HOUSTON DIRECT NAVIGATION COMPANY v. INSURANCE COMPANY OF NORTH AMERICA,

[89 TEXAS, 1.]

INTERSTATE COMMERCE, WHEN COMMENCES.-When commodity is delivered to a carrier to be transported on a continuous voyage or trip to a point beyond the state, the character of interstate commerce attaches thereto.

CARRIERS-INTERSTATE COMMERCE - CONNECTING CARRIERS.-If goods are delivered to a carrier for shipment to a point beyond the state, and he enters upon the duty of carriage, they are thereby brought within the law of interstate commerce, though ue is but one of several carriers by whom the whole carriage is to be effected, and he is to deliver the goods to another carrier before they leave the state, and he has restricted his liability so as not to be answerable for the act or negligence of any connecting carrier.

INTERSTATE COMMERCE-LIABILITY OF CARRIERS, BY WHAT LAW CONTROLLED.—If a carrier is engaged in interstate and foreign commerce, its liability for the loss of goods in its custody as such must be determined by the rules established by Congress, although it is a corporation, and its charter declares that it shall be subject in the transportation of freight to the laws applicable to common carriers.

CARRIERS--INTERSTATE COMMERCE, RIGHT TO LIMIT LIABILITY.-By the laws of Congress a carrier engaged in interstate or foreign commerce may, by contract, limit its liability in cases where it is not shown to have been guilty of negligence, and such limitation is effective, though by the state laws it is not permissible.

Mott & Armstrong, for the plaintiff in error.

Hume & Kleberg, for the defendant in error.

4 BROWN, A. J. The Insurance Company of North America sued the Direct Navigation Company to recover damage done to and the value of cotton destroyed by fire while in the

possession of the navigation company-the insurance company having paid the loss to the owners of the cotton, which had been shipped from Houston on a barge belonging to the navigation company, and insured for the owners by the Insurance Company of North America. The insurance company claimed to be subrogated to the rights of the owners. The navigation company pleaded a general denial, and by special answer to the effect that the fire "was not due to its negligence, nor to its design or neglect"; that the shipment was an interstate shipment, and that the contracts for the transportation of the cotton were maritime contracts concerning the transportation of freight upon the navigable waters of the United States connecting with the high seas; that the barge Katinka was duly enrolled and licensed under the laws of the United States for engaging in such commerce; that the loss was occasioned by fire not due to its negligence. There was a trial before the court without a jury, and judgment rendered for the plaintiff, which judgment was affirmed by the court of civil appeals. The facts are as follows:

The Direct Navigation Company is a corporation created by special act of the legislature of the state of Texas, approved October 9, 1866, which act contains, among others, the following provision:

"Sec. 10. That the company shall, within six months after the passage of this charter through the legislature, have on the waters of Buffalo bayou and Galveston bay and harbor a sufficient number of steamers, barges, and propellers to meet the demands of commerce upon said company, and they shall be subject in the transportation of freight to the laws applicable to common carriers.”

The navigation company was organized under this act, and ever since has operated under it and under license from the United States, running and navigating steamers, barges, and propellers upon the waters of Buffalo bayou and Galveston bay, between the city of Houston and the city of Galveston, and to seagoing vessels, for the purpose of transporting freight. During the month of September, 1892, it owned and operated upon said waters the barge Katinka. On the 15th of September, 1892, the company received, at Houston, Texas, one hundred and eighty-four bales of cotton, and on the 16th of the same month it received, at Houston, one hundred and fifty-four bales of cotton, giving bills of lading therefor. The bills of lading recited that the cotton was received by the Houston Direct Navigation Company, in apparent good order and well conditioned, of Zeig

ler & McIlhenny for delivery to order, notify John Sherwood & Co. and O. Hayworth, respectively, or their assigns, at Galveston, he or they paying freight and charges, as per margin. The freight and charges were paid at Houston. The bills of lading further provided, as follows: "It is understood and expressly stipulated that the liability of the Houston Direct Navigation Company shall cease upon delivery to the next connecting line, and that the said Houston Direct Navigation Company and its connections, which receive and transport the said property, shall not be liable for loss by fire. . . . . The cotton under this bill of lading . . . . is to be transported to the depots, or the landings of the steamboats of forwarding lines at the points receipted to, for delivery. It is further agreed that, in case of any loss or damage, that company alone shall be answerable therefor in whose actual custody the same may be at the time of the happening of such loss. This contract is executed and accomplished, and the liability of the Houston Direct Navigation Company terminates on the delivery of the cotton to the Mallory Line at Galveston, when the liability of the said Mallory Line commences, and not before."

The cotton shipped to order, notify John Sherwood & Co., was the property of John Sherwood & Co., who resided in Liverpool; and the cotton shipped to order, notify O. Hayworth, was the property of C. Menelas, who was a foreign buyer. When the cotton was delivered to the Direct Navigation Company, it was started on its trip to New York and Liverpool, to be transported by the defendant, the navigation company, to Galveston, there delivered to the Mallory Line, which was to transport it to New York, to be there delivered to a connecting line, and thence transported to Liverpool. The bill of lading given by the navigation company was only to Galveston, and then the remainder of the cotton, not destroyed, was delivered to the Mallory Line, which gave another bill of lading.

On the nineteenth day of September, 1892, after one hundred and seventy-two bales of the cotton had been unloaded from the barge Katinka, at one of the wharves at Galveston, a fire broke out in the balance of the cargo yet on board the barge, destroying a part thereof and damaging the balance. The insurance company, under the terms of its policy, took the damaged cotton and paid the full amount of the insurance on the cotton so burned, amounting in the aggregate to the sum of six thousand seven hundred and twenty-nine dollars and thirty-three cents. It sold the damaged cotton in open market to the high

est bidder, sustaining a loss of sixteen hundred and forty-three dollars and seventy-eight cents, being the value of the cotton burned and the difference between the value of the damaged cotton before it was damaged and the amount realized from the sale. The trial court found that the origin of the fire was unknown, but it expressly declined to determine whether the fire originated from the negligence of the navigation company or not.

Under a number of assignments practically two questions are presented in this case, which may be stated as follows: 1. Was the Direct Navigation Company engaged in interstate commerce while transporting the cotton in question from Houston to Galveston? If so, then 2. Did the provision in its charter that it should "be subject in the transportation of freight to the laws applicable to common carriers," operate to make it liable under the laws of the state for the loss sustained, notwithstanding the limitation contained in the bill of lading and the exemption provided by the statutes of the United States?

No distinct and certain definition of interstate commerce has yet been fixed by the decisions of the courts, and perhaps none can be given which will apply to all cases. But the law as applicable to this case, deducible from the decisions of the courts, may be stated thus: When a commodity has been delivered to a common carrier, to be transported on a continuous voyage or trip to a point beyond the limits of the state where delivered, the character of interstate or foreign commerce attaches thereto: Coe v. Erroll, 116 U. S. 517; The Daniel Ball, 10 Wall. 557; Ex parte Koehler, 30 Fed. Rep. 867; In re Greene, 52 Fed Rep. 113; Missouri Pac. Ry. Co. v. Sherwood, 84 Tex. 125.

In Coe v. Erroll, 116 U. S. 517, the question to be determined was whether or not the property in question was subject to taxation in the state where it then was, and this question depended upon whether or not it had become an element of interstate commerce. The court said: "But no distinct rule has been adopted with regard to the point of time at which the taxing power of the state ceases as to goods exported to a foreign country or to another state. What we have already said, however, in relation to the products of a state intended for exportation to another state, will indicate the view which seems to us the sound one on that subject, namely, that such goods do not cease to be a part of the general mass of property in the state, subject, as such, to its jurisdiction and to taxation in the usual way, until they have been shipped or entered with a common carrier for trans