State law challenges to limitation of liability clauses are preempted by federal requirements for equality and uniformity of rates in interstate commerce.
A company transmitted a cable message that contained a transcription error, resulting in significant financial loss for the sender. The company sought to limit its liability to the amount of the tolls collected, based on a tariff that included a limitation of liability provision. Although the sender had no actual knowledge of the tariff and did not expressly assent to its terms, the court held that the sender was bound by the provision. Because the Act to Regulate Commerce requires uniformity and equality in rates, a lawfully established rate, including its inherent limitations of liability, applies equally to all parties regardless of their individual knowledge or assent.
At page 571 Limitation of liability as an inherent part of the rate15 citing caseslimitation of liability “an inherent part of the rate
- Global Crossing Telecomm., Inc. v. CCT Commc'ns, Inc. (In Re CCT Commc'ns, Inc.), 464 B.R. 97 (Bankr. S.D.N.Y. 2011).published (The limitation of liability was an inherent part of the rate.)
- Pay Phone Concepts, Inc. v. MCI Telecomm. Corp., 904 F. Supp. 1202 (D. Kan. 1995).published (The limitation of liability was an inherent part of the rate.)
- Pub. Serv. Co. of Colorado d/b/a Xcel Energy, Petitioner/Cross-Respondent v. Outdoor Design Landscaping LLC, Respondent/Cross-Petitioner & Francisco Cuevas, 2026 CO 6, 583 P.3d 778.publishedCo. v. Esteve Bros. &Co., 256 U.S. 566, 571 (1921), the majority compromises the 30 PUC's ability to ensure that Coloradans maintain access to affordable and safe electricity. ¶63 For these reasons, I respectfully dissent. [1] I.
- In re SDG&E Consol. Cases, No. 3:17-cv-02433 (S.D. Cal. Feb. 19, 2021).Co. v. Esteve Bros. & Co., 256 U.S. 566, 571 (1921).
- World-Link, Inc. v. MeZUN.COM, Inc., 14 Misc. 3d 745 (N.Y. Sup. Ct. 2006).publishedWestern Union Telegraph Co. v Esteve Brothers & Co., 256 US 566, 571 [1921]; North Am.
- In Re Universal Serv. Fund Tel. Billing Practices Litig., 300 F. Supp. 2d 1107 (D. Kan. 2003).publishedCo. v. Esteve Bros. & Co., 256 U.S. 566, 571, 41 S.Ct. 584 , 65 L.Ed. 1094 (1921) (citing the predecessor to § 202(a) as establishing the uniformity principle); N. Am.
- Cent. Off. Tel., Inc. v. Am. Tel. & Tel. Co., 108 F.3d 981 (9th Cir. 1997).publishedAT&T argues that the filed-rate doctrine does not only apply to rates, citing Western Union Telegraph Co. v. Esteve Bros. & Co., 256 U.S. 566, 571-72, 41 S.Ct. 584, 586-87 , 65 L.Ed. 1094 (1921).
- Disk 'N' Data, Inc. v. AT&T Commc'ns, 616 N.E.2d 76 (Mass. 1993).published(limitation of liability “an inherent part of the rate)
- Lebowitz Jewelers Ltd. v. New England Tel. & Tel. Co., 508 N.E.2d 125 (Mass. App. Ct. 1987).publishedCo. v. Esteve Bros. & Co., 256 U.S. 566, 571 (1921), that “[t]he limitation of liability [is] an inherent part of the rate.” In sum, the regulation is reasonable and of undisputed application to this action.
- State Farm Fire & Cas. Co. v. S. Bell Tel. & Tel. Co., 262 S.E.2d 895 (Ga. 1980).publishedCo. v. Esteve Bros. & Co., 256 U. S. 566, 571 (1921).
Show 5 more citing cases
- S. Bell Tel. & Tel. Co. v. Invenchek, Inc., 204 S.E.2d 457 (Ga. Ct. App. 1974).publishedCo. v. Esteve Bros. & Co., 256 U. S. 566, 571 (41 SC 584, 65 LE 1094).
- Mandel v. Bell Tel. Co., 48 Pa. D. & C.2d 199 (1969).publishedAssent to the terms of the rate was rendered immaterial, because when the rate is used, dissent is without effect”: 256 U.S. 566 at 571, 572 .
- MacK v. E. Air Lines, Inc., 87 F. Supp. 113 (D. Mass. 1949).publishedBoston & Maine Railroad v. Hooker, 233 U.S. 97 , 34 S.Ct. 526 , 58 L.Ed. 868 , L.R.A.1915B, 450, Ann.Cas.1915D, 593; Western Union Telegraph Co. v. Esteve Brothers & Co., 256 U.S. 566, 571, 573 , 41 S.Ct. 584 , 65 L.Ed. 1094 .
- Abbott Supply Co. v. W. Union Tel. Co., 61 A.2d 660 (Del. Super. Ct. 1948).publishedCo. v. Esteve Bros., (1921) 256 U.S. 566, 571, 572 , 41 S. Ct. 584, 586 , 65 L.
- Am. Tel. & Tel. Co. v. New York City Human Resources Admin., 833 F. Supp. 962 (S.D.N.Y. 1993).published (The limitation of liability [is] an inherent part of the rate.)
At page 572 Rate structure as a matter of law not contract10 citing casesexplaining that an approved tariff governs the utility’s services “not as . . . a matter of contract, . . . but [as] a matter of law
- Centerpoint Energy Resources Corp. v. Fernando Ramirez & Minerva Ramirez, No. 20-0354 (Tex. Feb. 11, 2022).published (explaining that an approved tariff governs the utility’s services “not as . . . a matter of contract, . . . but [as] a matter of law)
- Maryland Cas. Co. v. NSTAR Elec. Co., 30 N.E.3d 105 (Mass. 2015).publishedCo. v. Esteve Bros. & Co., 256 U.S. 566, 572 (1921), it demands a degree of judicial deference not warranted in the contractual context.
- CenterPoint Energy Entex v. R.R. Comm'n of Texas, Victor Carrillo, Elizabeth A. Jones, Michael Williams, City of Tyler & State of Texas, No. 03-04-00731-CV (Tex. App.—Austin July 7, 2006).publishedCo. v. Esteve Bros. & Co., 256 U.S. 566, 572 (1921); Wegoland, Ltd. v. NYNEX Corp., 27 F.3d 17, 18 (2d Cir. 1994); Metro-Link Telecom, 919 S.W.2d at 691 .
- CenterPoint Energy Entex v. R.R. Comm'n of Texas, Victor Carrillo, Elizabeth A. Jones, Michael Williams, City of Tyler & State of Texas, No. 03-04-00731-CV (Tex. App.—Austin Apr. 21, 2006).publishedCo. v. Esteve Bros. & Co., 256 U.S. 566, 572 (1921); Wegoland, Ltd. v. NYNEX Corp., 27 F.3d 17, 18 (2d Cir. 1994); Metro-Link Telecom, 919 S.W.2d at 691 .
- CenterPoint Energy Entex v. R.R. Comm'n of Texas, Victor Carrillo, Elizabeth A. Jones, Michael Williams, City of Tyler & State of Texas, No. 03-04-00731-CV (Tex. App.—Austin Feb. 24, 2006).publishedCo. v. Esteve Bros. & Co., 256 U.S. 566, 572 (1921); Wegoland, Ltd. v. NYNEX Corp., 27 F.3d 17, 18 (2d Cir. 1994); Metro-Link Telecom, 919 S.W.2d at 691 .
- Cole v. Pac. Tel. & Tel. Co., 246 P.2d 686 (Cal. Ct. App. 1952).publishedCo. v. Esteve Bros. & Co., 256 U.S. 566, 572 [ 41 S.Ct. 584 , 65 L.Ed. 1094 ]) and ‘becomes a part of the contract, and the rights and liabilities under the contract must be determined with reference to the law in effect.” In Correll v. Oh…
- Riaboff v. Pac. Tel. & Tel. Co., 102 P.2d 465 (Cal. Ct. App. 1940).publishedCo. v. Esteve Bros. & Co., 256 U. S. 566, 572 [41 Sup. Ct. 584, 65 L.
41 S. Ct. at 586 Florida Public Service Commission could impose rate increase despite private contract between utility and customer4 citing cases
- Sheffler v. Commonwealth Edison Co., 923 N.E.2d 1259 (Ill. App. Ct. 1st Dist. 2010).publishedEd. 1094, 1097 , 41 S. Ct. 584, 586 (1921). 2.
- Commonwealth Edison Co. v. Illinois Com. Comm'n, 924 N.E.2d 1065 (Ill. App. Ct. 2d Dist. 2009).published(Florida Public Service Commission could impose rate increase despite private contract between utility and customer)
- Adams v. N. Illinois Gas Co., 809 N.E.2d 1248 (Ill. 2004).published Ed. 1094, 1097-98 , 41 S. Ct. 584, 586 (1921), the United States Supreme Court considered the legal effect of tariffs filed pursuant to the Interstate Commerce Act: “The Act of 1910 [ 36 Stat. 539 , 544] introduced a new principle into the…
- W. Union Tel. Co. v. Bashinsky, Case & Co., 117 So. 289 (Ala. 1928).published Co. v. Esteve Bros., 256 U. S. 566, 572 , 41 S. Ct. 584, 586 ( 65 L.
At page 573 Since any deviation from the lawful rate would involve either an undue preference or an unjust discrimination, a rate lawfully established must apply equally to all, whether there is knowledge of it or not.3 citing cases
- Universal Serv. v. AT&T Corp., 619 F.3d 1188 (10th Cir. 2010).published (Since any deviation from the lawful rate would involve either an undue preference or an unjust discrimination, a rate lawfully established must apply equally to all, whether there is knowledge of it or not.)
- In Re Universal Serv. Fund Tel. Billing, 619 F.3d 1188 (10th Cir. 2010).published (Since any deviation from the lawful rate would involve either an undue preference or an unjust discrimination, a rate lawfully established must apply equally to all, whether there is knowledge of it or not.)
- State Farm Fire & Cas. Co. v. S. Bell Tel. & Tel. Co., 258 S.E.2d 198 (Ga. Ct. App. 1979).published“a rate lawfully established must apply equally to all, whether there is knowledge of it or not”
At page 570 “without assent in fact, bound as matter of law by the provision limiting liability, because it is a part of the lawfully established rate.”1 citing case
- Sprint Corp. v. Evans, 818 F. Supp. 1447 (M.D. Ala. 1993).published Co. v. Esteve Bros. & Co., 256 U.S. 566, 570, 572 , 41 S.Ct. 584, 586, 586 , 65 L.Ed. 1094 (1921); Western Union Tel.
65 L. Ed. at 1097 cited at this page1 citing case
- Garrison v. Pac. Nw. Bell, 608 P.2d 1206 (Or. Ct. App. 1980).publishedAs Justice Brandéis stated in a similar context upholding a telegraph company’s limitation of liability, "the limitation of liability was an inherent part of the rate.” Western Union Telegraph Co. v. Esteve Brothers & Co., 256 US 566, 571…
At page 568 Mr. Justice Brandéis delivered the opinion of the court. In September, 1917, the Western Union Telegraph Company delivered to Esteve Brothers & . Company at…1 citing case
- Zurich Am. Ins. Co. v. S. Connecticut Gas Co., No. 3:19-cv-00534 (D. Conn. Feb. 21, 2020).Co. v. Esteve Bros. & Co., 256 U.S. 566, 568 (1921), relied upon by SCG, the defendant, Western Union Telegraph Company (“Western Union”), transmitted an unrepeated cable message to the plaintiff company which erroneously directed the sale…
At page 574 reasonable rate, the principle of equality and uniformity laid down in § 3 required that it should have exactly the same force and effect as the rate initiated…1 citing case
- Kerr S.S. Co. v. Radio Corp. of Am., 157 N.E. 140 (N.Y. 1927).publishedCo. v. Esteve Bros. & Co., 256 U. S. 566, 574, 575).
Other citing cases
- Sw. Elec. Power Co. v. Grant, 73 S.W.3d 211 (Tex. 2002).published
- Himmelman v. MCI Commc'ns Corp., 104 F. Supp. 2d 1 (D.D.C. 2000).published
- Houston Lighting & Power Co. v. Auchan USA, Inc., 995 S.W.2d 668 (Tex. 1999).published
- In Re Illinois Bell Switching Station Litig., 641 N.E.2d 440 (Ill. 1994).published
- Comput. Tool & Eng'g, Inc. v. N. States Power Co., 453 N.W.2d 569 (Minn. Ct. App. 1990).published
- North Am. Phillips Corp. v. Emery Air Freight Corp., 579 F.2d 229 (2d Cir. 1978).published
- Am. Tel. & Tel. Co. v. Florida-Texas Freight, Inc., 357 F. Supp. 977 (S.D. Fla. 1973).published
- United States Court of Appeals, Tenth Circuit, 441 F.2d 704 (10th Cir. 1971).unpublished
- N. Nat. Gas Co. v. Grounds, 441 F.2d 704 (10th Cir. 1971).published
- Wallace v. Folks, 30 Fla. Supp. 169 (Fla. Cir. Ct., Duval Cty. 1968).published
Show 2 more citing cases
- W. Union Tel. Co. v. Czizek, 264 U.S. 281 (1924).published
- Roberts Distrib., Inc. v. Fed. Express Corp., 917 F. Supp. 630 (S.D. Ind. 1996).published
v.
Esteve Brothers & Company
delivered the opinion of the court.
In September, 1917, the Western Union Telegraph Company delivered to Esteve Brothers & . Company at New Orleans, Louisiana, an unrepeated cable message from the latter’s main office at Barcelona, Spain, directing a sale for future delivery of two thousand bales of cotton. The message actually sent had directed the sale of two hundred bales. The error in transmission resulted in a loss to Esteve Brothers & Company of $31,095. To recover, compensation for this loss they sued the Western Union in a state court of Louisiana. The case was removed to the Federal District Court and there was tried by jury upon these additional stipulated facts:
“The message was sent over lines of the Spanish Government Telegraph from Barcelona to Paris and thence over lines of the French Government to Havre. There it was delivered to the Western Union, transmitted by its cable to New York City and thence over its land lines to New Orleans. The error in transmission occurred on these land lines. The charge of $6.60, paid at Barcelona for transmitting the message, represented the sum of the local rates on the several connecting lines. The Western Union’s share was $4.65; and of this $3.75 was apportioned to the cable system and 90 cents to the land lines. This Western Union rate was established by its tariff of telegraph and cable rates, in force since some time prior to June 18, 1910. Under the act of that date, c. 309, 36 Stat. 544, making telegraph and cable companies subject to the Act to Regulate Commerce, this tariff had been filed with the Interstate Commerce Commission in May, 1916, by its permission and pursuant to an appropriate resolution of the company. The tariff so filed embodied the long used classification of messages, rules and regulations, including the provision that the company “shall not[*569] be liable for mistakes ... in transmission . . . of any unrepeated message, beyond the amount of that portion of the tolls which shall accrue to it.” The plaintiffs did not in fact assent to this limitation of liability. They did not, in sending the message at Barcelona, use a blank containing the provisions so limiting liability. They did not have actual knowledge of the resolution of the company or of the filing of the tariffs with the Interstate Commerce Commission.
The plaintiffs contended at the trial .that in view of the above facts they were entitled to a verdict for the full amount of their loss. The company, contended that, since the message had not been repeated, the verdict should be limited to $4.65, the amount received by it as tolls. A verdict was directed for $31,095 with interest; judgment thereon was affirmed by the United States Circuit Court of Appeals for the Fifth Circuit, 268 Fed. Rep. 22; and a petition for writ of certiorari was granted. 254 U. S. 624. The sole question presented for our decision is the amount of damages recoverable.
For more than fifty years prior to the transaction here in suit the Western Union had maintained these two classes of rates for general cable and telegraph service. The usual or basic rate was for service practically at the sender’s risk, liability being limited to the amount of the toll collected. Another special rate entitled the sender to have the message repeated back to the point of origin and rendered the company liable in case of mistake or nondelivery up to fifty times the amount of the extra charge. The extra charge for this additional service was for telegrams one-half and for cables one-quartér of the basic rate. In Primrose v. Western Union Telegraph Co., 154 U. S. 1, decided in 1894, this classification of rates and the limitations upon the company’s liability were declared by this court to be reasonable and valid, in the absence of willful misconduct, or gross negligence. The[*570] limitation upon the company’s common-law liability was held to be in the nature of contract; and this liability unlike that of a common carrier, was not an insurer’s. It was merely for «the damage flowing from failure to use due care in transmission. Primrose v. Western Union Telegraph.Co., supra, 14. Since the limitation of liability was in the nature of contract, the provision had to be brought home to the sender of a message in order to be legally binding upon him. Assent by the sender was ordinarily established if the message was written upon one of the company’s blanks which set forth the limitation of' liability. Primrose v. Western Union Telegraph Co., supra, 25; compare Cau v. Texas & Pacific Ry. Co., 194 U. S. 427, 431. Whether, in view of long established practice, the mere sending of a message, although not written on such a. blank, imported assent to the usual terms of the rate involved then an issue of fact. See New Jersey Navigation Co. v. Merchants’ Bank, 6 How. 344, 383. The question presented for our decision is whether since the amendment of June 18, 1910, to the Act to Regulate Commerce, the sender is, without assent in fact, bound as matter of law by the provision limiting liability, because it is a part of,the lawfully established rate.
The Act of June 18, 1910, c. 309, § 7,36 Stat; 539,544, broadened the scope of the Act to Regulate Commerce to include “telegraph, telephone, and cable companies (whether wire or wireless) engaged in sending messages from [a] State ... to any foreign country.” And whatever may have been the legal incidents of transmitting the message from Barcelona to Havre under' Spanish and French law, the Western Union in sending the message. over its own lines from Havre to New Orleans was governed by,:, the provisions of that act. Galveston, Harrisburg & San Antonio Ry. Co. v. Woodbury, 254 U. S. 357. In the third paragraph of § 1 of the amended act Congress provided that messages might be -“classified[*571] into day, night, repeated, unrepeated, letter, commercial, press, Government, and such other classes as are just apd reasonable, and different rates [might] be charged for the different classes of messages.” Acting, in May, 1916, under the authority of that provision, the Western Union by appropriate action approved the tariff involved in the present case and by permission of the Interstate Commerce Commission filed with it the tariff, including the provisions here in question. The company was not required so to do by the terms of the act or. by any order of the Commission; compare 25th Annual Report I. C. C. (1911) pp. 5, 6. But the rate, long before established, ther, formally adopted and filed, was thereafter the only lawful rate for an unrepeated message, and the limitation of liability became the lawful condition upon which it was sent. Postal Telegraph-Cable Co. v. Warren-Godwin Lumber Co., 251 U. S. 27, 30; Clay County Produce Co. v. Western Union Telegraph Co., 44 I. C. C. 670, 674.
The lawful rate having been established, the company was by the provisions of § 3 of the Act to Regulate Commerce prohibited from granting to anyone an undue preference or advantage over the public generally. For, as stated in Postal Telegraph-Coble Co. v. Warren-Godwin Lumber Co., supra, 30, the “Act of 1910 was designed to and did subject such companies as to their interstate business to the rule of equality and uniformity of rates.” If the general public upon paying the rate for an tin-repeated messagé accepted substantially the risk of erre r involved in transmitting the message, the company could not, without granting an undue preference or advantage extend different treatment to the plaintiffs here. The limitation of liability was an inherent part of the rate. The company could no more depart from it than it could depart from the amount charged for the service rendered.
The Act of 1910 introduced a new principle into the legal relations of the telegraph companies' with their[*572] patrons which dominated and modified the principles previously govérning them. Before the act the companies had a common-law liability from which they might or might npt extricate themselves ' according to views of policy prevailing in the several. States.' Thereafter, for all messages sent in interstate or foreign commerce, the outstanding consideration became that of uniformity and equality of rates. . Uniformity demanded that the rate represent the whole duty and the whole liability of the company. It could not be varied by agreement; still less could it be varied by lack of agreement. The rate be-, came, not as before a matter of contract by which a legal liability could be modified, but a matter of law by which a uniform liability was imposed. Assent to the terms of the rate was rendered immaterial, because when the rate is used, dissent is without effect. This principle was established in cases involving the limitation upon a carrier’s liability for baggage by Boston & Maine Railroad v. Hooker, 233 U. S. 97, and Galveston, Harrisburg & San Antonio Ry. Co. v. Woodbury, 254 U. S. 357. In the former case it was said, “If the charges filed were unreasonable, the only attack that could be made upon such regulation [limiting liability] would be by proceedings contesting their reasonableness before the Interstate Commerce Commission. While they were in force they were equally binding upon the railroad company and all passengers whose baggage was transported by carriers, in interstate commerce. ” So here the limitation of liability attached to the unrepeated cable rate is binding upon all. who send messages to or from foreign countries until it is set aside as unreasonable by the Commission.
It is strongly argued that the rule is not applicable to the situation before us, because of the difference in the provisions of law which govern the establishment of railroad and of telegraph rates. The railroad rate is established, and can only be established by filing the tariff with[*573] the Commission. Telegraph companies may initiate rates without filing tariffs with the Commission, (Clay County Produce Co. v. Western Union Telegraph Co., supra). Plaintiffs insist that it is the'filing and subsequent publication of the railroad rate which gives it the force of law and requires the- shipper to take notice of it. But the contention, by dwelling unduly upon 'the procedural features of the act, would defeat the end which Congress had in view. Both railroad and telegraph-cable rates are initiated, by the carrier. „ It is true that a railroad rare does not have the force of law unless it is filed with the Commission. But it is not true that out of the filing of the rate grows the rule of law by which the terms of this lawful rate conclude the passenger. The rule does not rest upon the fiction of constructive notice. It flows from. the requirement of equality and uniformity of rates laid down in jj 3 of the Act to Regulate Commerce. Since any deviation from the lawful rate would involve either an undue preference or an unjust discrimination, a rate lawfully established must apply equally to all, whether there is knowledge of it or not. - Congress apparently concluded, in the light of discrimination theretofore practiced by railroads among shippers -and localities, that in transportation by rail equality could be secured only by pro-', visions involving the utmost definiteness and constant official supervision. Accordingly by § 6 it forbade a carrier of goods from engaging in transportation unless its rates had been filed with the Commission ^and'it prohibited, under heavy penalties, departure in any way' from the terms of those rates when filed. In the case of telegraph and cable companies Congress appears to have considered that such stringent provisions were not required to secure the end in view. It did not make filing with the Commission .a condition precedent - to the existence of a. lawful telegraph and cable rate. When, therefore, the Western Union initiated and established this[*574] reasonable rate, the principle of equality and uniformity laid down in § 3 required that it should have exactly the same force and effect as the rate initiated by a rail carrier and filed according to the provisions of § 6.
It was suggested that the attempted limitation of liability must fail under the rule recently applied in Union Pacific R. R. Co. v. Burke, 255 U. S. 317; because both the alternative rates offered in the Western Union tariff for cable messages were for limited liability, and because, therefore, no offer was made to the sender of a rate under which the company would assume full liability for all losses suffered through its negligence. It is by no means dear that the rule of the Burke Case — established for common carriers of goods — should be applied to telegraph and cable companies. See the Primrose Case, supra, p. 14. In any event, it is not applicable here. The Western Union did not, as in the case of telegrams, offer to send cable messages upon a special valuation to be made by the sender and paid for by an extra charge “based on such value equal to one-tenth of one per cent, thereof.” But it offered alternative rates for repeated and for unrepeated cable messages. This long-established classification was expressly recognized as just and reasonable for cable as well as for telegraph messages in the amendment made by the Act of June 18, 1910, to § 1 of the Act to Regulate Commerce. The provision in the terms offered by the company is:
“To guard against mistakes or delays the sender of a cable message should order it repeated, that is, telegraphed back to the originating office for comparison. For this, one-quarter of the unrepeated cable message rate is charged in addition. Unless otherwise indicated on its face this is an unrepeated cable message and paid for as such.
“. . . this company shall not be liable for mistakes or delays in transmission or delivery . . . of any un[*575] repeated message; beyond the amount of that portion of the tolls which shall, accrue to this company; . . . [nor] of any repeated message,, beyond fifty times the extra sum received by this company from the sender for repeating such message over its own lines. . .
The repeated rate, offering greater accuracy and greater liability in case of error, was open to anyone who wished to pay the extra amount for extra security. Whether the limitation of liability prescribed for the repeated message would be valid as against a sender who had endeavored, by having the message repeated, to secure the greatest care on the part of the company, we have no occasion to decide, because it is not raised by the facts before us. It is enough to sustain the limitation of liability' attached to the unrepeated rate that another special rate was offered for messages of value and importance, and not availed of. The fact that the alternative rate had tied to it a provision which, if tested, might be found to be void, is not material in a case where no effort was made to take advantage of it.
Reversed.
Mr. Justice Pitney and Me. Justice Clarke dissent.