J. Aron & Co. v. Panama Railroad

The appellant is a common carrier by water. It contracted to carry on its boat Lake Flattery bags of cocoa beans from Guayaquil, Ecuador, to New York. Upon arrival at the port of destination an inspection disclosed that the beans were damaged. The respondent, the consignee, immediately served notice of that fact upon the carrier and made a claim for damages.

Eleven months later this action was commenced by the consignee to recover the damage suffered. The record does not disclose any reason or excuse for the delay in commencing the action. The bill of lading signed by the shipper under which the goods were carried provided that “ No suit for loss or damage shall be maintainable against the carrier unless instituted within six months after the shipment concerned arrives or should arrive at destination.” The learned trial justice decided as a matter of law that the clause of the bill of lading which purported to limit the time within which an action could be commenced to recover damage was void as against public policy.

The shipper and common carrier do not stand upon equal terms. The shipper, to some extent at least, is at the mercy of the carrier, which may impose such terms as it desires unless the shipper is protected by law. Public policy, therefore, requires that shippers be protected from the imposition of an unreasonable, unfair or unjust limitation of time within which to commence an action to recover damages for the loss of or injury to goods carried. Courts have ever been zealous to protect shippers from the strict enforcement of harsh and unjust provisions of shipping contracts imposed by common carriers. The public in general has an interest in such contracts and the rule of freedom of contract which prevails as to private contracts is not applicable. (Southern Express Co. v. Caldwell, 21 Wall. [U. S.] 264.)

It was in conformity with that principle that Congress enacted the Harter Act (U. S. Comp. Stat. § 8029; Mason’s U. S. Code, vol. 3, tit. 46, § 190) forbidding a common carrier by water from issuing a bill of lading which, by its terms, would exempt the carrier from liability for its negligence or arbitrarily limit its liability without regard to the rate charged. The act does not, however, contain any provision relating to the terms of bills of lading which provide the time within which an action must be brought. That was left to be governed by the action of the contracting parties, subject, however, to the principle that such limitation of time must be just and fair.

After the enactment of those statutes this court was required to pass upon the validity of a clause in a bill of lading which provided that notice of claim must be given within sixty days after knowledge of loss and action commenced within sixty days thereafter. The shipment involved in that case was by water and not covered by either act. We found in the statutes referred to an expression of the will of Congress as to what constitutes a reasonable opportunity to commence an action. We

In the following cases it was decided, under the facts therein: That a provision of a bill of lading which limited the time to bring an action to thirty days was void (The President Polk, 43 Fed. Rep. [2d] 695); that a limitation of three months was void (Green Star S. S. Co. v. Nanyang Bros. Tobacco Co., Ltd., 3 Fed. Rep. [2d] 369).

On the other hand, it has been decided that a limitation in a bill of lading of sixty days within which to commence an action was valid (Eastern Outfitting Co. v. Pacific Mail S. S. Co., 26 Fed. Rep. [2d] 270; The Sagadahoc, 291 Fed. Rep. 920 ); that a limitation of three months was valid (The Susquehanna, 296 Fed. Rep. 461 ; The Turret Crown, 284 Fed. Rep. 439 ; Schnell v. United States, 30

The United States Supreme Court has not passed upon the question. No court so far as we have been able to find has ever held that a limitation of six months within which to commence an action was unfair, unreasonable or against public policy. We have reached the conclusion that under the facts of this case the limitation of six months contained in the bill of lading within which to bring an action was not an unreasonable limitation. The time allowed was substantial. It cannot be considered harsh, unfair or unjust. The parties had a legal right to enter into a contract imposing a limitation of time, and unless courts can see that the contract period is contrary to principles of fairness and justice, the contract as entered into should be enforced.

We do not attempt to fix a standard or establish, any definite time which shall be deemed reasonable under all conditions. We hold that under the facts and circumstances of this case six months was a reasonable limitation.

The distinction between a limitation of time within which to serve a preliminary notice of claim and the limitation of time within which to commence an action should be kept in mind.

We are not unmindful of the fact that thirty-two nations have adopted a statute which provides that an action to recover damages under a shipping contract must be commenced within one year. A Statute of Limitations does not, however, prevent the parties to a shipping contract from agreeing upon a shorter time within which action must be commenced, and the statutory limitation throws very little light upon the question of what constitutes a just and reasonable time under such an agreement.

Cardozo, Ch. J., Pound, Crane, Kellogg and O’Brien, JJ., concur; Lehman, J., not sitting. Judgments reversed, etc.