Story Case

The Indiana Interurban Railroad Company posted notices in all its passenger and freight receiving stations, to the effect that all claims for damages or loss of goods must be made within thirty days from the time the damage or loss occurred, otherwise they would not be recognized. Walter Dupree shipped a crate of eggs from Martinsville, Indiana, to Indianapolis, on June 1,1915. Many of the eggs were broken in transit, but Dupree did not place any claim for the loss until August first of the same year. When the company refused to pay, on the ground that the claim was too late, Dupree contended that the provision was no part of his contract, since it was not contained in his bill of lading. Can Dunree force the payment of the loss?

Ruling Court Case. Caldwell Vs. Southern Express Company, Volume 21 Wallace United States Reports, Page 264

Caldwell sued the Southern Express Company, as a common carrier, for its failure to deliver, at New Orleans, a package received by it on the twenty-third day of April, at Jackson, Tennessee. The transit between Jackson and New Orleans was only one day. The company pleaded that when the package was received, "it was agreed between the company and Caldwell, and made one of the express conditions upon which the package was received, that the company should not be held liable for any loss of or damage to, the package whatsoever, unless claim should be made thereof within ninety days from its liability to it." The company showed that no claim was made until six years later. For this reason, it contended that it was not liable for the loss.

It was contended by Caldwell that a common carrier had no power to escape its liability by contract.

Mr. Justice Strong said: "A common carrier is always responsible for his negligence, no matter what his stipulations may be; but an agreement that, in case of a failure by the carrier to deliver the goods, a claim shall be made by the bailor, or by the consignee, within a specified period, if that period be a reasonable one, and is altogether of a different character. It contravenes no public policy; it excuses no negligence; it is perfectly consistent with holding the carrier to the fullest measure of good faith, of diligence, and of capacity, which the strictest rules of the Common Law ever required.

"With the bailor (shipper) the bailment is a single transaction of which he has full knowledge; with the bailee (carrier) it is one of a multitude. There is no hardship in requiring the bailor to give notice of the loss, if any, or make a claim for compensation within a reasonable time after he has delivered the package to the carrier. There is great hardship in requiring the carrier to account for the parcel long after that time, when he has had no notice of any failure of duty on his part, and when the lapse of time has made it difficult, if not impossible, to ascertain the actual facts." For the reasons given, the contract was held valid, and judgment was given for the Southern Express Company.

Ruling Law. Story Case Answer

Although the general rule is that a carrier cannot make a contract limiting its liability for loss which has arisen from its own negligence, this does not preclude it from making an agreement, that it shall not be liable for loss, whether for negligence or not, unless the claim is made within a reasonable time. The purpose of such a stipulation is to compel those who have suffered loss to make their claims seasonably, so that the company will not be taken by surprise many months later. Such a provision does not relieve the carrier from any of his obligations. He remains under the Common Law obligation to exercise a high degree of diligence, fidelity and care; the provision is merely designed to secure expeditious service and fair dealing.

It will be noticed that a contract limiting the absolute liability of a carrier, as for loss by fire or robbery, must be directly asserted to by the shipper in an express contract. But provisions regulating the time in which a claim must be made, may simply be posted in the company's stations. They are binding upon the shipper if brought to his knowledge by public notice, and if they are reasonable in their provisions. The courts usually make a distinction between the reasonableness of a time limit for filing a claim, and the time limit for starting suit. Ten days after the discovery of the loss, has been held as a reasonable time limit for making a claim. A limitation of forty days for filing suit has been sustained where the circumstances did not make it unreasonable. The burden of proof is upon the carrier to prove the reasonableness of the stipulation.

By statute in Texas, two years has been fixed as the minimum time limit for filing suits. If the time limit has expired, but the railroad, nevertheless, enters into negotiations for settlement, it is held to waive the limit, and any action inducing the shipper to delay, will waive the time limit. It seems that there are no objections to the stipulation in the Story Case, and Dupree cannot recover.

The Cummins Amendment, enacted by Congress March 4, 1915, and having effect on interstate commerce, makes it unlawful for the carrier to fix a period for giving notice of claims shorter than 90 days, for the filing of claims shorter than four months, and for the institution of suits shorter than two years. The law does not indicate the time or date from which these several periods of time shall be computed; that is, whether from the date of delivery by the carrier of the damaged property, or in case of loss, after a reasonable time for delivery has elapsed, from the date shown on the bill of lading, or from the occurrence of the loss or of the damage. It seems clear that these provisions are, in common with the other matters, governed by the amendment, confined to instances of loss, damage or injury caused by the carriers. It will be necessary for the carriers to determine what periods of time they will fix for the giving notice of claims, the filing of claims, and the institution of suits. The dates or times for which such periods shall run should also be fixed in rules. In the interest of thorough understanding and to avoid controversies, it is very desirable that these rules be uniform for all the carriers of the country.