendant’s servants, if not gross, as by willful misconduct, or by causes beyond its control, were covered sufficiently by the clause of the contract. I think that the plaintiffs failed to make any case against the defendant for the recovery of the damage claimed to have resulted to them by reason of the error, or mistake, in the message, as transmitted, and the trial court was in error in submitting the case to the jury upon the theory that the stipulations on the printed blank, upon which the message was sent, were not binding upon the plaintiffs. For the reasons given, I advise the affirmance of the order of reversal and that judgment absolute should be rendered against the appellants, pursuant to the stipulation in their notice of appeal, with costs to the respondent in all the courts. Cullen, Ch. J., Vann, Werner, Willard Bartlett, His-cock and Chase, JJ., concur. Ordered accordingly.