[226 U.S. 491, 492] This was an action in the circuit court of Kenton county, Kentucky, against the express company, to recover the full market value of a small package containing a diamond ring which was delivered by the plaintiff below to the express company at its office in Cincinnati, Ohio, consigned to J. W. Clendenning at Augusta, Georgia. The package was never delivered.
The express company made defense by answer. The plaintiff demurred to the answer as not containing a defense, which demurrer was sustained. The company declined to further plead, whereupon the circuit court gave judgment for the sum of $137.52, being the full value of the ring and interest. A writ of error was sued out from this court to the circuit court of Kenton county, that being the highest court of the state in which a decision could be had.
The answer and accompanying exhibit were in substance as follows: [226 U.S. 491, 493] That the defendant was an express company engaged in interstate commerce within the provisions of the act of Congress of June 29, 1906 [34 Stat. at L. 584, chap. 3591, U. S. Comp. Stat. Supp. 1911, p. 1288]; that in obedience to that act it had duly filed with the Interstate Commerce Commission schedules showing its rates and charges from Cincinnati to Augusta, Georgia, which schedules showed that its rates and charges, when the value of the property to be carried was in excess of $50, were graduated reasonably, according to the value, and that the lawful rate upon the package of the plaintiff from Cincinnati to Augusta was 25 cents if the value was $50 or less, and was 55 cents if its value was $125.
It is averred that the plaintiff knew that the charges upon the package shipped were based upon the value of the shipment, and that it ( the defendant) required that the value should be declared by the shipper, and that if he did not disclose and declare the value when he delivered the shipment to it at Cincinnati for transportation to Augusta, the rate charged would be based upon a valuation of $50. It is then alleged that the package so delivered was sealed, and that defendant did not know the contents or value, and that if it had, it would not have received it for carriage for less than the lawful published rate of 55 cents. The receipt or bill of lading issued shows no value, but contains a stipulation in these words:
[226 U.S. 491, 497] Messrs. John Randolph Schindel and Morison R. Waite for defendant in error.
Mr. Justice Lurton, after making the foregoing statement, delivered the opinion of the court:
The answer relies upon the act of Congress of June 29, 1906 [34 Stat. at L. 584, chap. 3591, U. S. Comp. Stat. Supp. 1911, p. 1288], being an act to amend the interstate commerce act of 1887 [24 Stat. at L. 379, chap. 104], as the only regulation applicable to an interstate shipment; and avers that the limitation of value, declared in its bill of lading, was valid and obligatory under that act. This defense was denied. This constitutes the Federal question and gives this court jurisdiction.
Under the law of Kentucky this contract, limiting the plaintiff's recovery to the agreed or declared value, was invalid, and the shipper was entitled to recover the actual value, 'unless,' as said in Adams Exp. Co. v. Walker, 119 Ky. 121, 67 L.R.A. 412, 83 S. W. 106, and affirmed in Southern Exp. Co. v. Fox & Logan, 131 Ky. 257, 133 Am. St. Rep. 241, 115 S. W. 184, 117 S. W. 270, 'sufficient facts are shown, independently of the special contract, to avoid the contract for fraud, or to create an estoppel at common law.'
The question upon which the case must turn is whether the operation and effect of the contract for an interstate shipment, as shown by the receipt or bill of lading, is [226 U.S. 491, 500] governed by the local law of the state, or by the acts of Congress regulating interstate commerce.
That the constitutional power of Congress to regulate commerce among the states and with foreign nations comprehends power to regulate contracts between the shipper and the carrier of an interstate shipment by defining the liability of the carrier for loss, delay, injury, or damage to such property, needs neither argument nor citation of authority.
But it is equally well settled that until Congress has legislated upon the subject, the liability of such a carrier, exercising its calling within a particular state, although engaged in the business of interstate commerce, for loss or damage to such property, may be regulated by the law of the state. Such regulations would fall within that large class of regulations which it is competent for a state to make in the absence of legislation by Congress, growing out of the territorial jurisdiction of the state over such carriers, and its duty and power to safeguard the general public against acts of misfeasance and nonfeasance committed within its limits, although interstate commerce may be indirectly affected: Smith v. Alabama, 124 U.S. 465 , 31 L. ed. 508, 1 Inters. Com. Rep. 804, 8 Sup. Ct. Rep. 564; New York, N. H. & H. R. Co. v. New York, 165 U.S. 628 , 41 L. ed. 853, 17 Sup. Ct. Rep. 418; Chicago, M. & St. P. R. Co. v. Solan, 169 U.S. 133, 137 , 42 S. L. ed. 688, 692, 18 Sup. Ct. Rep. 289; Richmond & A. R. Co. v. R. A. Patterson Tobacco Co. 169 U.S. 311 , 42 L. ed. 759, 18 Sup. Ct. Rep. 335; Cleveland, C. C. & St. L. R. Co. v. Illinois, 177 U.S. 514 , 44 L. ed. 868, 20 Sup. Ct. Rep. 722; Pennsylvania R. Co. v. Hughes, 191 U.S. 477 , 48 L. ed. 268, 24 Sup. Ct. Rep. 132. In the Solan Case, cited above, it was said of such state legislation:
The contract there involved was for transportation of cattle with a drover in charge, and the shipper had signed a contract limiting the liability to himself or the drover to $500 for injury to the person of the drover. Proof was offered that this limitation was the consideration of a reduced rate of transportation.
In Pennsylvania R. Co. v. Hughes, 191 U.S. 477, 487 , 491 S., 48 L. ed. 268, 271, 273, 24 Sup. Ct. Rep. 132, there was involved a bill of lading in all essentials identical with the one here concerned, whereby it was stipulated that, in consideration of a reduced rate of freight, the shipper should receive, in case of negligent loss, the agreed value declared in the receipt. The shipment was made in New York, where the stipulation was valid, to a point in Pennsylvania, where such a limitation was invalid. The loss occurred in the latter state, and the supreme court of the state upheld a judgment for the full value, declaring the limitation invalid as forbidden by the public policy of that state. That case came to this court upon the contention that the Pennsylvania court, in refusing to limit the recovery to the valuation argeed upon, had denied to the railroad company a right or privilege secured to it by the interstate commerce law. But this court, as to that, said:
In view of the decisions of this court in the two cases last referred to, we shall assume that this case is governed by them, unless the subsequent legislation of Congress is such as to indicate a purpose to bring contracts for interstate shipments under one uniform rule of law not subject to the varying policies and legislation of particular states.
The original interstate commerce act of February 4, 1887, was extensively amended by the act of June 29, 1906 (34 Stat. at L. 584, chap. 3591, U. S. Comp. Stat. Supp. 1911, p. 1288). We may pass by many of the changes and amendments made by the latter act as not decisive, and come at once to the far more important amendment made in the 20th section,-an amendment bearing directly upon the carrier's liability or obligation under interestate contracts of shipment, and generally referred to as the Carmack amendment. For convenience of reference, it is set out in the margin
That any common carrier, railroad, or transportation company receiving property for transportation from a point in one state to a point in another state shall issue a receipt or bill of lading therefor, and shall be liable to the lawful holder thereof for any loss, damage, or injury to such property caused by it or by any common carrier, railroad, or transportation company to which such property may be delivered, or over whose line or lines such property may pass; and no contract, receipt, rule, or regulation shall exempt such common carrier, railroad, or transportation company from the liability hereby imposed: Provided, That nothing in this section shall deprive any holder of such receipt or bill of lading of any remedy or right of action which he has under existing law.
That the common carrier, railroad, or transportation company issuing such receipt or bill of lading shall be entitled to recover from the common carrier, railroad. or transportation company on whose line the loss, damage, or injury shall have been sustained, the amount of such loss, damage, or injury, as it may be required to pay to the owners of such property, as may be evidenced by any receipt, judgment, or transcript thereof. [226 U.S. 491, 504] This amendment came under consideration in Atlantic Coast Line R. Co. v. Riverside Mills, 219 U.S. 186 , 55 L. ed. 167, 31 L.R.A.(N.S.) 7, 31 Sup. Ct. Rep. 164; but the opinion and judgment was confined to that provision of the act which made the initial carrier liable for a loss upon the line of a connecting carrier, the property having been received under a bill of lading which confined the liability of the initial carrier to loss occurring upon its own line.
The significant and dominating features of that amendment are these:
First. It affirmatively requires the initial carrier to issue 'a receipt or bill of lading therefor,' when it receives 'property for transportation from a point in one state to a point in another.'
Second. Such initial carrier is made 'liable to the lawful holder thereof for any loss, damage, or injury to such property caused by it.'
Third. It is also made liable for any loss, damage, or injury to such property caused by 'any common carrier, railroad, or transportation company to which such property may be delivered, or over whose line or lines such property may pass.'
Fourth. It affirmatively declares that 'no contract, receipt, rule, or regulation shall exempt such common carrier, railroad, or transportation company from the liability hereby imposed.'
Prior to that amendment, the rule of carriers' liability, for an interstate shipment of property, as enforced in both Federal and state courts, was either that of the general common law, as declared by this court and enforced in the Federal courts throughout the United States ( Hart v. Pennsylvania R. Co. 112 U.S. 331 , 28 L. ed. 717, 5 Sup. Ct. Rep. 151), or that determined by the supposed public policy of a particular state (Pennsylvania R. Co. v. Hughes, 191 U.S. 477 , 4, L. ed. 268, 24 Sup. Ct. Rep. 132), or that prescribed by statute law of a particular state ( Chicago, M. & St. P. R. Co. v. Solan, 169 U.S. 133 , 42 L. ed. 688, 18 Sup. Ct. Rep. 289).
Neither uniformity of obligation nor of liability was [226 U.S. 491, 505] possible until Congress should deal with the subject. The situation was well depicted by the supreme court of Georgia in Southern P. Co. v. Crenshaw Bros. 5 Ga. App. 675, 63 S. E. 865, where that court said:
That the legislation supersedes all the regulations and policies of a particular state upon the same subject results from its general character. It embraces the subject of the liability of the carrier under a bill of lading which he must issue, and limits his power to exempt himself by rule, regulation, or contract. Almost every detail of the subject is covered so completely that there can be no rational doubt but that Congress intended to take possession of [226 U.S. 491, 506] the subject, and supersede all state regulation with reference to it. Only the silence of Congress authorized the exercise of the police power of the state upon the subject of such contracts. But when Congress acted in such a way as to manifest a purpose to exercise its conceded authority, the regulating power of the state ceased to exist. Northern P. R. Co. v. Washington, 222 U.S. 370 , 56 L. ed. 237, 32 Sup. Ct. Rep. 160; Southern R. Co. v. Reid, 222 U.S. 424 , 56 L. ed. 257, 32 Sup. Ct. Rep. 140; Second Employers' Liability Cases (Mondou v. New York, N. H. & H. R. Co.) 223 U.S. 1 , 56 L. ed. 327, 38 L.R.A.(N.S.) 44, 32 Sup. Ct. Rep. 169.
To hold that the liability therein declared may be increased or diminished by local regulation or local views of public policy will either make the provision less than supreme, or indicate that Congress has not shown a purpose to take possession of the subject. The first would be unthinkable, and the latter would be to revert to the uncertainties and diversities of rulings which led to the amendment. The duty to issue a bill of lading, and the liability thereby assumed, are covered in full; and though there is no reference to the effect upon state regulation, it is evident that Congress intended to adopt a uniform rule and relieve such contracts from the diverse regulation to which they had been theretofore subject.
What is the liability imposed upon the carrier? It is a liability to any holder of the bill of lading which the primary carrier is required to issue 'for any loss, damage, or injury to such property caused by it,' or by any connecting carrier to whom the goods are delivered. The suggestion that an absolute liability exists for every loss, damage, or injury, from any and every cause, would be to make such a carrier an absolute insurer, and liable for unavoidable loss or damage, though due to uncontrollable forces. That this was the intent of Congress is not conceivable. To give such emphasis to the words, 'any loss or damage,' would be to ignore the qualifying words, 'caused by it.' The liability thus imposed is limited to 'any loss, injury, or damage caused by it or a succeeding [226 U.S. 491, 507] carrier to whom the property may be delivered;' and plainly implies a liability for some default in its common-law duty as a common carrier.
But it has been argued that the nonexclusive character of this regulation is manifested by the proviso of the section, and that state legislation upon the same subject is not superseded, and that the holder of any such bill of lading may resort to any right of action against such a carrier, conferred by existing state law. This view is untenable. It would result in the nullification of the regulation of a national subject, and operate to maintain the confusion of the diverse regulation which it was the purpose of Congress to put an end to.
What this court said of the 22d section of this act of 1887 in the case of Texas & P. R. Co. v. Abilene Cotton Oil Co. 204 U.S. 426 , 51 L. ed. 553, 27 Sup. Ct. Rep. 350, 9 Sup. Ct. Rep. 1075, is applicable to this contention. It was claimed that that section continued in force all rights and remedies under the common law or other statutes. But this court said of that contention what must be said of the proviso in the 20th section, that it was evidently only intended to continue in existence such other rights or remedies for the redress of some specific wrong or injury, whether given by the interstate commerce act, or by state statute, or common law, not inconsistent with the rules and regulations prescribed by the provisions of this act. Again, it was said of the same clause, in the same case, that it could not in reason be construed as continuing in a shipper a commonlaw right the existence of which would be inconsistent with the provisions of the act. In other words, the act cannot be said to destroy itself.
To construe this proviso as preserving to the holder of any such bill of lading any right or remedy which he may have had under existing Federal law at the time of his action gives to it a more rational interpretation than one which would preserve rights and remedies under existing state laws, for the latter view would cause the proviso to [226 U.S. 491, 508] destroy the act itself. One illustration would be a right to a remedy against a succeeding carrier, in preference to proceeding against the primary carrier, for a loss or damage incurred upon the line of the former. The liability of such succeeding carrier in the route would be that imposed by this statute, and for which the first carrier might have been made liable.
We come now to the question of the validity of the provision in the receipt or bill of lading limiting liability to the agreed value of $50, as shown therein. This limiting clause is in these words:
The answer states that the schedules which the express company had filed with the Interstate Commerce Commission showed rates based upon valuations; and that the lawful and established rate for such a shipment as that made by the plaintiff from Cincinnati to Augusta, having a value not in excess of $50, was 25 cents, while for the same package, if its value had been declared to be $125, the amount for which the plaintiff sues as the actual value, the lawful charge, according to the rate filed and published, would have been 55 cents. It is further averred that the package was sealed, and its contents and actual value unknown to the defendant's agent.
That no inquiry was made as to the actual value is not vital to the fairness of the agreement in this case. The receipt which was accepted showed that the charge made [226 U.S. 491, 509] was based upon a valuation of $50 unless a greater value should be stated therein. The knowledge of the shipper that the rate was based upon the value is to be presumed from the terms of the bill of lading and of the published schedules filed with the Commission. That presumption is strengthened by the fact that across the top of this bill of lading there was this statement in bold type: 'This company's charge is based upon the value of the property, which must be declared by the shipper.'
That a common carrier cannot exempt himself from liability for his own negligence or that of his servants is elementary. York Mfg. Co. v. Illinois C. R. Co. 3 Wall. 107, 18 L. ed. 170; New York C. R. Co. v. Lockwood, 17 Wall. 357, 21 L. ed. 627; Bank of Kentucky v. Adams Exp. Co. 93 U.S. 174 , 23 L. ed. 872; Hart v. Pennsylvania R. Co. 112 U.S. 331, 338 , 28 S. L. ed. 717, 720, 5 Sup. Ct. Rep. 151. The rule of the common law did not limit his liability to loss and damage due to his own negligence, or that of his servants. That rule went beyond this, and he was liable for any loss or damage which resulted from human agency, or any cause not the act of God or the public enemy. But the rigor of this liability might be modified through any fair, reasonable, and just agreement with the shipper which did not include exemption against the negligence of the carrier or his servants. The inherent right to receive a compensation commensurate with the risk involved the right to protect himself from fraud and imposition by reasonable rules and regulations, and the right to agree upon a rate proportionate to the value of the property transported.
It has therefore become an established rule of the common law, as declared by this court in many cases, that such a carrier may, by a fair, open, just, and reasonable agreement, limit the amount recoverable by a shipper in case of loss or damage to an agreed value, made for the purpose of obtaining the lower of two or more rates of [226 U.S. 491, 510] charges proportioned to the amount of the risk. York Mfg. Co. v. Illinois C. R. Co. 3 Wall. 107, 18 L. ed. 170; New York C. R. Co. v. Lockwood, 17 Wall. 357, 21 L. ed. 627; Hart v. Pennsylvania R. Co. 112 U.S. 331, 338 , 28 S. L. ed. 717, 720, 5 Sup. Ct. Rep. 151; Phoenix Ins. Co. v. Erie & W. Transp. Co. 117 U.S. 312, 322 , 29 S. L. ed. 873, 878, 6 Sup. Ct. Rep. 1176; Liverpool & G. W. Steam Co. v. Phenix Ins. Co. (The Montana) 129 U.S. 397, 442 , 32 S. L. ed. 788, 792, 9 Sup. Ct. Rep. 469; New York, L. E. & W. R. Co. v. Estill, 147 U.S. 591, 619 , 37 S. L. ed. 292, 305, 13 Sup. Ct. Rep. 444; Primrose v. Western U. Teleg. Co. 154 U.S. 1, 15 , 38 S. L. ed. 883, 889, 14 Sup. Ct. Rep. 1098; Chicago, M. & St. P. R. Co. v. Solan, 169 U.S. 133, 135 , 42 S. L. ed. 688, 690, 18 Sup. Ct. Rep. 289; Calderon v. Atlas S. S. Co. 170 U.S. 272, 278 , 42 S. L. ed. 1033, 1035, 18 Sup. Ct. Rep. 588; Pennsylvania R. Co. v. Hughes, 191 U.S. 477, 485 , 48 S. L. ed. 268, 271, 24 Sup. Ct. Rep. 132.
That such a carrier might fix his charges somewhat in proportion to the value of the property is quite as reasonable and just as a rate measured by the character of the shipment. The principle is that the charge should bear some reasonable relation to the responsibility, and that the care to be exercised shall be in some degree measured by the bulk, weight, character, and value of the property carried.
Neither is it conformable to plain principles of justice that a shipper may understate the value of his property for the purpose of reducing the rate, and then recover a larger value in case of loss. Nor does a limitation based upon an agreed value for the purpose of adjusting the rate conflict with any sound principle of public policy. The reason for the legality of such agreements is well stated in Hart v. Pennsylvania R. Co. 112 U.S. 331, 338 , 28 S. L. ed. 717, 720, 5 Sup. Ct. Rep. 151, where it is said:
The statutory liability, aside from responsibility for the default of a connecting carrier in the route, is not beyond the liability imposed by the common law, as that body of law applicable to carriers has been interpreted by this court, as well as many courts of the states. Greenwald v. Barrett, 199 N. Y. 170, 175, 35 L.R.A.(N.S.) 971, 92 N. E. 218; Bernard v. Adams Exp. Co. 205 Mass. 254, 259, 28 L.R.A.(N.S.) 293, 91 N. E. 325, 18 Ann. Cas. 351. The exemption forbidden is, as stated in the case last cited, 'a statutory declaration that a contract of exemption from liability for negligence is against public policy and void.' This is no more than this court, as well as other courts administering the same general common law, have many times declared. In the same case, just such a stipulation as that here involved was upheld, the court saying:
In Greenwald v. Barrett, cited above, the same conclusion was reached as to the nature of the liability imposed and the purport of the exemption forbidden, the court, among other things, saying:
To the same effect are the cases of Travis v. Wells, F. & Co. 79 N. J. L. 83, 74 Atl. 444; Fielder v. Adams Exp. Co. 69 W. Va. 138, 71 S. E. 99; Larsen v. Oregon Short Line R. Co. 38 Utah, 130, 110 Pac. 983. See also Atkinson v. New York Transfer Co. 76 N. J. L. 608, 71 Atl. 278, as to the general rule.
That a carrier rate may be graduated by value, and that a stipulation limiting recovery to an agreed value, made to adjust the rate, is recognized by the Interstate Commerce Commission, see Re Released Rates, 13 Inters. Com. Rep. 550.
We therefore reach the conclusion that the provision of the act forbidding exemptions from liability imposed by the act is not violated by the contract here in question. [226 U.S. 491, 513] The demurrer to the answer of the defendant below should have been overruled. For this reason the judgment is reversed, with direction to overrule the demurrer, and for such further proceedings as are not inconsistent with this opinion.