Healy v. New York Central & Hudson River Railroad
138 N.Y.S. 287, 1912 N.Y. App. Div. LEXIS 9312, 153 A.D. 516 (1912)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
A limitation of liability clause on a bailment receipt or claim check is not enforceable against a bailor who is not given actual notice of the term, unless the circumstances of the transaction would lead a reasonably prudent person to know that the check contained a special contract.
Facts:
- On November 4, 1911, the plaintiff checked a handbag at a parcel room in the defendant railroad's Albany station.
- In exchange for the handbag and a fee, the plaintiff received a small cardboard coupon to be used as a claim check.
- The back of the coupon contained a clause in fine print stating that the defendant's liability for any loss or damage was limited to ten dollars.
- The plaintiff's attention was not drawn to this clause, and he put the coupon in his pocket without reading it.
- Later that day, an employee of the defendant mistakenly delivered the plaintiff's handbag to another person.
- The handbag, which was valued at seventy dollars and ten cents, was never recovered.
Procedural Posture:
- The plaintiff brought an action against the defendant, New York Central & Hudson River Railroad Company, in the County Court to recover the value of a lost handbag.
- The County Court (trial court) rendered a judgment in favor of the plaintiff for the full value of the handbag and its contents, $70.10, plus costs.
- The defendant (appellant) appealed the judgment to this court, with the plaintiff acting as the respondent.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Does a limitation of liability clause printed in fine print on the back of a parcel room claim check bind a bailor who was not given actual notice of the clause and did not read it?
Opinions:
Majority - Lyon, J.
No. A limitation of liability clause printed on a parcel room claim check does not bind a bailor who lacks actual knowledge of it, as the minds of the parties have not met on that term. The court reasoned that the transaction did not suggest the existence of a special contract; the coupon was presumptively intended only as a token for identification. For a bailor to be bound by such a term, they must have notice of its existence or the circumstances must be such that a reasonably prudent person would be put on inquiry. Because the plaintiff had no knowledge of the special contract limiting liability, he cannot be deemed to have assented to it.
Concurring - Houghton, J.
No. The limitation of liability is not binding because the defendant failed to show that the bailor actually or impliedly agreed to the contract. This concurrence agrees with the outcome but rejects the majority's reliance on the Warehouse Law. The central issue is one of contract formation. While a bailee can legally contract to limit its liability, a contract requires assent. A person checking a bag would ordinarily regard the claim check as a mere token for identification, not a contract. Therefore, the law imposes no duty upon the bailor to read the check for contractual terms, and without knowledge or assent, no contract limiting liability was formed.
Analysis:
This case establishes a crucial distinction in contract law between documents that serve as mere tokens or receipts and those intended as formal contracts. It holds that for terms on a token-like document to be enforceable, the recipient must have actual notice or the circumstances must be sufficient to put a reasonable person on notice of the contractual nature of the document. This 'token receipt' doctrine protects consumers in hurried, everyday transactions (like parcel or coat checks) from being bound by hidden, unfavorable terms. It reinforces the principle that mutual assent is necessary for contract formation and cannot be presumed from the mere acceptance of a document that does not appear to be a contract.
Unlock the full brief for Healy v. New York Central & Hudson River Railroad