Western Union Telegraph Co. v. Esteve Bros. & Co.

Background

In September 1917, a New Orleans firm received a cable from its Barcelona office that was mistransmitted: it showed two hundred bales instead of two thousand, producing a $31,095 loss. The sender sued Western Union; the case moved to federal court, a jury award for the full loss was entered, and the Fifth Circuit affirmed. Western Union had a long-standing tariff filed with the Interstate Commerce Commission under the 1910 Act that charged a lower unrepeated rate and included a clause limiting liability to the carrier’s share of the tolls. The repeated service cost an extra quarter of the cable rate and promised greater protection.

Reasoning

The main question was whether a sender who had not expressly agreed to the printed limitation could nonetheless be bound by it. The Court said yes. It explained that the 1910 Act made telegraph and cable rates subject to equality and uniformity, and once a lawful rate and its terms were established and filed, those terms became the condition of service for all senders. Because the plaintiff did not pay for the higher repeated service that offered greater accuracy, the Court applied the unrepeated-message liability limit and reversed the judgment for full damages.

Real world impact

Going forward, people and businesses who send unrepeated telegraph or cable messages in interstate or foreign commerce will generally be limited to recovering only the carrier’s collected tolls for transmission errors. To obtain greater protection for valuable messages, senders must pay for the repeated service. Challenges to a published rate’s reasonableness must be pursued before the Interstate Commerce Commission rather than in individual suits.

Dissents or concurrances

Two Justices dissented; the opinion text notes their disagreement but does not state their reasons.