Kerr Steamship Co., Inc.  v. Radio Corporation Of America

245 N.Y. 284 (1927)

 

CARDOZO, Ch. J.

On May 15, 1922, the plaintiff, Kerr Steamship Company, Inc., delivered to defendant, the Radio Corporation of America, a telegram consisting of twenty-nine words in cipher to be transmitted to Manila, Philippine Islands.

The telegram was written on one of the defendant’s blanks, and is prefaced by the printed words: “Send the following radiogram via R. C. A., subject to terms on back hereof which are hereby agreed to.”

The defendant had no direct circuit for the transmission of radiograms to the Philippine Islands. A radiogram could have been sent to London, where by transfer to other companies it might have reached its destination. This was expensive for the customer. To reduce the expense and follow a more direct route, the defendant forwarded its Philippine messages over the line of the Commercial Cable Company, which transmitted them by cable. When messages were thus forwarded, the practice was to send them upstairs to be copied. One copy was then handed to the cable company, and one kept for the defendant’s files. That practice was followed in this instance except that the copy intended for the cable company was mislaid and not delivered. As a consequence the telegram was never sent.

 

The telegram on its face is an unintelligible cipher. It is written in Scott’s code. Translated into English, it remains at best obscure, though some inkling of the transaction may be conveyed to an ingenious mind. Untranslated, it is jargon. The fact is that one Macondray, to whom the telegram was addressed, had cabled the plaintiff for instructions as to the loading of a ship, The Blossom. The instructions were contained in the undelivered message. As a result of the failure to transmit them, the cargo was not laden and the freight was lost. The trial judge directed a verdict for $6,675.29, the freight that would have been earned if the message had been carried. He held that the cipher, though the defendant could not read it, must have been understood as having relation to some transaction of a business nature and that from this understanding without more there ensued a liability for the damages that would have been recognized as natural if the transaction had been known. The defendant insists that the tolls which the plaintiff was to pay, $26.78, must be the limit of recovery.

The settled doctrine of this court confines the liability of a telegraph company for failure to transmit a message within the limits of the rule in Hadley v. Baxendale (9 Exch. 341). Where the terms of the telegram disclose the general nature of the transaction which is the subject of the message, the company is answerable for the natural consequences of its neglect in relation to the transaction thus known or foreseen (Leonard v. N. Y. Tel. Co., 41 N. Y. 544; Rittenhouse v. Ind. Line of Telegraph, 44 N. Y. 263). On the other hand, where the terms of the message give no hint of the nature of the transaction, the liability is for nominal damages or for the cost of carriage if the tolls have been prepaid (Baldwin v. U. S. Tel. Co., 45 N. Y. 744). This is in accord with authority elsewhere (Primrose v. W. U. Tel. Co., 154 U. S. 1, 29; Wheelock v. Postal Tel. Cable Co., 197 Mass. 119; Sanders v. Stuart, L. R. 1 C. P. 326; 3 Sutherland on Damages, §  959).

We are now asked to hold that the transaction has been revealed within the meaning of the rule if the length and cost of the telegram or the names of the parties would fairly suggest to a reasonable man that business of moment is the subject of the message. This is very nearly to annihilate the rule in the guise of an exception. The defendant upon receiving from a steamship company a long telegram in cipher to be transmitted to Manila would naturally infer that the message had relation to business of some sort. Beyond that, it could infer nothing. The message might relate to the loading of a cargo, but equally it might relate to the sale of a vessel or to the employment of an agent or to any one of myriad transactions as divergent as the poles. Notice of the business, if it is to lay the basis for special damages, must be sufficiently informing to be notice of the risk (Primrose v. W. U. Tel. Co., supra; Tel. Co. v. Sullivan, 82 Ohio St. 14; 3 Sutherland on Damages, § §  959, 970).

. . .

We are not unmindful of the force of the plaintiff’s assault upon the rule in Hadley v. Baxendale in its application to the relation between telegraph carrier and customer. The truth seems to be that neither the clerk who receives the message over the counter nor the operator who transmits it nor any other employee gives or is expected to give any thought to the sense of what he is receiving or transmitting. This imparts to the whole doctrine as to the need for notice an air of unreality. The doctrine, however, has prevailed for years so many that it is tantamount to a rule of property. The companies have regulated their rates upon the basis of its continuance. They have omitted precaustions that they might have thought it necessary to adopt if the hazard of the business was to be indefinitely increased. Nor is the doctrine without other foundation in utility and justice. Much may be said in favor of the social policy of a rule whereby the companies have been relieved of liabilities that might otherwise be crushing. The sender can protect himself by insurance in one form or another if the risk of nondelivery or error appears to be too great. The total burden is not heavy since it is distributed among many, and can be proportioned in any instance to the loss likely to ensue. The company, if it takes out insurance for itself, can do no more than guess at the loss to be avoided. To pay for this unknown risk, it will be driven to increase the rates payable by all, though the increase is likely to result in the protection of a few. We are not concerned to balance the considerations of policy that give support to the existing rule against others that weigh against it. Enough for present purposes that there are weights in either scale. Telegraph companies in interstate and foreign commerce are subject to the power of Congress (36 Stat. 539, 544). If the rule of damages long recognized by State and Federal decision is to give way to another, the change should come through legislation.

. . .

The judgment of the Appellate Division and that of the Trial Term should be reversed, and judgment directed in favor of plaintiff for $26.78, to be offset against costs in all courts, which are awarded to defendant.

POUND, CRANE, ANDREWS, LEHMAN, KELLOGG and O’BRIEN, JJ., concur.