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purposes of the present note, however, Dean Wigmore and the general rule are at one. Contemporaneous parol agreements independent of the instrument and conditioning the maker's liability thereon, are excluded in both statements of the law. And the difficulty arises from the fact that neither statement of the law is an adequate statement of the situation. A well-established line of decisions freely admits as against immediate parties the proof of agreements fixing certain conditions to the instrument. And no summary excluding all collateral conditions can be adequate.
Dean Wigmore of course recognizes the existence of this line of decisions and excepts it from the general rule on the ground usually taken by the courts and the text writers, viz., that “a condition precedent to the existence of the obligation, i.e. an escrow," is always available. But it is difficult to see wherein this differentiation is effective either in application to the given case or in reasonableness. Although there may be a theoretical difference between a delivery in escrow to the payee, and a delivery to the payee to take effect in praesenti with a condition precedent to the obligor's liability, there is no difference in the legal effect of the two situations. The fact that in most jurisdictions 8 the delivery is anomalously allowed to be made in escrow to the payee cannot change the rule of escrow delivery in general, i. e. that the delivery of a deed in escrow creates an obligation presently,' etc. In either case there is an obligation outstanding which the parties have made dependent on a contingency. And in either case the payee can cut off the obligor's defense, based on the condition, by indorsement to a bona fide indorsee for value. 10 And yet the Parol Evidence Rule is made to apply in the one case and to be ineffective in the other.
In other words a line is drawn between parallel situations to the
ment into terms expressed or variable, and terms fixed or implied. The expressed terms are not open to qualification; the terms implied by law may be qualified provided the transaction is such that the negotiable instrument form is peculiarly convenient for certain features, however inconvenient for others.
4 The present note is not concerned with cases where the instrument and the contemporaneous agreement are mutual and dependent and therefore to be construed together as one contract. Barrie v. Quinby, 206 Mass. 259, 92 N. E. 451. See note to American Gas, etc. Co. v. Wood, 90 Me. 516, in 43 L. R. A. 449. There is no definite rule establishing a test for the “one-contract” interpretation, and it is often difficult to determine when the court will construe the instrument and the agreement together. See 43 L. R. A. 449, note, S III (b).
5 Dean Wigmore excludes contemporanec us parol conditions qualifying absolute instruments on the ground that, though the unconditional nature of a negotiable instrument is a term implied by law and hence variable under his formula (see note 3, supra), nevertheless if a condition was desired there was no prime necessity for the negotiable instrument form and the doors of his definition are closed. See WIGMORE, EVIDENCE, $ 2444 (2). This seems to be a determined effort to fit the law to the formula.
6 Seymour v. Cowing, 4 Abb. App. Dec. (N. Y.) 200; Beach v. Nevins, 162 Fed. 129, annotated in 18 L. R. A. (N. S.) 288.
? See WIGMORE, EVIDENCE, 2444, n. 6 end. The same distinction is taken by the cases. Niblock v. Sprague, 200 N. Y. 390, 93 N. E. 1105; Smith v. Dotterweich, 200 N. Y. 299, 93 N. E. 985; Shine v. Merville, 1 Oh. App. 33, and cases under the Negotiable Instruments Law generally.
8 Burke v. Dulaney, 153 U. S. 228. See 1 DANIEL, 6 ed., $ 68 a; NEGOTIABLE INSTRUMENTS Law, $ 16.
• Butter & Baker's Case, 3 Coke 25 a; WARREN, CASES ON PROPERTY, 213. 10 Gillette v. Hodge, 170 Fed. 313.
exclusion of the true agreement of the parties on one side of the line. The distinction is made, as suggested above, on the purely academic ground of the differentiation between a completed and an obstructed legal act. Where the instrument is delivered in escrow to the payee
there is at present no delivery, and hence no binding obligation, and hence no application for a rule which protects from qualification a binding legal instrument. It may be admitted that such a distinction as that between completed and obstructed legal acts is valuable for purposes of analysis. It may be admitted that the distinction would be justified on that ground alone if it were applicable to the cases in any satisfactory manner. But, as is usually true of distinctions that do not distinguish, an application to the cases results in a hopeless confusion. If delivery in escrow to the payee, such as is generally allowed in the United States, 12 were true delivery in escrow, or if the parties expressly attached their condition to the delivery, the problem would be simple. But, unfortunately, escrow delivery to the payee bears no ear-mark and the parties themselves seldom do more than insert a defensive condition without specifying its application. The result is that the court must decide in the usual case on which side of an arbitrary line a floating condition belongs.
And the decisions are not altogether unimaginative. A parol agreement, accompanying the manual delivery of a note and providing for two renewals and a retransfer of the note thereafter on a stipulated contingency, has been held to constitute a conditional delivery.13 A parol agreement, contemporaneous with the manual tradition of a note, and providing that the note was not to be enforced unless the saloon fixtures for which it was given were disposed of, was held to attach to the maker's liability, not to the delivery.14 A parol agreement that the maker's liability on the note should be contingent on his receiving a sum due him was held to fall without the proscriptions of the Rule. 15 But a parol agreement that payment was to depend on the maker's realizing on a sale of bonds, was held inadmissible.
The general conclusion to be drawn from an examination of recent cases on the point is that it is well nigh impossible to decide from any given statement of facts whether or no the Parol Evidence Rule should apply. And it follows from such a conclusion that the criterion for the application of the Rule must be fatally indecisive and inept. The remedy seems almost too obvious to miss. Indeed it lies in the very source of the mischief. If delivery in escrow to the payee is to be allowed at all, then it must be open to the parties to fix any condition they desire as the condition on which delivery is to take place. And if this may be done there is no reason why the courts should not construe any condition that may be laid down prior to the obligor's liability as a condition going to
11 Beach v. Nevins, 162 Fed. 129, in 18 L. R. A. (N. s.) 288.
16 Carnegie Trust Co. v. Kleybolte & Co., 74 Misc. 246, 134 N. Y. Supp. 69. See also Warner v. Bonds, 111 Ark. 238, 163 S. W. 788; Cochran v. Burdick, 7 Ala. App. 274, 61 So. 29; Alexander v. Righter, 240 Pa. St. 22, 87 Atl. 427; Sykes v. Everett, 167 N. C. 600, 83 S. E. 585; George v. Williams, 27 Colo. App. 400, 149 Pac. 837.
the delivery. Whatever decision they reach is, ir the ordinary case, the result of construction, and such construction as that suggested would give fullest effect to the policy suggested by the recent recognition of delivery in escrow to the payee.
TORT JURISDICTION OF THE INTERSTATE COMMERCE COMMISSION. Section 16 of the Act to Regulate Commerce, as amended June 29, 1906,' provides that "if ... the Commission shall determine that any party complainant is entitled to an award of damages under the provisions of this Act for a violation thereof, the Commission shall make an order directing the carrier to pay to the complainant the sum to which he is entitled. ...” The Interstate Commerce Commission is thus invested with jurisdiction of claims for all injuries which are caused by violations of the Act. The act complained of, however, must have been in violation of the statute at the time it was committed, and not merely because of some subsequent order of the Commission or change in conditions. That this so-called "reparation" section amounts to nothing more or less than an investiture with jurisdiction over a certain number of torts (which usually were also torts at common law) was at one time clearly recognized by the Commission. Such a recognition might be advisable now, in view of recent hastily considered decisions 4 of the Commission awarding damages for injuries caused by negligent misrepresentation which generally are not torts at common law. And it should also be remembered that the Commission's jurisdiction is not exclusive of that of a common-law court, provided the plaintiff is able to sustain his cause of action in the latter without the aid of a finding by the Commission.6
Stat. At L. 584, 590. 2 New Pittsburgh Coal Co. v. Hocking Valley R. Co., 26 Int. Com. Rep. 121; In re Wool, Hides and Pelts, 25 Int. Com. Rep. 675.
8.“Proceedings for reparation before the Commission for indemnitory damages are purely statutory and correspond to actions at law sounding in tort . . . If an injury is sustained on account of a violation of law, the proceeding is in its nature ex delició, and therefore carries with it none of the features or incidents of an action ex contractu. In the very nature of the thing no protest is necessary where an injury is inflicted by the commission of a tort. The violation of the law produces the injury and completes the offense, and the person injured does not have to perform any conditions to entitle him to recover for the damage sustained.” Southern Pine Lumber Co. v. Southern Ry. Co., 14 Int. Com. Rep. 195, 197.
* Healy & Towle v. Chicago & Northwestern Ry. Co., 43 Int. Com. Rep. 835; cf. Rutland & Rutland v. Chicago, Rock Island & Pacific Ry. Co., 19 Int. Com. Rep. 108; Wolverton v. Union Pacific R. Co., 31 Int. Com. Rep. 23, 24; Brittain v. Nashville, Chattanooga & St. Louis Ry., Unreported Opinion A-581.
5 See Jeremiah Smith, “Liability for Negligent Language,” 14 Harv. L. Rev. 184; cf. SALMOND, TORTS, 3 ed., 450.
Cf. WATKINS, SHIPPERS AND CARRIERS OF INTERSTATE AND INTRASTATE FREIGHT, 2 ed., 601. See also Michigan Hardwood Manufacturers' Ass'n v. Transcontinental Freight Bureau, 27 Int. Com. Rep. 32, 37: “In giving the Commission jurisdiction over reparation, it was the manifest intent of Congress to provide shippers with a method of obtaining an award of damages accruing by virtue of the violation of the Act, without resort to the expensive and tedious processes of the law.”
For the effect of the award of damages by the Commission, an?. the means of enforcing it, as provided by the Act, see Lehigh Valley R. Co. v. Clark, 207 Fed. 717,
“Reparation” is a curious misnomer for this jurisdiction, which is, as has been pointed out, purely to give damages for torts; and it should be observed that section 16 consistently speaks of "awarding damages," and nowhere uses the word “reparation. The widespread use of that word is not only incorrect but also unfortunate, for it tends to confuse this jurisdiction with other powers of the Commission which are in their nature more or less equitable. Such confusion is all the more likely, since the Commission has consistently made its award of damages purely discretionary. The exercise of the discretion, however, depends not upon the equitable balance of convenience, but upon the public interests involved.8 Thus, a plaintiff having a clear case for damages was nevertheless denied, because to award them to him would, in ultimate effect, disturb the equality of rates between districts. So also damages are not always awarded in an uncontested case, because of the possibility that thus collusively a rebate may be obtained.10
The Commission's award is for damages plus interest," in accordance with the better rule in actions at law for torts which are in the nature of injuries to property. And exemplary damages will not be given, 13 perhaps because of the anomalous nature of such damages, but more probably because the Act contains explicit provisions in other sections for penalties for its violation. An assignee of a claim will be awarded damages.14 Since the Act expressly establishes a limitations period, there has been much dispute whether laches should bar the claimant prior to the expiration of the statutory period.16 It would seem that laches should be no bar. 16
Section 16, it should be noticed, provides only for an award of damages against “the carrier.” This provision seems to have been violated by the Commission's action in sometimes (not always) taking into account undercharges by the carrier in making its awards.11 The carrier is thus enabled to secure damages from the undercharged shipper, in the guise
> Despite the fact that section 16 uses the mandatory“shall.”
See the cases cited in Lust, SUPPLEMENTAL DIGEst No. I OF DECISIONS UNDER THE INTERSTATE COMMERCE ACT, 519.
8 Joynes v. Pennsylvania R. Co., 17 Int. Com. Rep. 361.
• Youngstown Sheet & Tube Co. v. Pittsburgh & Lake Erie R. Co., 27 Int. Com. Rep. 165.
10 Thus, Elden v. Southern Pacific Co., 38 Int. Com. Rep. 530: “A mere willingness to pay reparation without evidence that the rate charged was unreasonable is not sufficient upon which to base an award of reparation."
11 International Agricultural Corporation v. Louisville & Nashville R. Co., 29 Int. Com. Rep. 391.
12 See SEDGWICK, ELEMENTS OF THE LAW OF DAMAGES, 2 ed., 137 et seq.
15 See Kindelon v. Southern Pacific Co., 17 Int. Com. Rep. 251, 252; 1 DRINKER, THE INTERSTATE COMMERCE Act, 440; 25 Harv. L. Rev. 665.
16 25 Harv. L. Rev. 665.
17 See the cases in LUST, SUPPLEMENTAL DIGEST No. 2 OF DECISIONS UNDER THE INTERSTATE COMMERCE Act, 802.
Cf. in this connection Manufacturers' Ry. Co.o. St. Louis, Iron Mountain & Southern Ry. Co., 28 Int. Com. Rep. 93, especially at p. 108: “An award of reparation is due only from a carrier to a shipper, and not to one carrier, as a carrier, from another.” There is apparent no reason for such an exercise of the Commission's discretion. Section 16 says only “any party complainant” may recover.
of set-off or counterclaim. It is apparently the case, however, that this limitation of jurisdiction to suits against carriers is an inadvertent one, since section 16 obviously intends to allow an award of damages for any violation of the Act; and since there are many sections of the Act which can be violated by others than carriers, whose violation is equally deserving of an award of damages.18
The Commission has awarded damages for many different torts. “Unjust discrimination" and "undue preference" cases have arisen frequently, and damages have been awarded.19 These injuries, aside from their status under the technical common law of carrier and shipper, or carrier and passenger, are certainly comprehended within the modern commonlaw definition of a tort as any injury inflicted intentionally and without justification.20 In an early case 21 the Commission decided that one such discrimination (here the ejection of a negro from a car) was a trespass. It is obvious that the discrimination might equally well take the form of an assault or a battery, and probably of a libel or a slander. Over such torts as these the Commission would seem to have jurisdiction, provided always that they are committed in violation of the Act. That, indeed, should be clearly recognized to be the only limit to the Commission's jurisdiction, 22 although it might be well to decline to exercise the juris
18 For example, section 10.
19 See Eichenberg v. Southern Pacific Co., 14 Int. Com. Rep. 250, 271; Meeker & Co. v. Lehigh Valley R. Co., 21 Int. Com. Rep. 129, 137. In the latter case the award was approved by the United States Supreme Court, s. C., 236 U. S. 412. DRINKER, supra, for discrimination, whether of facilities or of charges, pp. 433-434, 435; for preference among localities, p. 435.
29 Harv. L. Rev. 559; 30 HARV. L. REV. 292. It might here be observed that this finding of justification comes singularly close to the discretion” which the Interstate Commerce Commission exercises.
21 Councill v. Western & Atlantic R. Co., 1 Int. Com. Rep. 339. The Commission was stopped from awarding damages in this case only by the doctrine which it then held, that the Seventh Amendment required the intervention of a jury in such cases as these. See Heck & Petree v. The East Tennessee, Virginia & Georgia Ry. Co., i Int. Com. Rep. 495, 502; Riddle, Dean & Co. v. New York, Lake Erie and Western R. Co., 1 Int. Com. Rep. 594, 607. Happily this doctrine was soon abandoned, following the Amendment of March 2, 1889, which provided for a trial by jury on suits on the Commission's awards. See WATKINS, supra, 601.
22 Cf. 1 DRINKER, supra, 388: The Interstate Commerce Commission “cannot award damages for defective service, or for failure to make schedule time, or for breach of contract, or for conversion of chattels” (citing cases). This statement is, of course, incorrect; the Commission may, in a proper case, give damages for any of these things. The truth is that the Commission has unwisely used broad language with great frequency. Thus: “The commission's jurisdiction over claims for reparation does not extend to claims for loss, damage, or delay to shipments in transit, such claims being cognizable in the courts.” Atlas Portland Cement Co. v. Louisville & Nashville R. Co., 32 Int. Com. Rep. 487, 488.
As regards the breach of contract claim, see Bichel v. Atchison, Topeka & Santa Fe Ry. Co., 19 Int. Com. Rep. 499. Here plaintiff purchased from defendant a coupon book of tickets, with a provision that the coupons could be redeemed only within eighteen months. After more than eighteen months had elapsed, plaintiff sued; this provision was held void, and damages were awarded to the amount of the unused coupons. Cf., however, Larkin Co. v. Erie & Western Transportation Co., 24 Int. Com. Rep. 645; and see McArthur Brothers Co. v. El Paso & Southwestern Co., 34 Int. Com. Rep. 30, in which case an award for breach of contract was refused, rightly, because the breaking of the contract was not a violation of the Act. It is, of course, obvious that there are many contracts breach of which is in violation of the Act. But see WATKINS, supra, 329.