BAILMENTS
=225. Bailment Defined.= A _bailment_ has been defined to be "A
delivery of goods for the execution of a special object, beneficial to
the bailor, the bailee or both, upon a contract express or implied, to
carry out this object, and dispose of the property in conformity with
the purpose of the trust." It is the giving possession of personal
property to another for the purpose of having the property cared for,
improved or used, with the understanding that when the purpose of the
delivery is fulfilled, the property shall be returned to the bailor or
disposed of according to his directions.
A bailment differs from a sale in that the title to the property
remains in the bailor, and possession is given the bailee, while in
a sale, the title or ownership of the property is transferred to
the purchaser, while possession may remain in the seller. Bailment
is a broad subject covering many transactions. Loans, pledges, and
deliveries of property of every nature, in which mere possession is
given another without transfer of title are included. If _A_ leaves his
watch with _B_, a jeweler, for repairs, the transaction is a bailment.
If _A_ delivers property to _B_, a transportation company, to be
conveyed to _C_, the transaction is a bailment. If _A_ loans his knife
to _B_, the transaction is a bailment.
=226. Parties to a Bailment Contract.= There are two parties to a
bailment contract. The one who gives possession of chattel property to
another, reserving title to himself, is called the _bailor_, and the
one who receives possession of the property under these conditions is
called the _bailee_. A bailment is a contract. Parties to a bailment
must be competent to contract. (See _Competency of Parties_, chapter on
Contracts.) Parties under legal age may avoid contracts of bailment.
If _A_, fifteen years of age, hires a horse from _B_, a liveryman, for
one hour for $2.00, _B_ cannot compel _A_ to carry out his contract if
_A_ objects on the ground of infancy. But if _A_ injures the horse he
is liable in damages to _B_. An infant is liable for his torts, but not
for his contracts.
=227. Classification of Bailments.= Bailments are usually divided
into three classes; bailments for the sole benefit of the bailor,
bailments for the sole benefit of the bailee, and bailments for the
benefit of both the bailor and bailee. A common example of a bailment
for the sole benefit of the bailor is a delivery of property to the
bailee, to be kept by the bailee gratuitously for the accommodation
of the bailor, or delivery of property to the bailee to have work
performed on it, without compensation to the bailee. Examples of
bailments for the sole benefit of the bailee are loans to the bailee
without compensation to the bailor. Bailments for the mutual benefit of
bailor and bailee include deliveries of property to carriers, pledges,
renting property, or hiring the bailee to perform work on the property
bailed, or hiring the bailee to care for the property.
=228. Elements of a Contract of Bailment.= It is sometimes said that
a bailment for the sole benefit of the bailor is not a contract by
reason of there being no consideration. A consideration may consist
of any benefit to the party making a promise, or any detriment to the
one to whom the promise is made. The giving up of the property bailed
to the bailee is considered a detriment to the bailor, even though the
bailee receives no benefit. For a transaction to constitute a bailment,
there must be a delivery of the property bailed to the bailee, and
an acceptance by him of the property. This delivery may be actual or
constructive, as by delivery of a warehouse receipt, or a bill of
lading. The delivery must be sufficient to enable the bailee to secure
the possession of the goods, and to control the possession during the
period to be covered by the bailment, to the exclusion of the bailor.
The property must be in existence to be bailed. A contract of bailment
need not be express; it may be implied as well--a thief or a finder of
property is a bailee for the true owner.
=229. Title to Property Bailed.= The title to property bailed does
not pass to the bailee. Mere possession passes to the bailee. It is not
necessary that the bailor have title to the property to bail it. If
he has right of possession he may, under certain circumstances, bail
it. _A_ may rent a livery stable, including horses and carriages, of
_B_, for three years, with the understanding that he will operate the
business in the usual way. _A_ does not have title to the horses and
carriages, but he may hire them to _C_, or to anyone he chooses. This
transaction with _C_ constitutes a bailment, in which the bailor does
not have title to the property bailed. He has, however, sufficient
right of possession to enter into a bailment contract. The principal
distinction between a bailment and a sale of personal property is
that, in the latter case, title passes to the purchaser regardless of
change of possession of the property, while in the case of a bailment,
possession of the property must pass to the bailee, while title is not
disturbed.
=230. Bailments for the Sole Benefit of the Bailor.= Where personal
property is deposited with another for safe keeping, or for the purpose
of having work performed on it, without compensation to the bailee,
the transaction is called a bailment for the sole benefit of the
bailor. The liability of a bailor for the loss or injury of property
intrusted to his care, depends upon the nature of the property itself,
and upon whether the bailee receives compensation for his services.
Three degrees of care and negligence, respectively, are recognized in
bailments; slight, ordinary and great care, and gross, ordinary and
slight negligence. What constitutes ordinary care or negligence is
determined by considering what a man of ordinary prudence would do
under the circumstances in question. Any case of negligence above or
below this standard constitutes great care or gross negligence. If
_A_, in going to lunch, leaves his umbrella in _B's_ office, and the
umbrella is stolen, _B_ is not liable to _A_, if he exercised slight
care. If _A_, a lawyer, is obliged to go to police court to try a
criminal case, and leaves his diamond pin with _B_, a brother attorney,
_B_ is obliged to exercise only slight care, as in the case of the
umbrella, and is liable only for gross negligence. But slight care
means a much greater degree of care in case of the diamond pin than in
the case of the umbrella. In case of a bailment for the sole benefit of
the bailor, the bailee is obliged to exercise only slight care, and is
liable only for gross negligence. He receives no compensation for the
service, and for this reason is not obliged to exercise a great degree
of care. Property cared for gratuitously for the accommodation of the
bailor, or to be carried to some place, or to have something done to it
gratuitously, constitutes this class of bailments.
=231. Bailments for Sole Benefit of Bailee.= Property loaned to a
bailee for the latter's accommodation constitutes a bailment for the
sole benefit of the bailee. _A_ borrows _B's_ horse to drive to _Y_.
_A_ pays _B_ nothing for the use of the horse. _A_ must exercise
great care in the use of the horse, and is liable to _B_ for slight
negligence. It is no defense, in case the horse is injured while in
_A's_ possession, that _A_ acted as an ordinarily prudent man would act
under the circumstances. He must act as an ordinarily prudent man would
act when exercising great care. If, from the circumstances connected
with the injury to the horse, it is determined that an ordinarily
prudent man would have been guilty of slight negligence in the method
of handling the horse or causing the injury, _A_ is liable to _B_ for
the injury to the horse.
A court said on this point, "A bailee who is a borrower must use
extraordinary care to protect the property loaned to him, and is
responsible for the slightest neglect. He must exercise all the care
and diligence that most careful persons exercise in the transaction of
their own affairs."
If the bailee uses the property for any purpose other than that for
which it was bailed, or if he exceeds the authority of the bailor in
the use of the property, he is liable for injuries resulting. For
example, _A_ borrowed _B's_ oxen to plow up a hedge. _A_ used the oxen
to draw a load of stone. A stone rolled off the cart and injured one of
the oxen. _A_ was held liable for the injury.
=232. Bailments for Benefit of Both Bailor and Bailee.= The majority
of bailments are for the benefit of both bailor and bailee. This class
of bailments includes the hiring of personal property. _A_ rents _B's_
automobile for three hours, at three dollars an hour. This is an
example of this class of bailments. This class also includes pledges
or pawns of goods. If _A_ pledges ten shares of stock in a corporation
to his bank for a loan, this transaction constitutes this form of
bailment. This also includes the hiring of a bailee to carry goods
from one place to another. The most common example of this class of
bailments is that of common carriers. For example, _A_ employs _B_,
an express company, to carry a package of jewelry from Cleveland
to Chicago. The bailment is for the mutual benefit of both _A_ and
_B_. Any case in which one party employs another to carry goods from
one place to another for compensation is included in this class of
bailments, and is discussed more at length in the chapter on Common
Carriers.
Hiring a person to care for personal property for compensation is
included in the class of mutual benefit bailments. A traveling salesman
leaving his trunk and satchel with a hotel-keeper is a common example.
Where one person hires another to perform work or services on the thing
bailed, the transaction constitutes a mutual benefit bailment. For
example, if _A_ leaves his overcoat with _B_, his tailor, to be cleaned
and pressed, the transaction constitutes this form of bailment. In
mutual benefit bailments the bailee has the right to use the property
bailed only for the purposes of the bailment. If _A_ rents _B's_
automobile, he is entitled to use it during the period covered by the
contract. If he rents it for a particular designated trip, he cannot
use it for any other trip. In a mutual benefit bailment, when the
bailee hires out the use of a chattel, there is an implied contract on
his part that the chattel is fit for the purpose for which it is to
be used, and that it may safely be used for such purposes. _A_ rents
_B's_ naphtha launch for the purpose of taking a lake ride. _B_ has
carelessly supplied the wrong fuel. An explosion results, injuring
_A_. _B_ is liable for the injury. In mutual benefit bailments, the
bailee is obliged to exercise ordinary care, and is liable for ordinary
negligence.
The bailee must act as an ordinarily prudent man would act under the
same conditions in protecting and caring for the property. _A_ rents a
typewriter of _B_. If the typewriter breaks or gets out of order during
ordinary usage, _B_ must stand the loss. If the parties to a bailment
of this class specifically contract as to who shall bear the loss in
case of accident, or as to the degree of care which shall be exercised,
these express stipulations prevail.
=233. Warehousemen and Storage Companies.= A person who keeps a
place for the storage of goods for a compensation is a warehouseman
or storage-keeper. In a few states, public warehouses are provided
for by statute. In these states, the statutes define the duties and
liabilities of warehousemen. These public warehousemen are generally
required to take all goods offered for storage, no matter who the owner
may be, if the goods are in condition to be stored and if the storage
charges are tendered.
Most warehouses operate their business as private enterprises. A few
states provide by statute for public warehouses. Private warehousemen
may select their customers. They are not required to accept goods for
storage if they do not so desire. The government provides warehouses
for the storage of goods upon which customs or duties are to be paid.
These warehouses are private enterprises authorized by the government
to act as government warehouses. The government requires a bond of
these warehousemen for the protection of itself, but the government is
in no way responsible for the warehouseman's treatment of the goods, or
for breaches of contracts between the warehousemen and their customers.
Warehousemen commonly issue receipts for goods stored with them. These
warehouse receipts ordinarily are made payable to the customer's order,
and may be negotiated. They are not generally recognized as negotiable
instruments. A few states have statutes making them negotiable
instruments, but outside these jurisdictions, warehouse receipts are
merely evidences of ownership of the property. The purchaser takes the
same right to the property which the original bailor had, with the
additional right to sue the transferor if the title proves defective.
A warehouseman has a lien on the property for his charges. The
warehouseman or storage-keeper must exercise ordinary care in the
protection of the property. The bailor must reveal to the bailee
the character of the goods stored. If the goods are of a dangerous
character and injury results, the bailor is responsible to the bailee
for damages, if he has failed to reveal the dangerous character of the
goods.
=234. Degree of Care Required of Bailee.= A bailee of property is
required to exercise a certain degree of care in the use, preservation
and protection of the property placed in his possession, and is liable
for a certain degree of negligence. The amount of care a bailee is
obliged to exercise, and the amount of negligence for which he is
liable, depends upon the kind of property bailed, and whether the
bailment is for the sole benefit of the bailor, the bailee, or for
the mutual benefit of both the bailor and the bailee. If the property
bailed is of great value, or so delicate that it is easily lost,
destroyed or injured, a greater degree of care is required on the part
of the bailee than if the property is of little value, or is of such a
nature that it is not easily damaged, lost or destroyed.
If _A_, with _B's_ permission, stores his wagon in _B's_ barn, and the
wagon is stolen, _B_ is not liable unless he was grossly negligent.
He was not paid for the bailment, and was obliged to exercise only
slight care in the protection of the wagon. If, however, _A_ leaves his
watch with _B_ while he attends a ball game, and the watch is stolen,
_B_ must have exercised greater care than in the case of the wagon by
reason of the value and nature of the property bailed. Otherwise, he
will be liable. In this case as well as in the case of the wagon, _B_
received no compensation for the bailment, and is obliged to exercise
only slight care in the protection of the property bailed, and is
liable only for gross negligence. What constitutes slight care and
gross negligence differs materially in the case of the wagon and in the
case of the watch.
In connection with bailments, care is said to have three degrees,
_great_, _ordinary_ and _slight_. Negligence is also said to have
three degrees, _gross_, _ordinary_ and _slight_. Ordinary care or
negligence is the standard for testing each case. After ordinary care
or negligence is determined, slight or great care, and slight or gross
negligence is determined by ascertaining whether the care or negligence
is above or below ordinary. Any care greater than ordinary is great
care; any care less than ordinary is slight care. Any negligence
greater than ordinary is gross negligence. Any negligence less than
ordinary is slight negligence. If a person takes such precautions
in the use, preservation, and protection of the property as an
ordinarily prudent person would take of his own property under similar
circumstances, he is said to exercise ordinary care. The degree of care
required of a bailee depends upon the kind of a bailment in question,
as well as upon the kinds of property bailed.
If the bailment is for the sole benefit of the bailor, the bailee
receiving no compensation for his inconvenience and work, he is
required to exercise only slight care, and is liable only for gross
negligence. If the bailment is for the sole benefit of the bailee, the
bailor receiving no compensation for his inconvenience and the loss of
the use of his property, the bailee is required to exercise great care
in the use and preservation of the property, and is liable for slight
negligence. In case of mutual benefit bailments, the bailee is obliged
to exercise ordinary care in the use and protection of the property,
and is liable for ordinary negligence. Two classes of mutual benefit
bailees, innkeepers and common carriers, do not come within the above
rule. These are known as _exceptional mutual benefit bailments_, and
are discussed under separate chapters.
=235. Rights of Bailee as Against Bailor.= A bailee has the right to
keep the property, to use it according to the terms of the contract of
bailment, and to defend this right even against the bailor himself.
While the title to the property in question remains in the bailor,
the right of possession during the period covered by the contract of
bailment is in the bailee. He may retain possession of the property for
the purpose of the bailment. A bailee is entitled to use the property
bailed, and is restricted only by the limitations of the contract. If
the bailee uses this property in a way not authorized by the contract
of bailment, he is liable in damages to the bailee.
Where a mutual benefit bailment requires the bailee to use skill in
connection with the property bailed, the bailor must exercise a degree
of skill ordinarily used by persons who perform similar work. If the
bailee fails to use this degree of skill, he is liable in damages
to the bailor. For example, if _A_ leaves his horse with _B_, a
blacksmith, to be shod, and _B_ attempts the work, but performs it so
unskillfully, or carelessly that the horse is injured or lamed thereby,
_B_ is liable to _A_ for the damage caused.
=236. Rights of Bailee as Against Third Persons.= A bailee has the
right to keep the property bailed as against third persons who endeavor
to interfere with his possession. The bailee is not permitted to
dispute the title of the bailor for his own benefit. If, however, the
property is taken away from the bailee by action at law, by one whose
title is superior to that of the bailor, the bailee is relieved from
liability to the bailor. In this event, the one who has the paramount
title coupled with the right of immediate possession, may take the
property from the bailee. If the bailee yields possession to one whose
right of possession and title are inferior to the bailor's, the bailee
is answerable to the bailor for any losses sustained. The bailee cannot
confer good title upon anyone to whom he attempts to sell the property
bailed, even though the purchaser buys without notice of the bailment.
Anyone who injures the property while it is in the possession of the
bailee is responsible either to the bailor or bailee for the damages.
=237. Lien of Bailee.= A bailee who has performed work on the article
bailed, for which he is to be paid a consideration, is said to have
a _lien_ for the value of the work performed, or materials furnished.
By a lien is meant the right of the bailee to retain possession until
the value of his labor or material has been received. At common law,
a livery stable keeper had no lien upon horses fed and cared for. By
statute in most states, livery stable keepers now have a lien upon
horses left with them. If a bailee is employed to perform work or labor
upon personal property, and the property is destroyed without fault
of the bailee after part of the work has been performed, the bailee
may recover for the amount of work performed and materials furnished,
unless the contract of bailment is to the effect that the entire job is
to be completed before any payment is made.
A bailee loses his lien by parting with possession of the property.
At common law, a bailee could not sell the property to enforce his
lien. By statute in most states, the bailee is permitted to sell the
property, by giving notice of the time and place of sale to the bailor,
or by foreclosing his lien by a legal action.
PLEDGES
=238. Pledge Defined.= A _pledge_ is one form of a mutual benefit
bailment. It is a deposit of personal property by a debtor with a
creditor as security for a debt, the title to the property remaining
in the debtor until the property is disposed of by the creditor in
accordance with the express or implied agreement of pledge. A pledge
differs from a chattel mortgage in that possession of personal property
is given a creditor for the purpose of securing a debt, the title
remaining in the debtor. In case of a chattel mortgage, the title to
the personal property passes to the mortgagee, who is the creditor,
subject to revesting in the mortgagor, who is the debtor, in case of
payment of the mortgage debt. In a chattel mortgage, possession of the
property generally remains in the debtor.
_A_ owes _B_ $100.00. He gives _B_ possession of a diamond ring as
security for the debt. If _A_ does not pay the $100.00 when due, _B_
may retain possession of the ring until he receives $100.00 from _A_,
or he may sell the ring at public sale, advising _A_ of the time and
place of sale. If the ring sells for more than $100.00, _B_ must pay
_A_ the excess of $100.00.
Pledges form an important part of present day business. Pledges of
bonds, stocks and negotiable paper are common in transactions with
banks. Banks commonly make loans, taking a promissory note secured by
a pledge of stocks, bonds, negotiable instruments, or other personal
property. Their loans are commonly called loans on _collateral_ or
loans on _collateral security_.
=239. Parties to a Pledge.= A pledge of chattel property is a
contract express or implied. The party giving the property as security
to his creditors is called the _pledgor_, the party receiving the
property is called the _pledgee_. Like any contract, it requires
competent parties. (See _Competency of Parties_, chapter on Contracts.)
A person mentally insufficient, intoxicated, or an infant, is not
competent to make a contract. An infant's contracts of pledge, like any
of its contracts are voidable, but not void. The infant may carry out
the contract if he chooses. An infant's contracts are not illegal. They
cannot be enforced against an infant, however, if he objects by reason
of infancy. A competent party, contracting with an infant, cannot
void his contract on the ground of infancy of the other contracting
party. Most contracts of pledge are implied. If _A_ owes _B_ $10.00 and
gives _B_ his watch as security, _B_ impliedly has the right to retain
possession of the watch until _A_ pays him $10.00. _B_ also has the
right after _A_ fails to pay him the $10.00 when due, to sell the watch
at public auction, and apply as much of the proceeds as is necessary to
the payment of his debt. In most pledges of importance where securities
are pledged, the contract of pledge is reduced to writing, and a
stipulation is made giving the pledgee the right to sell the property
at public or private sale without notice to the pledger, and permitting
the pledgee himself to be a purchaser at the sale. No matter what the
contract of pledge provides, the sale should be public, notice of which
should be advertised, and notice of the time and place should be given
the pledgor.
=240. Personal Property Which May Be Pledged.= Any kind of personal
property which is the subject of transfer may be pledged. This includes
personal property having a tangible existence, as well as that which is
intangible. That is, choses in action as well as choses in possession
may be pledged. A promissory note, a certificate of stock, or a bond
which is an evidence of something tangible or the right to obtain
something tangible, is the subject of a pledge, as well as furniture,
jewelry and other tangible personal property. Property which has no
active or potential existence is not the subject of a pledge. A person
cannot pledge a horse which he expects to purchase, or a crop which he
expects to grow on the land of another. A person may, however, pledge a
growing crop.
=241. The Debt Secured.= A pledge or delivery of personal property is
for the purpose of securing a debt owing the pledgee. The existence of
a debt is one of the essential elements to a valid pledge. A delivery
of personal property to another in the absence of a debt may constitute
a bailment for the sole benefit of the bailor, the bailee, or for the
mutual benefit of both parties. To constitute a pledge, however, there
must be a debt owing the pledgee, and the property must be delivered
to him, and accepted by him as security for the debt. The debt must be
legal, and must be supported by a sufficient consideration to support
the contract of pledge.
_A_ won $50.00 at cards from _B_. _B_ gave _A_ his watch as security
for the debt. _B_ was permitted to recover possession of his watch
from _A_ by legal action, since the gambling transaction was illegal.
_B_ did not legally owe _A_ $50.00. An illegal debt cannot support a
contract of pledge. If, for any reason, the debt is not owing or is not
valid, it will not support a contract of pledge.
=242. Title to Property Pledged.= The legal title or ownership of
personal property pledged remains in the debtor or pledgor. A right of
possession is given the pledgee. This is sometimes called a _special
property_. A pledge differs from a sale in that, in a sale, the title
or ownership of the personal property passes to the purchaser, while
the possession may remain in the seller. In a pledge, however, the
possession passes to the pledgee or creditor, while the title remains
in the pledgor or debtor. A pledge differs from a chattel mortgage in
that, in the latter, the title passes to the creditor or mortgagee,
subject to revesting in the mortgagee or debtor, upon the latter's
paying the mortgage debt.
There is probably one exception to the rule that title to property
pledged does not pass to the pledgee, and that is in case of negotiable
instruments. A negotiable instrument endorsed in blank, or made
payable to bearer passes like currency by delivery. A pledge of such
paper passes title to the pledgee. A pledge of negotiable paper not
endorsed in blank, or not payable to bearer should be made by proper
endorsement. In this event title passes to the pledgee. The title
is revested in the pledgor by proper indorsement, or by delivery, if
the instrument is transferable by delivery, when the debt secured is
paid. A pledgee of negotiable paper, who takes it before it is due
without notice of defenses, is an innocent purchaser for value without
notice, and as such, is entitled to the rights of an innocent purchaser
for value without notice. (See _Innocent Purchaser for Value Without
Notice_, chapter on Negotiable Instruments.)
=243. Collateral Securities.= Loans by banks are frequently made on
collateral securities. This means that the borrower gives a bank a
promissory note for the amount, and pledges personal property to secure
the note. The contract of pledge may be by separate written instrument,
or it may be made a part of the note itself. Where made a part of the
note, the note is called a _collateral note_. (See _Collateral Note_,
chapter on Negotiable Instruments.) Any kind of property which is
the subject of a pledge may be used as collateral security. Stocks,
bonds, and even commercial paper are commonly used. Jewelry, bills of
lading, and warehouse receipts are not infrequently used in this kind
of a pledge. Collateral security given as security for a promissory
note or other negotiable instrument is a pledge. The rules governing
ordinary pledges govern this kind of pledge as well. The only practical
distinction between a collateral loan and an ordinary loan is that, in
a collateral loan, the debt is evidenced by a negotiable instrument
which is secured by a pledge of personal property.
=244. Rights and Duties of Pledgor and Pledgee.= A pledgor has the
right to have his pledged property returned to him upon payment of
the debt secured by the pledge. He also has the right to have the
property carefully preserved and cared for while in the possession
of the pledgee. The pledgee is entitled to retain possession of the
property pledged until the debt owing him is paid. He may re-pledge
the property if he so desires. If the pledged property is negotiable
paper, the pledgee must collect the paper as it falls due, and observe
all the requirements necessary to preserve the rights of the pledgor.
If the property pledged is tangible personal property, the pledgee
must use the care of an ordinarily prudent man in the preservation and
protection of it. He is not permitted to use property which may be
injured by use, and should not use the property except to the extent
that it is necessary for its preservation. If the pledgee sells or
transfers the debt secured, the purchaser is entitled to the benefit
of the pledge. That is, if _A_ owes _B_ $500.00 and pledges five shares
of stock to _B_ as security for the debt, and _B_ sells the debt to
_C_, _C_ is entitled to the benefits of the pledged certificates of
stock. If _B_ gives _C_ possession of the stock, _C_ may retain the
same until he receives the $500.00 from _A_. If _B_ does not turn over
the shares of stock to _C_, _C_ may bring an action to compel the
transfer of possession to him.
=245. Disposal of Property by Pledgee After Default.= If the pledgor
fails to pay the debt secured when due, the pledgee has the right to
enforce his pledge. In the absence of any special agreement, the law
impliedly gives the pledgee the right to sell the property at public
sale, and apply as much of the proceeds of the pledged property as is
necessary to the payment of his debt. This sale must be public. The
pledgee must first notify the pledgor that he is in default of payment,
and of his intention to sell the property, giving the time and place
of the proposed sale. The pledgee cannot be a purchaser at the sale,
unless so permitted by express stipulation in the contract of pledge.
Many contracts of pledge are in writing, by the terms of which the
pledgor waives notice of default and of time and place of sale, and
permits the pledgee to sell at private sale, and to become a purchaser
at the sale. When a pledgee is given the right to purchase by the
contract of pledge, he cannot make a valid purchase without advertising
the property, and without exerting himself reasonably to obtain the
greatest amount possible for the pledged property at the sale.
In selling pledged property, notice of default should be given the
debtor. He should also be notified of the time and place of sale. The
sale should be advertised publicly, and should be public. The pledgee
cannot himself purchase the property unless the contract of pledge
expressly so provides. Even in this event, the sale will not be held
valid unless it is public and fair in every way to the interests of the
pledgor. A pledgee is permitted in some states to sell according to
certain statutory methods provided. A pledgee may sell by foreclosing
his lien in equity. This means by filing a written request in a court
of equity to sell the property. In this event, the sale is conducted by
order of court.
=246. Redemption.= A pledgor has the right to obtain possession of
the property pledged, by paying the debt secured at any time before
actual sale of the property. A pledgor sometimes agrees by the contract
of pledge, to waive the right to redeem the property after default of
payment of the debt secured. Courts will not enforce such a provision
of the agreement against him. The pledgor is permitted to redeem the
property by paying or tendering the amount of the debt at any time
before sale of the pledged property. If the pledgor is in default of
payment, however, and agrees by separate agreement, made subsequently
to the contract of pledge, that the pledgee may keep the property
pledged in satisfaction of the debt, he is bound by this agreement.
MORTGAGES OF PERSONAL PROPERTY
=247. Mortgages of Personal Property Defined.= By _mortgage_ of
personal property, is meant the transfer of title to personal property
by a debtor to a creditor; the possession of the property usually
remaining in the debtor, and the transfer being made for the purpose of
giving the creditor security for the debt, the debtor having the right
to secure a return of title to the property by paying the debt within
a stipulated time. It is a conditional sale. It is not absolutely
necessary that possession of property which is the subject of a chattel
mortgage, remain in the debtor. Possession may be given the creditor
with the understanding that possession and title are to revest in the
debtor when the latter pays the debt secured. As a matter of business
practice, however, possession of personal property which is the subject
of a chattel mortgage, remains in the debtor, the creditor taking the
title as security for the debt, with the right to secure possession
or sell the property in case the debtor fails to pay the debt secured
when due. When possession of personal property is given a creditor
as security for a debt, the transaction is usually in the form of a
pledge. In a pledge, title remains in the debtor, but possession is
given the creditor. The distinguishing features of a sale, bailment or
pledge, and a mortgage of personal property are important. In a sale
of personal property title passes to the purchaser, while possession
usually remains in the seller until the purchase price is paid. In a
pledge, which is a form of a bailment, title remains in the bailor, and
possession only is given the bailee or creditor. In case of a chattel
mortgage, possession remains in the debtor, while title passes to the
creditor subject to revesting in the debtor upon payment of the debt
secured. The debtor, or person giving the mortgage, is called the
_mortgagor_, the creditor, or person receiving the mortgage, is called
_mortgagee_.
[Illustration: IN THE PRIVATE OFFICE OF THE GENERAL MANAGER OF THE S.
OBERMAYER CO., CINCINNATI, OHIO]
=248. What Kinds of Personal Property May Be Mortgaged.= The rule is
usually stated as follows: Any interest in personal property which
may be the subject of a present sale may be mortgaged. Any tangible
personal property such as furniture, horses, cattle and clothing,
as well as intangible personal property, such as promissory notes,
contracts, and shares of stock may be mortgaged. It is not necessary
that the mortgagor have absolute, unencumbered title to the property
to give a mortgage. An owner may give several mortgages on the same
property. He may mortgage his interest as long as any remains. If _A_
owns a stock of goods worth $10,000, he may give successive mortgages
to different creditors to whom he is indebted. He must practice no
fraud, however. He must make each mortgage subject to the prior ones,
and must reveal the facts to the creditor taking the mortgage. But he
is permitted to mortgage his remaining interest.
=249. A Mortgage of Personal Property as Security for a Debt.= A
mortgage of personal property is a contract, and must be supported
by a consideration. Mortgages are usually given to secure loans of
money. They may, however, be given to secure any kind of obligation.
A mortgage of personal property may be given to secure advances of
money to be made in the future, as well as present or past advances or
obligations. It is usually held that a past indebtedness is sufficient
consideration to support a mortgage, as to all persons, except one who
may have been defrauded out of the property mortgaged.
=250. Form of Mortgages of Personal Property.= To constitute a
transaction a chattel mortgage, there must be an agreement by which
title to personal property is transferred to a creditor upon condition
that it is to revest in the debtor upon the latter paying a certain
sum of money, or fulfilling an obligation, within a certain time.
As between the mortgagor and mortgagee themselves, an oral chattel
mortgage is binding, unless within the provisions of the Statute of
Frauds. (See _Statute of Frauds_, chapter on Sales.) Most states
provide that contracts for the sale of personal property involving
more than $50.00 must be in writing to be enforceable. This provision
applies to chattel mortgages. If possession of the mortgaged personal
property is given the mortgagee under an oral mortgage, the
transaction is binding, not only between the parties thereto, but as to
third persons as well. Most states provide by statute that as against
third persons who purchase the property, or as against creditors of the
mortgagor, the chattel mortgage must be in writing, and be recorded
or filed with a public official, in case possession of the mortgaged
property is left with the mortgagor. This question is discussed more at
length in the following section.
=251. Filing and Recording Mortgages of Personal Property.= Most
states have statutes providing that chattel mortgages must be filed or
recorded with a designated public official to be effective as against
creditors, subsequent purchasers or mortgagees. This requires that the
mortgage be in writing, and be deposited or recorded according to the
provisions of the statute with the designated public official. For
example, if _A_ orally mortgages his horse to _B_ to secure a loan of
$40.00, the mortgage may be binding between _A_ and _B_, but if _C_,
a creditor of _A_, secures a judgment against _A_ and levies on the
horse, his levy is superior to _B's_ mortgage. If _A_ sells the horse
to _D_, who has no notice of the mortgage to _B_, _D's_ rights to the
horse are superior to _B's_. If _A_ gives a mortgage in writing to _E_,
who records his mortgage according to statute, his rights to the horse
are superior to _B's_. The statutes of the different states require
these mortgages to be refiled at stated intervals. Most states require
them to be refiled each year. Some require them to be refiled only
every three years.
=252. Rights of Mortgagor in Property Mortgaged.= A mortgage of
personal property ordinarily contains a stipulation that the mortgagor
shall retain possession until after default of payment of the mortgage
debt. Some states have statutory provisions giving the mortgagor the
right of possession of the mortgaged property before default of payment
of the mortgage debt. It is the custom at the present time to give the
mortgagor possession of the property before default. If a mortgagor
having possession of the property has it stored on his own behalf, and
the warehouseman acquires a lien on the goods for his charges, his lien
is inferior to the mortgage. The same is true if a mechanic acquires a
lien for repairs upon the property.
A mortgagor may mortgage his interest in the personal property by
giving a second mortgage. The second mortgagee takes the mortgagor's
right to have the property revest in him upon payment of the debt
secured by the first mortgage. A mortgagor may sell his interest in the
property, subject to the interest of the mortgagee. If the mortgage
stipulates that a mortgagor cannot sell his interest, this stipulation
is binding. A mortgagor has the right to pay the debt secured, and by
this means to have the title to the property revest in him.
=253. Rights and Liabilities of Mortgagee.= A mortgagee of personal
property has a conditional title to the property. If the mortgagor does
not pay the debt secured, according to the terms of the mortgage the
mortgagee has the right to seize the property or at least to subject
it to the satisfaction of his debt. The mortgagee has the right to
sell the debt secured by the mortgage. In the absence of an express
stipulation to the contrary, a transfer by a mortgagee of the debt
secured by the mortgage, transfers the mortgage. An assignment of a
chattel mortgage apart from the debt secured, passes no interest to
the transferee. A mortgagee has the right to seize the property upon
default of payment of the debt secured, if the mortgage contains a
stipulation to that effect. The mortgagee has the right to foreclose
his lien. By this is meant that he has the right to file a petition in
a court of equity asking that the property be sold, and that his claim
be paid from the proceeds first, and that the mortgagor's right to
pay the debt and secure a return of the property be cut off. This is
discussed under the section on _foreclosure_.
=254. Mortgagor's Right of Redemption.= In law, a mortgage is regarded
as a security for a debt, rather than as a transfer of property. By a
chattel mortgage, a transfer of title to personal property is made by a
debtor to a creditor as security for a debt. The debtor has the right,
however, to secure a return of the title to the property by paying the
mortgage indebtedness according to the terms of the mortgage. When the
debtor fails to pay the debt when it is due, absolute title to the
property vests in the mortgagee or creditor. The law, however, permits
the debtor or mortgagor to pay the debt at any time before actual sale
of the property by the mortgagee, together with interest and expenses,
and thus secure the title to the mortgaged property. This is known as
the _mortgagor's equity of redemption_.
Legal title is vested absolutely in the mortgagee upon failure of the
mortgagor to pay the mortgage debt when due. The mortgagor, however,
is permitted to pay the debt with expenses at any time before sale of
the property, and by this means to secure a return of the title to
the property. This makes a mortgage of personal property in effect a
security for a debt, rather than a transfer of title. The purpose of
the law is to give the creditor or mortgagee the right to secure the
payment of his debt out of the mortgaged property, and nothing more.
Most states have statutes providing a method by which a mortgagor may
obtain his equity of redemption. Where there are no statutes, this
right must be enforced by a petition in a court of equity.
=255. Mortgagee's Right of Foreclosure.= Equity permits the mortgagor
to recover the mortgaged property by filing a petition in a court of
equity, even after he has defaulted in paying the mortgage debt, by
tendering the amount due, together with interest and expenses. This
right of the mortgagor may be cut off by an equitable right enforced
on the part of the creditor or mortgagee. This right is called the
_mortgagee's right of foreclosure_. When the debtor or mortgagor is in
default, the creditor or mortgagee is permitted to file a petition in a
court of equity, setting forth the fact, and asking the court to order
the property to be sold, the expenses to be paid, the mortgage debt to
be satisfied, and the balance of the proceeds of the sale to be paid to
the debtor or mortgagor. After this proceeding has been resorted to and
completed, the debtor cannot enforce his equity of redemption.
The common method afforded a mortgagee of foreclosing a mortgagor's
equity of redemption is by the petition in equity above described. Many
of the states have provided statutory methods which may be followed.
Some mortgages by express stipulation give the creditor or mortgagee
the right to seize the property and sell same upon default of the
debtor to pay. This takes the place of an equitable foreclosure. When
a mortgage contains a power of sale stipulation, the mortgagee may
seize the property when the mortgagor defaults, and sell the same at
public sale. The excess recovered over the mortgage debt and expenses,
must be paid the mortgagor. If possession of the property cannot be
obtained peaceably, the mortgagee must bring an action in replevin,
by which possession is obtained by an officer of the court. In some
jurisdictions, a mortgagee is permitted to seize and sell mortgaged
property upon default of the debtor, even though the mortgage contains
no power of sale stipulation. The sale must be _bona fide_ and public,
or it can be set aside at the instance of the defrauded mortgagor.
CARRIERS
=256. Carriers Defined.= _Carrier_ is the term applied to individuals
or companies engaged generally or specially in carrying goods or
passengers from place to place. The business of carriers has grown
rapidly with the development of this country. The business of
steamboat, railway, express, and electric package companies forms an
important part of present day affairs. Carriers are usually classified
as _common_ or _private_. Both common and private carriers may carry
either passengers or goods. Carriers of passengers are discussed in a
separate chapter.
=257. Common Carriers of Goods.= A common carrier of goods is one who
represents himself as engaged in the business of carrying goods from
place to place for anyone who desires to employ him. A common carrier
of goods is liable as an insurer of the goods. By reason of this
exceptional liability attaching to a common carrier, it is important to
know who are common carriers. Everyone who carries goods from place to
place is not a common carrier. To constitute a person a common carrier,
there must be a representation on his part of a willingness to carry
goods belonging to anyone who desires to employ him for that purpose.
A common carrier need not necessarily hold himself out as willing to
carry all classes of goods. He may limit his business to carrying a
peculiar class of goods, and still be a common carrier. It may be
stated as a rule that anyone who holds himself out as willing to carry
goods of any person is a common carrier. Common examples of common
carriers are railroad companies, express companies, public transfer
companies, and electric package companies. An express company, in
holding itself out as willing to carry goods of any person, is a common
carrier.
If persons carry goods only on special contract, and choose their
customers, they are private carriers, and are not liable as insurers of
the goods entrusted to their care. Anyone may engage in the business
of a private carrier, and so long as he does not hold himself out
as a common carrier, he cannot be compelled to accept for carriage
goods against his will, neither is he liable as an insurer of the
goods. A private carrier is an ordinary bailee. If he agrees to carry
for compensation, he must exercise ordinary care, and is liable for
ordinary negligence. The business of a common carrier is said to be one
of the exceptional mutual benefit bailments. The exceptional liability
of a common carrier is discussed under a separate section.
=258. Implied Liability of a Common Carrier.= In early days when
pirates infested the seas and stagecoach robberies were common, it
was an easy matter for a common carrier to conspire with robbers and
thieves, in unjustly depriving the owner of the goods entrusted to the
carrier's care. By reason of the opportunity given a common carrier
fraudulently to deprive a shipper of his goods, the law at an early
time placed the exceptional liability of an insurer upon a common
carrier. The relation between a shipper and a carrier, after goods are
placed in the hands of the carrier, is one of mutual benefit bailment.
The liability of a common carrier, however, is not limited to the
liability of an ordinary mutual benefit bailee. Common carriers and
innkeepers are said to be _exceptional mutual benefit bailees_. This
exceptional liability is placed on them by reason of the opportunity
given them fraudulently to deprive the owners of their goods, and to
compel the carriers to protect the goods against robbery and theft.
A common carrier is liable as an insurer of the goods entrusted to his
care. He cannot avoid liability by acting as an ordinarily prudent man
would act under the circumstances in protecting and caring for the
goods, but he must actually protect them or be liable to the owner for
their loss or damage. There are a few exceptions discussed under a
separate section. If _A_ employs _B_ to keep, feed, and care for his
horse for six months, for fifty dollars, and _B_ puts the horse in his
stable, where it is stolen, together with _B's_ own horse, _B_ is not
liable to _A_ for the loss of the horse, if he acted as an ordinarily
prudent man would act under the same conditions. If, however, _A_
delivers his horse to _B_, a railroad company, to be shipped from
Buffalo to Chicago, and the horse is stolen from _B's_ possession, _B_
must pay _A_ the value of the horse. He is not permitted to say that he
exercised ordinary care in the protection of the horse. This is what
is meant by the exceptional liability of a common carrier. While the
reason for this exceptional liability of a common carrier has largely
passed away by the practical extermination of highway robbers and
pirates, the exceptional liability of common carriers remains as a
part of the law. This exceptional liability is not a matter of express
contract between the shipper and the carrier, but is impliedly a part
of the contract.
=259. Exceptions to the Liability of a Common Carrier as an Insurer.=
A common carrier of goods is not absolutely liable as an insurer of
the goods entrusted to his care. If the goods are lost, injured, or
destroyed by an Act of God, by a public enemy, by negligence of the
shipper, by the inherent nature of the goods, or by the exercise of
public authority, the carrier is not liable as an insurer.
By _Act of God_ is meant an inevitable act arising without the
intervention or aid of a human agency. A loss of goods by a storm,
by lightning, or by earthquake is an example. If the goods are lost
or injured as a result of any act of the shipper, the carrier is not
liable as an insurer. A carrier is permitted to adopt and enforce
reasonable regulations relating to the packing and shipment of goods.
If the shipper negligently packs goods so that they are injured by
reason thereof, the carrier is not liable as an insurer. If the shipper
improperly addresses packages, and they are lost by reason thereof, the
carrier is not liable as an insurer. If the shipper accompanies live
stock, and injury occurs by reason of the carelessness of the shipper,
the carrier is not liable as an insurer.
By _public enemy_ is meant a power at war with a nation. This includes
pirates. Mere insurrections, robberies, thefts, mobs, and strikes are
not included in this class of public enemies. If a loss of goods occurs
by means of public enemy, a carrier is not liable as an insurer of the
goods. If the loss occurs through the _inherent nature of the goods_,
without the negligence of the carrier, the latter is not liable as
an insurer. For example, if fruit spoils as a result of warm or cold
weather, if the carrier is not in any way at fault, he is not liable as
an insurer, since the loss occurs on account of inherent defects of the
goods. If animals injure themselves while in the carrier's possession
by reason of their viciousness, or fright, which injury could not have
been prevented by reasonable care on the part of the carrier, the
latter is not responsible.
If the goods are lost or injured by reason of the _exercise of public
authority_, the carrier is not liable as an insurer. If the goods,
while in the possession of the carrier are seized upon attachment, or
by levy on execution by the creditors of the shipper, the carrier is
not liable if he promptly notifies the shipper.
=260. Limiting Common Law Liability by Special Contract.= The common
law liability of a common carrier of goods is that of an insurer. It
matters not how the loss or injury occurs, whether without, or through
the carelessness of the carrier, the latter is liable for the loss, if
it does not come within the recognized exceptions. Carriers commonly
endeavor to limit their exceptional liability by making a special
contract with a shipper, by the terms of which the carrier limits his
exceptional liability in case of loss.
There is considerable conflict of authorities between the different
states as to whether a carrier may limit his exceptional liability
at all by special contract. Where permitted to limit this liability,
there is considerable controversy as to the extent to which a carrier
may limit his liability by special contract. The courts of most
jurisdictions agree that a common carrier cannot limit his exceptional
liability by special contract as to his own negligence or the
negligence of his servants. This special contract by which a common
carrier limits his exceptional liability as an insurer is usually in
the form of a written contract signed by the shipper or in the form of
stipulations in the bill of lading given to the shipper and called to
his attention.
If a carrier accepts a carload of hay for shipment, without limiting
his common law liability by special contract, and the hay is destroyed
by fire, the carrier must respond in damages for the loss, regardless
of his negligence. If, however, the carrier enters into a special
contract with the shipper to the effect that the carrier shall not
be liable for loss by fire, and the hay is destroyed by fire without
negligence of the carrier or his agents or servants, the carrier is not
liable in damages.
=261. Limiting Common Law Liability by an Agreed Valuation.= Common
carriers frequently attempt to limit their liability for loss or injury
to goods by stipulations in a bill of lading, that in case of loss, the
valuation shall not exceed $50.00, or some specified amount. If the
shipper does not notify the carrier that the valuation is a greater
amount, the amount mentioned in the bill of lading is the valuation
fixed by special contract. In case of loss there is a great variety
of holdings as to whether a carrier may limit his liabilities to the
amount mentioned in the contract. Probably the courts in the majority
of cases hold that such a stipulation is valid in case of losses
arising not by reason of the negligence of the carrier or his agents.
The courts of a few jurisdictions hold that the stipulation as to
valuation is good even as against the negligence of the carrier or his
agent.
So far as interstate shipments are concerned, the question is settled
by the Federal Interstate Commerce Act of 1906. This act provides that
as to shipments from one state to another, such a stipulation is not
valid. The language of the Interstate Commerce Act relative to this
question is as follows:
A common carrier receiving property for interstate transportation
shall issue a receipt or bill of lading therefor, and be liable to
the holder for any loss, damage or injury to the property, and no
contract, receipt, etc., shall exempt the carrier from the liability
thereby imposed.
At present, so far as interstate shipments are concerned, a common
carrier cannot limit his common law liability by a special contract.
=262. Bills of Lading and Shipping Receipts.= _Bill of lading_, or
_shipping receipt_ is the term applied to the receipt given a shipper
by a carrier, when goods are delivered into the latter's possession. A
bill of lading serves two purposes. It is a receipt of the shipper from
the carrier for the goods delivered to the latter, and it is a contract
representing the agreement between the shipper and the carrier. It is
usually held that the terms printed on the bill of lading are binding
on the shipper, even though the bill is not signed by him. A bill of
lading represents the title to the goods. It may be transferred like a
negotiable instrument. A purchaser takes the position of the shipper.
A bill of lading is negotiable in the sense that it represents title
or ownership of the goods, and in the sense that a purchaser takes the
right of the shipper in the goods. But it is not negotiable in the
sense that a purchaser takes a better position than the original holder
had.
=263. Title to Goods After Delivery to Common Carrier.= In the absence
of special agreement to the contrary, where a party in one town
purchases goods from a party in another, the goods to be delivered by
common carrier, title to the goods passes to the purchaser when the
goods are delivered to the carrier properly packed and addressed. This
kind of a sale is commonly called a sale _F. O. B._ place of purchase,
"F. O. B." means "free on board." Careful business people, in making
sales or purchases, specify whether the goods are to be F. O. B.
place of shipment, or F. O. B. place of delivery. If the sale is F. O.
B. place of delivery, title does not pass to the purchaser until the
goods are delivered at the place specified. If the goods are lost by
the carrier, the loss falls on the shipper or carrier, and not on the
purchaser. If goods are shipped F. O. B. place of shipment, or if no
agreement is made about shipment or payment of freight, title passes
to the purchaser when the goods are properly delivered to the carrier.
If the goods are lost, the loss falls on the carrier or purchaser, and
not on the seller. Where no stipulation is made relative to payment
of freight or carrier's charges, the law presumes that the purchaser
is to pay the carrier's charges. Sales are sometimes made in which it
is specified that the freight charges are _to be allowed_. This means
that the shipper is to pay the carrier the freight charges. If the
goods are lost, the loss falls on the purchaser. If there is an express
stipulation that the goods are to be delivered at the place of delivery
by the seller, this means that title does not pass to the buyer until
the delivery is made at that place, and the shipper or seller stands
the risk of loss in transit.
=264. Duty of Common Carrier to Accept Goods for Carriage.= A
common carrier of goods holds himself out to the public as ready to
carry the goods of anyone who desires to employ him. The carrier
may demand payment of reasonable charges in advance. He may also
enforce reasonable regulations relating to the packing, delivery, and
addressing of goods. Carriers are not obliged to carry goods other
than the kinds they purport to carry. For example, an express company
representing itself to the public as a carrier of light packages cannot
be forced to accept heavy machinery for carriage. A carrier cannot be
compelled to accept goods not belonging to the class it represents
itself as being in the business of carrying. But a carrier must accept
for carriage goods of the class it purports to carry, no matter by
whom tendered. If the bill of lading offered by the carrier contains
stipulations not agreeable to the shipper, the latter may demand the
carrier to carry the goods under the terms of the implied common law
liability of a carrier. The carrier is excused from accepting goods in
the event of a great and unexpected bulk of business. He must, however,
furnish sufficient equipment to meet the general requirements of
business.
=265. Stoppage in Transitu.= Where goods sold on credit have been
delivered to a carrier, if the vendor learns that the purchaser is
insolvent, he may order the carrier to withhold delivery of the goods.
This is called _stoppage in transitu_. This question is also discussed
in the chapter on sales. The vendor may compel the carrier to withhold
delivery of goods by giving him written or oral notice to that effect.
To be effective, this notice must be given before the carrier has
surrendered possession of the goods to the purchaser. If the carrier
delivers the goods to the purchaser after receiving notice from the
seller to withhold shipment, he is liable in damages to the seller.
If the purchaser has received possession of the bill of lading, and
has sold it to a _bona fide_ purchaser, as to the latter, the seller
cannot exercise the right of stoppage _in transitu_. If the carrier is
in doubt about who is entitled to possession of the goods, he may file
a petition with a court, called an _interpleader_, asking the court to
determine who is entitled to possession of the goods.
=266. Delivery of Goods by a Carrier.= The manner of delivery of goods
required of a common carrier, depends largely upon usage and custom.
In large cities, express companies and carriers of small packages
usually make deliveries to residences and places of business. In small
towns, and in the country they usually deliver at their depots or
store rooms only. Persons dealing with common carriers are bound by
their customs, and by reasonable regulations of the carriers. Carriers
by water and rail ordinarily deliver at their depots and warehouses
only. The purchaser is obliged to call for his goods. The carrier is
obliged to give the purchaser notice that the goods have arrived. If
the purchaser fails to call within a reasonable time thereafter, the
exceptional liability of a common carrier ceases, and the liability of
a warehouseman attaches. A warehouseman is obliged to exercise only
ordinary care in the protection of the goods, while a carrier is an
insurer of the goods.
If a carrier delivers goods to the wrong person, he is liable in
damages to the owner. If the consignee refuses to accept the goods, the
carrier should notify the shipper of this fact. The carrier's liability
then becomes that of a warehouseman.
Goods are frequently delivered to a carrier _C. O. D._ (collect
on delivery). A carrier, in this event, is required to collect a
specified amount from the purchaser before delivery. The purchaser
is entitled to inspect the goods. Title to goods sent C. O. D., is in
the purchaser, the possession only being reserved by the owner for the
purpose of collecting certain charges, ordinarily the purchase price.
=267. Charges and Lien of Common Carrier.= A common carrier usually
stipulates by special contract with a shipper the amount of charges for
carriage. In the absence of special contract, the carrier is entitled
to a reasonable amount for this service. The United States Congress has
the right to regulate charges for interstate carriage. The states may,
through their legislatures, regulate the rates within their respective
jurisdictions. A carrier has a lien on the goods carried for his
charges, and may retain possession of the goods until these charges are
paid.
=268. Discrimination by Common Carrier.= A common carrier represents
himself as willing to carry the goods of anyone who desires to employ
him. Business depends to a large degree upon the facilities offered by
carriers, notably by railroads. If certain business men or interests
are favored by carriers, competition in the same line is eventually
destroyed. For this reason, the law prohibited discrimination on
the part of a common carrier. All persons shipping under the same
conditions must be treated alike. The policy of the law is to promote
competition. There are cases which hold that a carrier is permitted
to charge one person a less rate than another, if the latter is not
charged an unreasonable rate. But this rule does not apply where the
parties are competitors and where the difference in rate charged is for
the purpose of destroying competition. The matter of discrimination
is now regulated largely by interstate commerce legislation discussed
under a separate section.
=269. Carriers of Mail.= The Constitution of the United States gives
Congress the power to establish postoffices and post roads. Under
this provision, the postoffice department has been created. It is a
department of the government. While the postoffice department carries
mail for compensation, it is a department of the government and not
a common carrier. The government cannot be sued without giving its
consent. It is an elementary principle that a government or sovereign
power cannot be sued by its citizens. If the mail is lost, the
government cannot be sued for damages. The government employs postal
clerks, postmasters and mail-carriers to operate the postal system.
These agents or servants of the government are required to give bond
to the government. If they violate their contract, or neglect their
duties, the government may collect its losses on these bonds. A
person whose mail is lost cannot sue a postoffice agent on his bond.
If, however, a person whose mail is lost can trace the loss to the
carelessness of a particular postmaster or mail-carrier, he may sue
such postmaster or carrier for damages sustained.
=270. Interstate Commerce Act.= The United States Constitution gives
Congress the power to regulate interstate commerce. The United States
Congress enacted interstate commerce regulations in 1887, 1889, 1891,
1895 and in 1906. The present United States interstate commerce
regulation is commonly known as the _Interstate Commerce Act of 1906_.
This act provides for an interstate commerce commission, consisting of
seven members. Each member receives a salary of $10,000 a year. The act
compels carriers engaged in interstate or foreign commerce to publish
a schedule of charges for carrying property. Carriers who give rebates
or offset, or discriminate between shippers in any way, are subject to
heavy fines, and the officers and agents are subject to imprisonment.
The commission is authorized to investigate the profits and charges of
carriers, and to fix the maximum and minimum rates for carriage as well
as the proportion of through rates to which each of several carriers
is entitled. Persons discriminated against may make complaints to the
commission. The commission may investigate these complaints as a court
by summoning witnesses, and by taking testimony. The commission may
award damages to the party injured. If the carrier refuses to comply
with the orders of the commission, the latter may invoke the machinery
of the United States courts to enforce its order. When matters are
removed to a United States court, the finding of the commission makes
out a _prima facie_ case.