VOL.

42, OCTOBER 3, 1921 205

H. E. Heacock Co. vs. Macondray & Co.

as a proper and lawful mode of securing a due propor­tion between

the amount for which the carrier may be responsible and the
freight he receives, and of protecting himself against extravagant
and fanciful valuations.' "

In the case of Boston & M. R. Co. vs. Piper (246 U. S.,

439), it was said:

"In the previous decisions of this court upon the subject it has
been said that the limited valuation for which a recovery may be
had does not permit the carrier to defeat recovery because of
losses arising from its own negligence, but serves to fix the
amount of recovery upon an agreed valuation made in
consideration of the lower rate stipu­lated to be paid for the
service."

For all of the foregoing reasons the judgment of the

lower court should be affirmed, without any finding as to
costs in this instance. So ordered.

Araullo, Street, Avanceña, and Villamor, JJ., concur.

Judgment affirmed.

——————————
 

[No. 16598. October 3, 1921]

H. E. Heacock Company, plaintiff and appellant, vs. Ma-­
condray & Company, Inc., defendant and appellant.

1.Common Carrier; Bill of Lading; Stipulations Regarding Liability of

Carrier for Loss of or Damage to Cargo; Validity of such

Stipulations.—Three kinds of stipulation have often been made in a

bill of lading. The first is one exempting the carrier from any and all
liability for loss or damage occasioned by its own negligence. The
second is one providing for an unqualified limitation of such liability
to an agreed valuation. And the third is one limiting the liability of
the carrier to an agreed val­uation unless the shipper declare a higher
value and pays a. higher rate of freight. According to an almost
 uniform weight of authority, the first and second kinds of stipulations
are invalid as being contrary to public policy, but the third is valid
and enforceable.
2.Id.; Id.; Id.—A stipulation in a bill of lading which either exempts the
carrier from liability for loss or damage occasioned by its negligence,
or provides for an unqualified limitation of such

206

206 PHILIPPINE REPORTS ANNOTATED

H. E. Heacock Co. vs. Macondray & Co.

    liability to an agreed valuation, is invalid as being contrary to public

policy.
3.Id.; Id.; Id.—But a stipulation in such bill of lading which limits the
liability of the carrier to a specified amount unless the shipper
declares a higher value and pays a higher rate of freight, is valid and
enforceable. Thus, if a common carrier gives to a shipper the choice of
two rates, the lower of them conditioned upon his agreeing to a
stipulated valuation of his property in case of loss, even by the
carrier's negligence, if the shipper makes the choice understandingly
and freely, and names his valuation, he cannot thereafter recover
more than the value which he thus places upon his property.
4.Contract; Construction of, in Case of Doubt.—A written contract, in
case of doubt, should be interpreted againts the party who has drawn
the contract. It is a well-known principle of construction that
ambiguity or uncertainty in an agreement must be construed most
strongly against the party causing it. There rules are applicable to
contracts contained in bills of lading. In construing a bill of lading
given by the carrier for the safe transportation and delivery of goods
shipped by a con­signor, the contract will be construed most strongly
against the carrier, and favorably to the consignor, in case of doubt in
any matter of construction.

APPEAL from a judgment of the Court of First Instance of

Manila. Harvey, J.
The facts are stated in the opinion of the court.
Fisher & DeWitt for plaintiff and appellant.
Wolf son, Wolfson & Schwarzkopf for defendant and
appellant.

Johnson, J.:
This action was commenced in the Court of First
Instance of the City of Manila to recover the sum of P420
together with interest thereon. The facts are stipulated by
the par­ties, and are, briefly, as follows:
 (1) On or about the 5th day of June, 1919, the plaintiff caused
to be delivered on board the steamship Bolton Castle. then in the
harbor of New York, four cases of merchandise, one of which
contained twelve (12) 8-day Edmond clocks,

207

VOL. 42, OCTOBER 3, 1921 207

H. E. Heacock Co. vs. Macondray & Co.

properly boxed and marked for transportation to Manila, and paid

freight on said clocks from New York to Manila in advance. The
said steamship arrived in the port of Manila on or about the 10th
day of September, 1919, con­signed to the defendant herein as
agent and representative of said vessel in said port. Neither the
master of said vessel nor the defendant herein, as its agent,
delivered to the plaintiff the aforesaid twelve 8-day Edmond
clocks, al­though demand was made upon them for their delivery.
(2) The invoice value of the said twelve 8-day Edmond clocks
in the city of New York was P22 and the market value of the same
in the City of Manila at the time when they should have been
delivered to the plaintiff was P420. 
(3) The bill of lading issued and delivered to the plain­tiff by
the master of the said steamship Bolton Castle con­tained, among
others, the following clauses: 
"1. It is mutually agreed that the value of the goods re­ceipted
for above does not exceed $500 per freight ton, or, in proportion
for any part of a ton, unless the value be expressly stated herein
and ad valorem freight paid thereon."
"9. Also, that in the event of claims for short delivery of, or
damage to, cargo being made, the carrier shall not be liable for
more than the net invoice price plus freight and insurance less all
charges saved, and any loss or damage for which the carrier may
be liable shall be adjusted pro rata on the said basis."
(4) The case containing the aforesaid twelve 8-day Edmond
clocks measured 3 cubic feet, and the freight ton value thereof
was $1,480, U. S. currency. 
(5) No greater value than $500, U. S. currency, per freight
ton was declared by the plaintiff on the aforesaid clocks, and no
ad valorem freight was paid thereon. 
(6) On or about October 9, 1919, the defendant tendered to
the plaintiff P76.36, the proportionate freight ton value of the
aforesaid twelve 8-day Edmond clocks, in payment of plaintiff's
claim, which tender plaintiff rejected.

208

208 PHILIPPINE REPORTS ANNOTATED

 H. E. Heacock Co. vs. Macondray & Co.

The lower court, in accordance with clause 9 of the bill of

lading above quoted, rendered judgment in favor of the
plaintiff against the defendant for the sum of P226.02, this
being the invoice value of the clocks in question plus the
freight and insurance thereon, with legal interest thereon
from November 20, 1919, the date of the complaint,
together with costs. From that judgment both parties
appealed to this court.
The plaintiff-appellant insists that it is entitled to
recover from the defendant the market value of the clocks
in ques­tion, to wit: the sum of P420. The defendant-
appellant, on the other hand, contends that, in accordance
with clause 1 of the bill of lading, the plaintiff is entitled to
recover only the sum of P76.36, the proportionate freight
ton value of the said clocks. The claim of the plaintiff is
based upon the argument that the two clauses in the bill of
lading above quoted, limiting the liability of the carrier, are
con­trary to public order and, therefore, null and void. The
defendant, on the other hand, contends that both of said
clauses are valid, and that clause 1 should have been ap-­
plied by the lower court instead of clause 9.
I. The appeal of the plaintiff presents this question:
May a common carrier, by stipulations inserted in the bill
of lading, limit its liability for the loss of or damage to the
cargo to an agreed valuation of the latter?
Three kinds of stipulations have often been made in a
bill of lading. The first is one exempting the carrier from
any and all liability for loss or damage occasioned by its
own negligence. The second is one providing for an un-­
qualified limitation of such liability to an agreed valuation.
And the third is one limiting the liability of the carrier to
an agreed valuation unless the shipper declares a higher
value and pays a higher rate of freight. According to an
almost uniform weight of authority, the first and second
kinds of stipulations are invalid as being contrary to public
policy, but the third is valid and enforceable.
The authorities relied upon by the plaintiff-appellant
209

VOL. 42, OCTOBER 3, 1921 209

H. E. Heacock Co. vs. Macondray & Co.

(the Harter Act [Act of Congress of February 13, 1893];

Louisville Ry. Co. vs. Wynn, 88 Tenn., 320; and Gait vs.
Adams Express Co., 4 McAr., 124; 48 Am. Rep., 742) sup-­
port the proposition that the first and second stipulations
in a bill of lading are invalid which either exempt the
carrier from liability for loss or damage occasioned by its
negligence, or provide for an unqualified limitation of such
liability to an agreed valuation.
A reading of clauses 1 and 9 of the bill of lading here in
question, however, clearly shows that the present case falls
within the third stipulation, to wit: That a clause in a bill
of lading limiting the liability of the carrier to a cer­tain
amount unless the shipper declares a higher value and
pays a higher rate of freight, is valid and enforceable. This
proposition is supported by a uniform lien of decisions of
the Supreme Court of the United States rendered both
prior and subsequent to the passage of the Harter Act, from
the case of Hart vs. Pennsylvania R. R. Co. (decided Nov.
24, 1884; 112 U. S., 331), to the case of the Union Pacific
Ry. Co. vs.-Burke (decided Feb. 28, 1921, Advance
Opinions, 1920-1921, p. 318).
In the case of Hart vs. Pennsylvania R. R. Co., supra, it
was held that "where a contract of carriage, signed by the
shipper, is fairly made with a railroad company, agree­ing
on a valuation of the property carried, with the rate of
freight based on the condition that the carrier assumes
liability only to the extent of the agreed valuation, even in
case of loss or damage by the negligence of the carrier, the
contract will be upheld as proper and lawful mode of
securing a due proportion between the amount for which
the carrier may be responsible and the freight he receives,
and protecting himself against extravagant and fanciful
valuations."
In the case of Union Pacific Railway Co. vs. Burke,
supra, the court said: "In many cases, from the decision in
Hart vs. Pennsylvania R. R. Co. (112 U. S., 331; 28 L. ed.,
717; 5 Sup. Ct. Rep., 151, decided in 1884), to Boston & M.

18746414

210

210 PHILIPPINE REPORTS ANNOTATED

H. E. Heacock Co. vs. Macondray & Co.

R. Co. vs. Piper (246 U. S., 439; 62 L. ed., 820; 38 Sup. Ct.
Rep., 354; Ann. Cas. 1918 E, 469, decided in 1918), it has
been declared to be the settled Federal law that if a
common carrier gives to a shipper the choice of two rates,
the lower of them conditioned upon his agreeing to a
stipulated valua­tion of his property in case of loss, even by
the carrier's negligence, if the shipper makes such a choice,
understandingly and freely, and names his valuation, he
cannot there­after recover more than the value which he
thus places upon his property. As a matter of legal
distinction, estop­pel is made the basis of this ruling,—that,
having accepted the benefit of the lower rate, in common
honesty the shipper may not repudiate the conditions on
which it was obtained,—but the rule and the effect of it are
clearly established."
The syllabus of the same case reads as follows: "A
carrier may not, by a valuation agreement with a shipper,
limit its liability in case of the loss by negligence of an
interstate shipment to less than the real value thereof,
unless the shipper is given a choice of rates, based on
valuation."

"A limitation of liability based upon an agreed value to obtain a

lower rate does not conflict with any sound prin­ciple of public
policy; and it is not conformable to plain principles of justice that
a shipper may understate value in order to reduce the rate and
then recover a larger value in case of loss." (Adams Express Co.
vs. Croninger, 226 U. S., 491, 492.) See also Reid vs. Fargo (130 C.
C. A., 285); Jennings vs. Smith (45 C. C. A., 249); George N. Pierce
Co. vs. Wells, Fargo & Co. (236 U. S., 278); Wells, Fargo & Co. vs.
Neiman-Marcus Co. (227 U. S., 469).

It seems clear from the foregoing authorities that the

clauses (1 and 9) of the bill of lading here in question are
not contrary to public order. Article 1255 of the Civil Code
provides that "the contracting parties may establish any
agreements, terms and conditions they may deem
advisable, provided they are not contrary to law, morals or
public order." Said clauses of the bill of lading are,
therefore, valid and binding upon the parties thereto.
211

VOL. 42, OCTOBER 3, 1921 211

H. E. Heacock Co. vs. Macondray & Co.

II. The question presented by the appeal of the

defendant is whether clause 1 or clause 9 of the bill of
lading here in question is to be adopted as the measure of
defendant's liability. Clause 1 provides as follows:

"1. It is mutually agreed that the value of the goods re­ceipted

for above does not exceed $500 per freight ton, or, in proportion
 for any part of a ton, unless the value be ex­pressly stated herein
and ad valorem freight paid thereon." Clause 9 provides:
"9. Also, that in the event of claims for short delivery of, or
damage to, cargo being made, the carrier shall not be liable for
more than the net invoice price plus freight and insurance less all
charges saved, and any loss or damage for which the carrier may
be liable shall be adjusted pro rata on the said basis."

The defendant-appellant contends that these two

clauses, if construed together, mean that the shipper and
the carrier stipulate and agree that the value of the goods
receipted for does not exceed $500 per freight ton, but
should the invoice value of the goods be less than $500 per
freight ton, then the invoice value governs; that since in
this case the invoice value is more than $500 per freight
ton, the latter valuation should be adopted and that
according to that valuation, the proportionate value of the
clocks in ques­tion is only P76.36, which the defendant is
ready and willing to pay to the plaintiff.
It will be noted, however, that whereas clause 1 contains
only an implied undertaking to settle in case of loss on the
basis of not exceeding $500 per freight ton, clause 9 con-­
tains an express undertaking to settle on the basis of the
net invoice price plus freight and insurance less all charges
saved. "Any loss or damage for which the carrier may be
liable shall be adjusted pro rata on the said basis," clause 9
expressly provides. It seems to us that there is an irre-­
concilable conflict between the two clauses with regard to
the measure of defendant's liability. It is difficult to
reconcile them without doing violence to the language used
and read-

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