Anderson, John T.

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North Dakota Law Review Volume 28 Number 1 Article 6 1952 Bailment - Limitation of Liability on Storage Receipt - Applicability to Separate Agreement to Repair - Remedy of Insurer John T. Anderson Follow this and additional works at: https://commons.und.edu/ndlr  Part of the Law Commons Recommended Citation Anderson, John T. (1952) "Bailment - Limitation of Liability on Storage Receipt - Applicability to Separate Agreement to Repair - Remedy of Insurer," North Dakota Law Review: Vol. 28 : No. 1 , Article 6. Available at: https://commons.und.edu/ndlr/vol28/iss1/6 This Case Comment is brought to you for free and open access by the School of Law at UND Scholarly Commons. It has been accepted for inclusion in North Dakota Law Review by an authorized editor of UND Scholarly Commons. For more information, please contact und.commons@library.und.edu. NORTH DAKOTA LAW REVIEWDistrict of Columbia decision. 1 6 In that case it was held that the violation.of an ordinance, by leaving the key in a parked vehicle, was the proximatecause of an injury resulting from the unauthorized and negligent use of thevehicle by another. In the instant case, the ordinance, requiring that a three-foot space be maintained between parked vehicles, was undoubtedly enactedto facilitate parking, and prevent the identical situation from arising: in whichthe present defendant found himself. The quaere arises as to whether ornot the court here has largely nullified the ordinance which was obviouslyadopted to prevent the inconvenience and damage incurred here by the de-fendant and plaintiff.17WILLIAM E. PORTERBAILMENT - LIMITATION OF LIABILITY ON STORAGE RECEIPT - APPLICABIL-ITY TO SEPARATE AGREEMENT TO REPAIR - REMEDY OF INSURER. Plaintiff.insurance company, as subrogee, brought an action to recover the value ofa fur coat that was lost or stolen while in possession of the defendant furrier,-who had contracted to store and repair it. Aware of the coat's $2000 insuredvalue, defendant suggested to the owner that a minimum value of $100 beplaced upon it to avoid further insurance. The owner agreed and a storagereceipt specifying the $100 valuation was issued, and liability limited to thatamount. After being repaired, the coat disappeared on the way to the coldstorage vaults. Plaintiff paid the owner the full $2000 valuation and soughtrecovery against the defendant on the ground that there were two contracts,that defendant was negligent under the alteration contract, thereby renderinginapplicable the liability limitation in the contract for storage. On appeal froma judgment in favor of the defendant, it was held that plaintiff was limitedto the $100 valuation. A dissenting opinion adhered to the theory that twoseparate bailment contracts were executed, and that the limitation in thestorage contract had no application to the bailment for repairs. Lumbermen'sMutual Insurance Co. v. F. Z. Cikra, Inc. 95 N.E.2d 230 (Ohio 1950).The majority opinion disregarded the element of separate contracts solelyon the validity of the receipt limiting the liability of the bailee to the specified$100. The dissent logically points out that the storage contract never becameeffective because the coat never reached storage, and also that payment forrepairs was separate from and in addition to the payment for storage, therefor,the limitation could not be effective. In contending for liability for the fullvalue the dissent relied upon a former Ohio case.1Although it has been contended to the contrary, 2 bailment is generally con-ceded to be a contractual relationship.2 Indirectly, a bailment may be saidto be the rightful possession of goods by one who is not the owner, that the16. Ross v. Hartman, 139 F.2d 14 (D.C.Cir. 1943).17. Defendant in this instant case could possibly have counter claimed. See Harnick v.Levine, 106 N.Y.S. 460 (1st Dist. 1951) (where motorist unable to extricate his vehiclebecause the defendant had double parked, in violation of a city ordinance, brought suitand was allowed recovery for discomfort and inconvenience).1. Aetna Casualty & Surety Co. v. Higbee Co., 80 Ohio App. 437, 76 N.E.2d 404(1947), rev'd. on other grounds.2. Paton, Bailment: Property or Contract? 23 Aust. L.J. 591 (1950).3. Story, Bailments 5 (9th ed. 1878).RECENT CASEStrust shall faithfully be executed by returning the property or accounting forit when the special purpose is accomplished. 4 Bailments have been groupedinte three classes:5 (1) the hire of active labor and services, (2) the hireof care and attention about goods, as for deposit, (3) the hired carriage ofgoods. The distinction has been made between the first two that in the firstthe principal undertaking is feasance, in the second, custody.6 Therefor, onewho for compensation or as a necessary incident of his business takes an-other's property into his care and custody is a bailee for hire.7The applicability of a contract limiting the liability of a bailee while thegoods are in storage to the same goods while being processed under an agree-ment to repair them has been decided previously. In an almost identicalsituation,8 it was held that the limitation of liability for loss or damage underthe contract for storage was inapplicable to the bailee's subsequent separatecontract to repair and clean a coat. That case also represents the principlethat where goods are specially contracted to be kept in a particular place,and the bailee keeps them in another, he is liable as an insurer.9 This is alsothe rule in England.1o The reasoning is that in going beyond the limits ofthe bailment the bailee becomes, or is closely akin to, a converter."x Hence,it would appear that in the principal case, the bailee would be an insurerupon removing from, or failing to place in storage the bailed goods.The view has been taken that where a bailee has undertaken expressly orthrough an established course of dealing to insure property, he is presumtivelyrequired to insure it for the full value.12 Thus, one whose business custom-arily involves the care and transmission of the valuables of others which areespecially susceptible to loss by theft may fail in his duty to exercise reason-able care and be liable if he sends the property uninsured and loss occurs,where insured transmission was equally available and would have avoidedthe loss.1; While a bailee for hire is not an insurer of the goods, he is liablefor their loss due to his negligence. 14 Nor may he exempt himself from lia-4. Knapp, Stout & Co. v. McCaffrey, 178 I11. 107, 52 N.E. 898 (1899) (the propertybailed may rightfully be kept by the bailee until the bailor reclaims it); Union Old LowellNat. Bank v. Paine, 318 Mass. 313, 61 N.E.2d 666 (1945); D. M. Ferry & Co. v.Forquer, 61 Mont. 336, 202 Pac. 193 (1921).5. Hale, Law of Bailments and Carriers 213 (1896).6. Story, Bailments §422 (8th ed. 1870).7. Hotels Statler Co. v. Saler, 103 Ohio St. 638, 134 N.E. 460 (1921).8. Aetna Casualty & Surety Co. v. Higbee Co., 80 Ohio App. 437, 76 N.E.2d 404 (1947)(defendant furrier agreed to store coat under limited liability clause and coat was lost whilebeing cleaned by another company to which it was sent by defendant without klowledgeof the bailor).9. McCurdy v. Wallblom Furniture & Carpet Co., 94 Minn. 326, 102 N.W. 873, (1905).10. See In re Missouri Steamship Co., 42 Ch. D. 321 (1888). Contra, Liverpool &Great Western Steam. Co. v. Phenix Ins. Co., 129 U.S. 397 (1889).11. See Heffron v. Brown, 155 I11. 322, 40 N.E. 583 (1895).12. Rice Oil Co. v. Atlas Assurance Co., 102 F.2d 561 (9th Cir. 1939); Broussard v.South Texas Rice Co., 103 Tex. 535, 131 S.W. 412 (1910), afi'g, 120 S.W. 587 (Tex.Civ. App. 1910).13. Bank of Monango v. Ellendale Nat. Bank, 52 N.D. 8, 201 N.W. 839 (1924) (wheredefendant mailed plaintiff's pledged negotiable bonds uninsured to rediscounter and theywere stolen in the mail, defendant was bailee with duty to exercise ordinary diligence andreasonable care in transmission of the bonds).14. Firemen's Fund Insurance Co. v. Schreiber, 150 Wis. 42, 135 N.W. 507 (1912)(it was reasonable for bailee to use the usual means of executing the agreement anddelegating the work to employees).NORTH DAKOTA LAW REVIEWbility for negligence by special contract. 1 5 North Dakota has imposed uponthe bailee for hire the duty of ordinary care, 16 and has held that where oneenters into an agreement to return the property or pay its value, he is an in-surer of the property.' 7 The value of the bailed goods is usually a decisivefactor in determining the degree of care required of the bailee.18It is well settled that by actual incorporation into the contract of. the limita-tion of liability,' 9 the bailee for hire may limit his contract liability unlessthe limitation contravenes public policy or violates a statute.2 0 Hence, thelimitation in the instant case was perfectly valid in regard to the contractfor storage. However, it seems from the facts in the case that the storagecontract had not become effective when the coat disappeared because thecoat never reached storage. Limitation of liability in bailment contracts usuallyis strictly construed, 21 and it should be confined to the terms and performanceof the contract.In the struggle against public policy, limitation of liability has completelywon out in England,22 but has not fared so well in this country. 2 3 Freedomof contract should not be hampered unless it actually does operate to thedetriment of the public, but neither should this freedom be extended beyondthe contract. Where the practice of limiting liability would invite fraud, itshould not be allowed to prevail. The wisdom of allowing two parties tocontract to the detriment of a third party, in this case the insurance company,:is open to question.JOHN T. ANDERSONCRIMINAL LAW - EXTRADITION - PERSONS ILLEGALLY BROUGHT WITHINJURISDICTION - RIGHT TO HABEAS CORPUS OF A PERSON UNLAWFULLY RE-TURNED TO A STATE FOR PROSECUTION. - It has long been considered settledlaw in both federal 1 and state 2 courts that an illegality 3 occurring in themethods used to bring a defendant back to a state from which he has fled15. Scott Auto & Supply Co. v. McQueen, 11 Okl. 107, 226 Pac. 372 (1924) (basedupon statute). But cf. Interstate Compress Co. v. Agnew, 255 Fed. 508 (8th Cir. 1919)(decided before Erie R. Co. v. Tompkins, refusing to apply law established by Oklahomadecisions).16. N.D. Rev. Code §47-1504 (1943).17. Grady v. Schweinler, 16 N.D. 452, 113 N.W. 1031 (1907) (plaintiff's stallion diedwhile us defendant's possession,); accord, Steele v. Buck, 61 Ill. 343 (Freem. 1881).18. See Cussen v. Southern California Say. Bank, 133 Cal. 534, 65 Pae. 1099 (1901).19. Jones v. Great Northern By. Co.. 68 Mont. 231, 217 Pae. 673 (1923).20. See Story, Bailments 31-2 (8th ed. 1870).21. Minnesota B. & C. Co. v. St. Paul C-S. W. Co., 75 Minn. 445, 77 N.W. 977 (1899);Jones v. Great Northern Ry. Co., 68 Mont. 231, 217 Pac. 673 (1923). Contra: Stephens v.Southern Pae. Ry. Co., 109 Cal. 86, 41 Pac. 783 (1895).22. See 86 U. of Pa. L. Rev. 772, 774 (1938).23. Ibid.1. Mahon v. Justice, 127 U.S. 700 (1888); Ker v. Illinois, 119 U.S. 436 (1886);United States v. Toombs, 67 F.2d 744 (5th Cir. 1933); Ex parte Campbell, 1 F.Supp. 899(S.D.Tex. 1932). Cf. Robinson v. United States, 144 F.2d 392 (6th Cir. 1944) (by thesame court which decided the principal cases).2. People v. Groves, 63 Cal.App. 709, 219 Par. 1033 (2d Dist. 1923); Joiner v State,66 Ga.App. 105, 17 S.E.2d 101 (1st Div. 1941); Commonwealth v. Gorman, 288 Mass.294, 192 N.E. 618 (1934); People v. Eberspacker, 29 N.Y.Supp. 796 (2d Dept. 1894).3. "Illegality" as used herein refers to acts of abduction or kidnapping, as distinguishedfrom mere procedural or substantive errors occurring during the course of an extraditionproceeding. For an able discussion of extradition procedures, see Moorhead, Texas andInterstate Rendition, 23 Tex. L. Rev. 228 (1945).

Bailment - Limitation of Liability on Storage Receipt - Applicability to Separate Agreement to Repair - Remedy of Insurer

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Bailment - Limitation of Liability on Storage Receipt - Applicability to Separate Agreement to Repair - Remedy of Insurer

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