GEORGE et ux. v. BEKINS VAN & STORAGE CO.
Plaintiffs' household furnishings and effects, valued at more than three thousand dollars, were destroyed by fire on May 16, 1945, while in the possession of defendant storage company at its Grand Avenue warehouse in Los Angeles. Plaintiffs were promptly notified by defendant of the destruction of their goods. Thereafter, having paid all charges due, plaintiffs tendered to defendant the non-negotiable warehouse receipt for the goods, which had been previously issued to them, and demanded redelivery of their property. Defendant's failure to redeliver gave rise to the present action in which plaintiffs have recovered a judgment for the full value of the destroyed articles in an amount exceeding three thousand dollars.
The complaint stated six separate causes of action against defendant storage company, but since the findings and judgment were predicated on only three of these counts, the others may be disregarded. The first successful cause of action alleged a conversion of plaintiffs' personalty by defendant; the second set forth a breach of contract to safely keep, store, and redeliver said property; and the third was based on negligence. By its answer, defendant alleged that the plaintiffs' property had been destroyed by fire while in the warehouse, and set forth four affirmative defenses material here, of which two went to the issue of the existence of legal liability, and two others (as will be discussed more fully hereafter) to the issue of the extent of any liability which might exist. The former two defenses alleged that by the terms of the storage agreement, defendant was to be liable only for lack of ordinary care in the storage of plaintiffs' goods; and that the fire which destroyed plaintiffs' property was not caused by any act or omission to act on the part of said defendant.
The trial court made findings to the effect that defendant had failed to redeliver plaintiffs' goods on demand, and had wrongfully converted them to its own use; that defendant had breached its storage agreement by failing to exercise due care in the management of its warehouse and safekeeping of plaintiffs' property, as a result of which the said property was destroyed by fire; and that plaintiffs' property was destroyed by fire due directly to negligence on the part of defendant. The court also made a specific finding that at the time of the fire, the warehouse and its contents were within the sole and exclusive control of defendant and that the fire was of such a nature that it would not ordinarily have occurred under such circumstances if ordinary care had been exercised.
Defendant challenges the findings in respect to conversion as having no support in the evidence. We think this contention is well taken. The tort of conversion consists of any act of dominion wrongfully exerted over the personal property of another inconsistent with, or in denial of, his rights therein. Zaslow v. Kroenert, 29 Cal.2d 541, 549, 176 P.2d 1; McCaffey, C. Co., Inc. v. Bank of America, 109 Cal.App. 415, 424, 294 P. 45; 24 Cal.Jur. 1021. Mere failure to exercise ordinary care does not in itself indicate any assumption of control or ownership over the goods, and hence is not an ‘act of dominion’ over them sufficient to support a finding of conversion. In Emmert v. United Bank etc. Co., 14 Cal.App.2d 1, 4, 57 P.2d 963, 964, the court states that ‘The general rule is that neither negligence, active or passive, nor a breach of contract, even though it result in injury to, or loss of, specific property, constitutes a conversion.’ To the same effect, see, 1 Rest., Torts, sec. 224 and comment b, sec. 237, comment d; Poggi v. Scott, 167 Cal. 372, 375, 139 P. 815, 51 L.R.A.,N.S., 925; Vagim v. Hazlett Warehouse Co., 131 Cal.App. 197, 201, 20 P.2d 992; Cass v. Ocean Park Bath Co., 45 Cal.App. 656, 658, 188 P. 616.
We do not find any real conflict of authority on this point. Cases like Atwood v. Southern California Ice Co., 63 Cal.App. 343, 218 283, and Wolfe v. Willard H. George, Inc., 110 Cal.App. 532, 294 P. 436, in which some intimation may be found that conversion may be based on negligence, were true conversion cases. While the complaints in Dieterle v. Bekin, 143 Cal. 683, 77 P. 664, and Wilson v. Crown Transfer, etc. Co., 201 Cal. 701, 258 P. 596, alleged conversion, the evidence of negligence would have warranted a recovery on the theory of breach of contract and no question was raised as to the sufficiency of the complaints to support the judgment. And in Scotts V. F. Exch. v. Growers Refrig. Co., 81 Cal.App.2d 437, 184 P.2d 183, an action in conversion, which had been tried on the theory that defendant was liable if it had been negligent, it was pointed out, in affirming a judgment for the plaintiff, that the question whether negligence alone will support an action in conversion was not presented for decision. Since the loss of plaintiffs' property in the present case was found to be due solely to negligence on the part of defendant, there was clearly no basis for recovery on the theory of conversion.
In reaching this conclusion, we are not unmindful of the well established rule that in an action for conversion against a bailee, a prima facie case is made out by the plaintiff by proof of the bailment and subsequent refusal of the bailee to make delivery on demand. Chatterton v. Boone, 81 Cal.App.2d 943, 945, 185 P.2d 610; Vagim v. Hazlett Warehouse Co., 131 Cal.App. 197, 201, 20 P.2d 992; Wolfe v. Willard H. George, Inc., 110 Cal.App. 532, 535, 294 P. 436; U. Drive & Tour v. System Auto Parks, 28 Cal.App.2d, Supp., 782, 784, 71 P.2d 354, and cases cited. Where the bailor makes such proof and the bailee fails to establish that compliance with the demand was impossible due to reasons other than intentional exercise of dominion over the goods, a judgment for conversion is proper. See Atwood v. Southern Cal. Ice Co., 63 Cal.App. 343, 347, 218 P. 283. But where the bailee's evidence establishes his inability to deliver because of unintentional loss or destruction of the goods (as, for example, by fire or theft) the basis for a recovery on the strict conversion theory vanishes, and plaintiff's right to recover must be predicated upon proof of either negligence or breach of contract, although, as already noted, recovery has been sustained occasionally on the conversion theory where that theory of recovery has not been brought in question. The findings of conversion are without support in the evidence, and are inconsistent with other findings which have evidentiary support.
Defendant's next contention, that the findings on the issue of breach of contract are not supported by the evidence, is, we think, without merit. Preliminarily, it may be noted that a clause appearing in the warehouse receipt stating that the goods were accepted for storage ‘at the exclusive risk of the Depositor for damage thereto from * * * fire,’ is clearly invalid as being against public policy insofar as it attempts to relieve the warehouseman from the exercise of ordinary care. England v. Lyon Fireproof Storage Co., 94 Cal.App. 562, 571, 271 P. 532; Dieterle v. Bekin, 143 Cal. 683, 688, 77 P. 664; Uniform Warehouse Receipts Act, Deering's Gen. Laws, Act 9059, sec. 3; Rest., Contracts, sec. 575, subd. 1(b). We do not understand defendant to contend to the contrary.
The tenor of defendant's argument is that plaintiffs had the burden of proving that defendant did not exercise due care in carrying out the storage agreement, and failed to satisfy that burden. The issue of due care, of course, also arose in respect to plaintiff's cause of action for negligence, but the incidence of the burden of proof is not necessarily the same in both instances. See 6 Am.Jur., Bailments, secs. 368, 369, pp. 446–448. In the carefully considered case of Wilson v. California C.R.R. Co., 94 Cal. 166, 29 P. 861, 17 L.R.A. 685, which was a contract action brought against a bailee for failure to redeliver on demand, the bailee, as in the present case, pleaded as an affirmative defense that the goods were destroyed by fire without fault on its part. The Supreme Court there held that the burden of proving this defense, including a lack of negligence, was on the defendant. The basis for the decision was succinctly stated in the following words, 94 Cal. page 172, 29 P. page 863: ‘All the facts pleaded by defendant in avoidance of its confessed contractual obligation were material and necessary to constitute a defense to the action, and of course the burden of proving all such facts was upon the defendant. It will hardly be contended that the new matter pleaded would have constituted a defense without the allegation that the destruction of the goods by fire was ‘without the carelessness or negligence of this defendant.’ Had the defendant been sued as a tort feasor, and charged in the complaint with negligence whereby plaintiff's goods were destroyed by fire, the burden of proving the alleged negligence would have been upon the plaintiff. Wilson v. Southern Pac. R. R. Co., 62 Cal. , 171.'
This decision was expressly approved and followed in Dieterle v. Bekin, 143 Cal. 683, 687, 688, 77 P. 664; Wilson v. Crown Transfer Co., 201 Cal. 701, 706, 258 P. 596, and U. Drive & Tour v. System Auto Parks, 28 Cal.App.2d, Supp., 782, 785, 71 P.2d 354. See also, Dodwell & Co. v. Los Angeles W. Co., 119 Cal.App. 457, 460, 6 P.2d 990; Wolfe v. Willard H. George, Inc., 110 Cal.App. 532, 535, 294 P. 436. We think it is necessarily determinative of the issue in the case at bar.
In respect to contract actions against warehousemen, the principles stated in the foregoing cases received legislative sanction more than forty years ago in the provisions of section 8 of the Uniform Warehouse Receipts Act. Deering's Gen.Laws, Act 9059, Stats.1909, p. 437, as amended. That section reads as follows:
‘A warehouseman, in the absence of some lawful excuse provided by this act, is bound to deliver the goods upon a demand made either by the holder of a receipt for the goods or by the depositor, if such demand is accompanied with—(a) An offer to satisfy the warehouseman's lien, (b) An offer to surrender the receipt if negotiable, with such indorsements as would be necessary for the negotiation of the receipt, and (c) A readness and willingness to sign, when the goods are delivered, an acknowledgment that they have been delivered, if such signature is requested by the warehouseman.
‘In case the warehouseman refuses or fails to deliver the goods in compliance with a demand by the holder or depositor so accompanied, the burden shall be upon the warehouseman to establish the existence of a lawful excuse for such refusal.’ (Italics added.)
Conceding that the demand made by plaintiffs met the requirements of this section, defendant maintains that the italicized works do not purport to shift the burden of proof, but merely affect the burden of proceeding or going forward with the evidence, leaving the ultimate burden upon the plaintiff to establish by the preponderance of the evidence that the bailee was negligent. There is an aparent conflict of opinion in cases from the various states dealing with this problem, due largely perhaps to the failure of some courts to accord to the expression ‘burden of proof’ its full significance. See cases cited in 3 U.L.A. 37–43. The Supreme Court of California, however, in Wilson v. Crown Transfer etc. Co., supra, 201 Cal. 701, 705, 707, 258 P. 596, after full consideration of the prior California cases on the point, decided this precise question adversely to defendant's contention. The court there expressly approved an instruction that the burden was upon the defendant to establish by a preponderance of the evidence in its affirmative defense that plaintiffs' goods were destroyed by fire without negligence on its part.
Generally speaking, the incidence of the burden of proof is ‘a question of policy and fairness based on experience in the different situations.’ 9 Wigmore on Evidence, sec. 2486, p. 275. On this basis, the rule placing the full burden of proof of due care upon the warehouseman finds ample justification. As said in Leckie v. Clemens, 135 Md. 264, 108 A. 684, 686, ‘The goods are in the possession of the defendant or bailee, and usually upon his premises at the time the injury or loss occurs, and he knows, or is presumed to know, not only the condition of the premises, but also what is going on there in respect to such goods, and thus he is in a far better position to explain or account for their injury or loss than the bailor, who, generally speaking, has no such information, and at times cannot acquire it. In many cases the bailee might be guilty of the grossest negligence, and yet, because of the character of his exclusive possession and custody of the goods, it would be almost impossible for the bailor to show such negligence; while, on the other hand, the bailee, with the information ordinarily possessed by him, could show without difficulty in most cases that he had exercised proper care in respect to such goods, if such was the fact, and he relieved of all liability.’ A similar rationale has been approved in Alabama's Freight Co. v. Jiminez, 40 Ariz. 18, 9 P.2d 194, 195; Traders' Compress Co. v. Precure, 140 Okl. 40, 282 P. 165, 167, 168, 71 A.2d 759, and Rustad v. Great Northern Ry. Co., 122 Minn. 453, 142 N. W. 727, 728. Furthermore, the correctness of the rule is forcefully indicated by our code provisions as to the burden of proof. Under sections 1869 and 1981, Code of Civil Procedure, discussed in Wilson v. California C. R. R. Co., supra, 94 Cal. 166, 174, 175, 29 P. 861, 17 L.R.A. 685, plaintiff would necessarily have prevailed on the contract theory if no evidence had been produced by either party on the issue of negligence.
Defendant further maintains that in any event it has more than sustained the burden of proving that it did exercise due care in carrying out the storage agreement. In considering this contention, our duty, of course, is limited to a determination of whether the record contains any substantial evidence, which, taken in its most favorable aspect, together with reasonable inferences therefrom, supports the findings.
It was shown that defendant's Grand Avenue Warehouse was of reinforced concrete construction with steel framed windows, and was an unheated building. All electrical wiring was placed in metal conduit, and electric lights were located over aisles at least two feet from any stored goods. The elevator shaft, and the stairway adjacent to it, were in the northwest corner of the building, and each was equipped with a fire door. For fire fighting purposes, there was on each floor, located opposite the elevator door, a chemical fire extinguisher of two and one-half gallons capacity and a wet standpipe under city water pressure with two hundred feet of hose attached. A dry standpipe was located in the southeast corner. The extinguisher and hose were periodically inspected. Defendant obtained annual physical inspections of the warehouse by the Fire Prevention Bureau of the Los Angeles Fire Department, and received safety recommendations of the bureau in writing as well as a follow-up inspection by the bureau to see that these suggestions were complied with. On pain of dismissal, defendant forbade smoking in the warehouse at any time except in the lavatory on the first floor. ‘No Smoking’ signs were posted on the ground floor, but not on the second floor. The storage of gasoline, oil, kerosene, ammunition, explosives, or motion picture film was prohibited. Daily inspections of the warehouse were required to be made by the foreman of the building, and comprehensive monthly written reports of conditions in the warehouse were made by the warehouse superintendent.
On the other hand, the evidence revealed that the second floor was an open loft area of 100,000 square feet with no dividing walls, and that at the time of the fire it was very full of household furnishings, wrapped in paper and packed in excelsior, stacked from floor to ceiling. No fire detection device or fire sprinkler system was maintained by defendant, nor was any fire alarm system in use in the warehouse. No night watchman was employed. Some of the bailments were stacked against the windows, thereby hampering access to the fire by firemen.
On the morning of the fire, the warehouse foreman opened the building about 7:15. About 7:30 he took a crew of four employees to the seventh floor, stopping for a minute at the second floor to let one man obtain his apron which had been left there. At this time, the men observed nothing unusual on the second floor and smelled no smoke. A short time later, the foreman again went by elevator to the seventh floor, and upon arriving there, smelled smoke. He left the elevator and ran down the stairs to the second floor. On opening the door he saw thick black smoke but no flame; he went about 25 feet into the loft before retreating because of the smoke. He then ran downstairs to the manager and reported that the second floor was on fire. Another employee, then present, though not regularly employed at the warehouse, testified that he looked for a fire extinguisher on the second floor with which to fight the fire but did not find one. There was no evidence that defendant's employees made any effort to put out the fire before the firemen arrived. All the goods stored on the second floor were destroyed. Over defendant's objections two members of the Los Angeles Fire Department's Arson Bureau testified in plaintiffs' behalf, as experts, that the fire could not have started by spontaneous combustion, and that, in their opinion it was caused by careless smoking.
Whether given conduct is reasonably careful, or is negligent, depends upon the attendant facts and circumstances of the case, and is ordinarily a question for the trier of fact to determine. 19 Cal.Jur., Negligence, sec. 133, p. 719. In view of the crowded storage conditions on the second floor of defendant's warehouse, with its concentration of highly inflammable packing and wrapping materials, the trial court might reasonably have concluded that a relatively high degree of care was required of defendant. It was a question of fact, on which differing inferences could have been drawn, whether the failure to maintain a fire detection or sprinkler system under these circumstances was negligent (see Cox v. Vermont Cent. R. Co., 170 Mass. 129, 49 N.E. 97, 100; Tubbs v. American Transfer & Storage Co., Tex.Civ.App., 297 S.W. 670, 672); or whether there was adequate equipment readily accessible for effectively fighting a fire which might occur (see Runkle v. Southern Pacific Milling Co., 184 Cal. 714, 717, 195 P. 398, 16 A.L.R. 275; Exporters' & Traders' Compress & Warehouse Co. v. Shaw, Tex.Civ.App., 20 S.W.2d 248, 251), and whether reasonable efforts were made to use such equipment to prevent the spread of the fire once it was discovered. cf. Jordan v. Federal Compress, etc. Co., 156 Miss. 514, 126 So. 31, 33. Likewise, the issue of whether a deficiency in any of these respects was the proximate cause of the destruction of plaintiffs' goods was essentially one of fact. Mosley v. Arden Farms Co., 26 Cal.2d 213, 219, 157 P.2d 372, 158 A.L.R. 872; Fennessey v. Pac. G. & E. Co., 20 Cal.2d 141, 124 P.2d 51.
Although an expert witness testified on behalf of defendant that the construction of the building and methods of fire protection employed by defendant in the management of its warehouse were in conformance with the general custom of warehousemen in the Los Angeles area, it is clear that such evidence is not conclusive on the issue of ordinary care. Polk v. City of Los Angeles, 26 Cal.2d 519, 529, 159 P.2d 931; Mehollin v. Ysuchiyama, 11 Cal.2d 53, 57, 77 P.2d 855. Conformity to the ‘general practice or custom would not exonerate defendant unless such practice or custom was consistent with due care.’ Neel v. Manning's, Inc., 19 Cal.2d 647, 655, 122 P.2d 576, 580.
On the record as a whole, we cannot say that defendant has so conclusively sustained its burden of proving due care as to justify a reversal of the judgment, for there was evidence from which reasonable inferences of negligence could be drawn, and the trial court's findings on that issue may not be disturbed.
Defendant strenuously maintains that the trial court committed prejudicial error in admitting the opinion testimony of plaintiffs' experts as to the cause of the fire since it was to a large extent based upon hearsay. These witnesses, Bice and Halter, both were present while the fire was raging, and conducted their investigations both during and after the fire. Analysis of their testimony indicates that the opinion they expressed that the cause of the fire was careless smoking was reached in part by a process of elimination. The several elements upon which the ultimate opinion was based may be briefly summarized as follows: (1) the fire started near the men's lavatory in the southeast corner of the second floor; (2) cigarette butts were observed in the second floor lavatory after the fire; (3) Bekins had recently discharged an employee for smoking in unauthorized areas; (4) the fire could not have been caused by spontaneous combustion; (5) it was not caused by arson. Conclusion number (1) was based partly on personal observation and knowledge, and partly on hearsay; number (2) was a personal observation entirely; numbers (3), (4), and (5) were based largely on hearsay statements of defendant's employees.
It is undoubtedly true, as a general rule, that opinion evidence based on hearsay is inadmissible. See Nelson v. Painless Parker, 104 Cal.App. 770, 778, 286 P. 1078; 32 C.J.S., Evidence, § 521, Page 219, note 81. Some well-defined exceptions, based chiefly upon necessity in circumstances which clothe the hearsay basis of the opinion with a substantial degree of trustworthiness. See United States v. Aluminum Company of America, D.C., 35 F.Supp. 820, have been recognized. McElligott v. Freeland, 139 Cal.App. 143, 157, 158, 33 P.2d 430 (property value; Fishel v. F. M. Ball & Co., Inc., 83 Cal.App. 128, 134, 256 P. 493 (market value); Glantz v. Freedman, 100 Cal.App. 611, 614, 280 P. 704 (market value); Hammond Lumber Co. v. County of Los Angeles, 104 Cal.App. 235, 247, 248, 285 P. 896 (land value); Willoughby v. Zylstra, 5 Cal.App.2d 297, 300, 42 P.2d 685 (medical diagnosis); Tierney v. Charles Nelson Co., 19 Cal.App.2d 34, 37, 38, 64 P.2d 1150 (medical diagnosis). Where expert opinion as to the cause of fire is concerned, it would seem that it should be based upon a hypothesis founded in the evidence, including observations made by the witness. See Manney v. Housing Authority, 79 Cal.App.2d 453, 461, 180 P.2d 69; Gallichotte v. California etc. Ass'n., 23 Cal.App.2d 570, 581, 74 P.2d 73, 535. Cf. Commercial Union Assur. Co. v. Pacific G. & E. Co., 220 Cal. 515, 524, 31 P.2d 793. The error in admitting such opinion may be cured by subsequent admission of proper evidence showing the facts relative to which the opinion was given. See cases cited, 5 C.J.S., Appeal and Error, § 1735, page 1016, note 90.
A careful reading of the record in the present case discloses that, with one exception, the hearsay basis for the opinions of plaintiffs' experts was substantially cured, at least to the extent of eliminating any possible prejudice to defendant, by the subsequent admission of competent evidence of the same facts. The exception was the opinion excluding arson as a possibility. This opinion was based in part on hearsay statements of unindentified employees that no unauthorized persons could obtain access to the second floor, and in part upon unsworn statements of various employees interviewed that none held a grievance or grudge against defendant. The former basis was cured by direct testimony of defendant's foreman to the same effect; but while the latter basis was not so cured, we fail to discern how defendant was in any way prejudiced thereby. Such self-serving statements, which amounted to a denial of the existence of a motive for a crime, would certainly have been given little if any weight by the experienced trial judge. It is indeed doubtful whether, in view of the statutory presumptions that a person is innocent of crime or wrong, and that the law has been obeyed (Code Civ.Proc., sec. 1963, subds. 1 and 33), the exclusion by evidence of the possibility of arson on the part of defendant's employees was even an important element in the ultimate opinion.
Because of the conclusion we have reached that the judgment should be affirmed on the cause of action for breach of contract, it is unnecessary to consider whether it might also be upheld on the theory of negligence. Counsel for defendant has earnestly attacked the rule, adhered to here, which, in respect to the same facts, places the burden of proof on the bailor where negligence is pleaded, and on the bailee where breach of contract is pleaded, as being inconsistent with the fundamental doctrine of code procedure that there is but a single form of action. Code Civ.Proc., sec. 307. The rule, it is said, may lead to conflicting judgments arising out of the same fire or other cause of the destruction of bailments, depending on the theory of the pleadings.
It is possible, of course, that in a single action and upon the same evidence the bailee may prevail on a negligence cause of action and the bailor on a cause of action for breach of contract. The evidence may be so evenly balanced that as a result, the plaintiff fails to produce a preponderance on the negligence cause of action; and on the other hand, the defendant may likewise fail to prove want of negligence on his part by a preponderance of the evidence on the contract cause of action. We see nothing in this situation of which the bailee may justly complain. Whether the action be upon one theory of liability or the other, the bailee must be prepared to meet the issue of negligence and the same is true as to the bailor. If the latter, by suing in negligence, has unnecessarily assumed a burden that would have rested upon the bailee had the action been for breach of contract, he is the one who will suffer if the evidence is evenly balanced or preponderates against him. Appellant's argument upon this phase of procedure is wistful and introspective, but is lacking in practicality. It points out only that the bailee may sometimes escape liability for negligence where he would be liable upon the same evidence for breach of contract.
Defendant directs our attention to the finding which furnished a basis for the application of the doctrine of res ipsa loquitur, and contends that the findings responsive to plaintiff's cause of action for negligence were based upon this doctrine. Apparently this is true. However, it is unnecessary for us to decide whether the doctrine could properly be applied to the facts as established. There were other findings of negligence in respect to the cause of action for breach of contract which were not based upon the res ipsa loquitur doctrine. It is clear that ordinarily it would serve no purpose to apply that doctrine in the trial of the breach of contract issue, inasmuch as the bailor is not required to prove negligence in establishing breach of contract, and the burden of proof which rests upon the bailee is even greater than that imposed by the doctrine. We must therefore give full effect to the finding of negligence on the cause of action for breach of contract and may disregard the finding which appears to have been based upon the res ipsa loquitur doctrine.
On the issue of damages, defendant's answer, which incorporated the terms of the warehouse receipt issued to plaintiffs, pleaded as affirmative defenses, first that the receipt constituted the contract of bailment between the parties and in terms limited defendant's liability to the ‘depositor's declared value’ of $10.00 per 100 pounds per article; and, second, that defendant had no reason to suppose the plaintiffs' property to be worth more than the said ‘declared value.’ These defenses were evidently framed in cognizance of the provisions of section 1840 of the Civil Code, which states that ‘The liability of a depositary for negligence cannot exceed the amount which he is informed by the depositor, or has reason to suppose, the thing deposited to be worth.’
Inspection of the warehouse receipt itself discloses the following statement which appears on its front, not as a separate statement, but as a part of a printed paragraph: ‘The Company's rates and its responsibility under this Contract are based on the Depositor's declared value of $10.00 per 100 lbs. per article.’ In somewhat smaller print immediately below appears this legend: ‘See Provisions, Limitations, Terms and Conditions on the Reverse Side.’ The upper half of the reverse side is covered by more than a hundred lines of small print arranged in two columns. Among the provisions there stated may be found the following: ‘2. Storage Rates; It is agreed that the storage rate is based upon the space occupied by the goods and upon the declared valuation herein stated, and for the purpose of fixing such charges, the Depositor declares that the value of any article, box, package, or receptacle including the contents thereof, packed, transported, received, handled or stored hereunder or later received for the account of said depositor shall not exceed ten dollars per 100 pounds per article, unless the Depositor fixes a greater value in writing at the time of the delivery to this Company and the same is receipted hereon, in which event the Depositor agrees to pay an additional charge therefor. * * * 6. Liability of Company. * * * (c) The Company shall only be liable for failure to use ordinary care and then only upon the basis of the Depositor's declared valuation of said goods.’
Plaintiffs introduced evidence tending to prove the following facts. In October, 1943, while residing in Oregon where her husband was preparing himself for foreign sea duty with the Navy, plaintiff's wife sent a telegram to defendant stating, ‘Wire immediately if you will store my five rooms of valuable furniture.’ A reply was received from defendant saying that it would store the furniture. The goods were shipped to Los Angeles by the Navy, and were received by defendant on or about January 22, 1944. No warehouse receipt was then issued, and no negotiations as to the terms of storage took place between the parties at any time. On February 24, 1944, a nonnegotiable warehouse receipt prepared by defendant alone, and dated February 4, 1944, was mailed to plaintiff wife, together with a salmon colored ‘identification card.’ The card, reciting that the warehouse receipt had been received and its terms accepted, was subsequently signed by plaintiffs and mailed back to defendant. Plaintiff wife did not read the warehouse receipt, but looked at it and noticed the number of articles acknowledged to have been received by defendant. She thought it was merely a receipt showing that Bekins had received the items. Plaintiff husband did not recall ever seeing the receipt, since it arrived while he was at sea, and his wife mailed it to her mother-in-law for safekeeping about three days after it was received. The salmon card was apparently signed by plaintiffs about March 13, 1944, although plaintiff wife did not recall signing it and did not read it. She testified that she would not have stored the property with defendant had she known of the claimed limitation on liability. It was stipulated that expert testimony would set the reasonable value of the property on the date of storage and on the date of the fire at $3,126.15. The weight of the goods was stipulated to be 5,014 pounds. It was also shown that for at least fifteen years prior to the time of the fire, the defendant had been engaged in the business of buying and selling household furniture.
On the basis of the foregoing evidence, the trial court made findings on the issue of damages, which may be summarized as follows: Defendant received plaintiffs' goods for storage on or about January 22, 1944, but did not enter into the written agreement for storage, designated ‘Warehouse Receipt and Contract,’ until on or about February 4, 1944. Defendant did not agree to and did not receive plaintiffs' goods for storage pursuant to the terms of this warehouse receipt, nor was its agreement to return the goods based exclusively thereon. Prior to February 4, 1944, plaintiffs made no declaration of value of their property to defendant in any amount less than the fair and reasonable value thereof. The receipt was not mailed to plaintiffs until February 24, 1944, and prior thereto plaintiffs were not notified or informed of any provisions or terms thereof. Plaintiffs did not agree to a declared value of $10.00 per hundred pounds per article by virtue of the warehouse receipt, would not have entered into a storage cantract with defendant on a basis of less than fair and reasonable value, and in fact did not store their property under and pursuant to the terms and provisions of the warehouse receipt. The storage charges, which were based on the ‘declared value’ stated in the receipt, were fixed by defendant alone and were not negotiated for, and defendant did not believe, rely, or act upon any declarations, acts, or omissions of plaintiffs concerning the valuation of the property. And finally, the court found that the reasonable value of the property was $3,126.15; that defendant knew that the value of plaintiffs' property far exceeded $10.00 per hundred pounds per article; and that defendant was familiar with the values of household furnishings of this character.
In attacking the foregoing findings as not being supported by the evidence, defendant predicates its argument chiefly upon the proposition that the facts proven are legally insufficient to render nugatory the express stipulation in the warehouse receipt which fixed the ‘declared value’ of the property as the basis of responsibility. Despite the rule, adverted to previously, which invalidates contractual provisions purporting to exempt a warehouseman from liability due to his own negligence, clauses which merely limit liability to the declared or agreed value of the goods have generally been upheld. Wilson v. Crown Transfer etc. Co., 201 Cal. 701, 258 P. 596; McMullin v. Lyon Fireproof Storage Co., 74 Cal.App. 87, 239 P. 422; 56 Am.Jur. 420; annotation, 142 A.L.R. 776. The distinction is based on the theory that a property valuation freely agreed upon by the parties for the purpose of the contract does not constitute an illegal exemption from full responsibility for the actual value of the goods, but is merely a permissible determination, reached in advance, as to what the actual value is. Donlon Bros. v. Southern Pacific Co., 151 Cal. 763, 769, 91 P. 603, 11 L.R.A.,N.S., 811, 12 Ann.Cas. 1118, followed in McMullin v. Lyon Fireproof Storage Co., supra. The authorities have also recognized the fact that where, as in the present case, warehouse storage charges are based upon the value of the goods stored, ‘declared value’ clauses are a feasible and practical means for measuring compensation by the risk assumed. To this effect, it has been held that ‘The right of warehouse owners to limit their liability by such a notice is given in order that they may protect themselves from unreasonable and excessive demands for loss of goods without any previous knowledge of their real value.’ Wilson v. Crown Transfer, etc. Co., supra, 201 Cal. at page 714, 258 P. 602.
The question of general validity, of course, is distinct from the question whether such a provision will be enforced in a given case. Since provisions limiting liability are merely a privileged deviation from the rule of full accountability embodied in the statute (Uniform Warehouse Receipts Act, Deering's Gen.Laws, Act 9059, sec. 21), they will be given effect only where the agreement is reasonable and was fairly and freely entered into by the parties. See Donlon Bros. v. Southern Pacific Co., 151 Cal. 763, 774, 91 P. 603, 11 L.R.A.,N.S., 811, 12 Ann.Cas. 1118; McQueen v. Tyler, 61 Cal.App.2d 263, 267, 142 P.2d 466; cf. Scott's V. F. Exch. v. Growers Refrig. Co., 81 Cal.App.2d 437, 184 P.2d 183.
It will be observed that if full effect should be given to the terms of the receipt defendant's liability would be limited to approximately one-sixth of the actual value of the goods. Plaintiff does not attack this limitation as one whose practical effect would be to substantially relieve the defendant of liability for negligence, and we do not consider the point. It is mentioned only to call attention to the fact that there might be such a discrepancy between the limited liability and the actual value of the goods as to deprive the agreement of reasonableness, which is essential to the validity of such an agreement.
The requirement that the contract be fairly and freely entered into (cf. Civ. Code, secs. 1565, 1567) must be considered in relation to the cases which have held that where the warehouse receipt was not delivered at the same time as delivery of the goods to the warehouse, the storage company was under an affirmative ‘duty, if it desired to limit its liability for the loss of the goods, of bringing home to the respondents [i. e. the bailors] notice that the goods were accepted and held under such limited liability.’ Wilson v. Crown Transfer etc. Co., 201 Cal. 701, 714, 258 P. 596, 602. Under such circumstances, a contract of storage arises by implication of law upon acceptance of the goods by the storage company; and the efficacy of provisions permitted but not required by law (e. g. a limitation upon liability for negligence) which are sought to be inserted into the contract by means of a subsequently issued warehouse receipt depends upon knowledge and consent thereto by the bailor. Colgin v. Security Storage & Van Co., 208 La. 173, 23 So.2d 36, 39, 160 A.L.R. 1107; Brasch v. Sloan's Moving & Storage Co., 237 Mo.App. 597, 176 S.W.2d 58, 60, 61; Voyt v. Bekins Moving & Storage Co., 169 Or. 30, 119 P.2d 586, 127 P.2d 360, 362; annotation 160 A.L.R. 1117. In the absence of such knowledge and consent, there is no meeting of the minds, and the attempted modification of the original implied contract therefore cannot be held to have been freely and fairly entered into, or be given effect as a binding agreement.
Furthermore, in determining whether, within the framework of a specific factual situation, a limitation of liability clause should be enforced, the practical considerations discussed above upon which the rule of validity is based should be constantly kept in mind. Where a warehouse receipt is issued at the time the goods are received, the depositor is normally chargeable with knowledge of all the terms thereof which are clearly set forth in an intelligible manner (Taussig v. Bode & Haslett, 134 Cal. 260, 265, 266, 66 P. 259, 54 L.R.A. 774, 86 Am.St.Rep. 250) and accordingly, where the receipt in terms purports to limit liability to a stipulated value, and the warehouseman has no notice of the true value, the limiting provision (assuming it to be otherwise valid) may be fairly given its intended effect. McMullin v. Lyon Fireproof Storage Co., supra, 74 Cal.App. 87, 239 P. 422. But where the warehouseman has knowledge or notice of facts reasonably indicating that the true value is substantially greater than that stipulated, the clause limiting liability is denied effect unless it has been brought to the actual attention of the bailor and assented to by him. England v. Lyon Fireproof Storage Co., 94 Cal.App. 562, 572, 573, 271 P. 532; cf. Wilson v. Crown Transfer etc. Co., 201 Cal. 701, 714, 258 P. 596. The correctness of this result is indicated by the fact that, under such circumstances, the reason for imparting effectness to the ‘declared value’ provision vanishes, for the warehouseman, being advised of the greater actual value of the goods, is in a position to protect himself either by rendering care and supervision commensurate with that value and exacting an appropriate charge based on the additional risk, or by obtaining the bailor's consent to the limitation.
In the present case, the defendant's liability, calculated according to the terms of the receipt, was limited to $501.40, whereas the actual value of the property was over three thousand dollars. The evidence as to the subsequently acknowledged telegram informing defendant that plaintiffs wished to store ‘five rooms of valuable furniture,’ and the testimony as to defendant's business experience in the buying and selling of such property, formed a sufficient basis for charging defendant with notice that the actual value of the plaintiff's goods, weighing over two and one-half tons, substantially exceeded the stipulated value. The evidence clearly supports the findings on this point.
Defendant, however, maintains that the testimony of plaintiff wife as to the contents of the said telegrams was erroneously admitted. We find no merit in the contention. It was shown that no copies of the telegrams were in the possession of or available to plaintiffs, having been burned in the same fire that destroyed the rest of their belongings. Defendant was requested to produce copies, but stated that it had none. Upon this showing, secondary evidence by way of oral testimony as to the contents of the telegrams was fully justified. 10 Cal.Jur., Evidence, sec. 132, p. 850. This evidence, moreover, was expressly not offered for the purpose of varying the terms of the written warehouse receipt, but went to the issue of whether the receipt was the only and entire contract between the parties. It was also clearly competent as tending to show knowledge on the part of defendant as to the value of the property to be stored with it. It is well settled, of course, that ‘if evidence is admissible for any purpose, it must be received, even though it may be highly improper for another purpose.’ Hatfield v. Levy Bros., 18 Cal.2d 798, 809, 117 P.2d 841, 847.
It is evident from what we have said that the correctness of the amount of the recovery turns upon the issue of whether defendant has satisfactorily discharged its duty of bringing the limitation of liability clause to plaintiffs' attention. The evidence was plainly adequate to prove that plaintiffs did not have actual knowledge of the limitation clause in the warehouse receipt, and that they would not have knowingly stored their property at less than its full valuation. Our attention is thus directed to the question of whether the receipt and salmon card were sufficient in themselves to give actual notice to the average bailor, for only if such were the case could it be held that defendant had discharged its duty in the premises as a matter of law. Parenthetically, we may note that in addition to these two documents, defendant relies in part upon a third document, designated by it as a ‘transmittal letter,’ which is claimed to have been sufficient to call to plaintiffs' attention the terms of the warehouse receipt. However, there was no substantial evidence that any such letter was ever mailed to, or received by, plaintiffs, and it may be disregarded here.
Turning to the receipt and salmon identification card, we find that the latter document merely refers to the receipt in general terms, and contains no independent recitation of the terms and provisions of the receipt nor indication of their substance. Its efficacy as notice, therefore, can stand on no better footing than the receipt itself. The provisions of the receipt purporting to limit defendant's liability are not distinctively set forth in a manner calculated to attract the attention of the bailor, but on the contrary, are for the most part incorporated into the mass of small print on the reverse side of the document. In respect to equally inconspicuous provisions in a passbook purporting to limit a bank's liability to its depositor, the Supreme Court has said, ‘It is just the character of thing that the average man would not trouble to read, or reading would fail to appreciate * * * the fact that it very materially changed the usual obligation of a bank to its depositors.’ Los Angeles Inv. Co. v. Home Sav. Bank, 180 Cal. 601, 613, 182 P. 293, 298, 5 A.L.R. 1193, holding the provision not binding on the depositor in the absence of knowledge and consent. This comment is directly applicable to the facts of the present case, for not only is the limitation clause unlikely to be noticed, but its terms are completely inadequate to convey to the ordinary inexperienced bailor any definite notion as to the actual extent of the storage company's liability. Few householders could even approximate the weight of bulky household furniture. There was no showing that plaintiffs knew or were informed of the weight of their stored property in the present case; whereas, defendant presumably weighed it in order to fix its charges. Considered in respect to the present facts, therefore, we think that the receipt was plainly insufficient to discharge defendant's duty of bringing the liability limitation to plaintiffs' attention, and that its deficiencies would have been eliminated only if it had contained an unambiguous and conspicuous statement which would have clearly disclosed upon inspection the amount of the limited liability. A notice of this nature, set out in a manner likely to attract attention, could normally be expected to result in actual knowledge on the part of the average bailor. Upon the evidence the court was justified in concluding that plaintiffs were not shown to have freely and fairly assented to the contractual limitation, and that it was not binding upon them.
Defendant makes a final contention that certain of the findings in respect to the status of the warehouse receipt as a contract between the parties, are inconsistent and contradictory. There is no merit in the argument. We have examined the challenged findings carefully and find them fully consistent with each other and with the legal principles set forth above.
The judgment is affirmed. The attempted appeal from the order denying motion for new trial is dismissed.
SHINN, Acting Presiding Justice.
WOOD, J., and McCOMB, J. Assigned, concur.