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1. With respect to Cardozo's remarks that "[m]uch may be said in favor of the social policy of a rule whereby [telegraph] companies have been relieved of liabilities that might otherwise be crushing," compare his opinion in H. R. Moch Co., Inc. v. Rensselaer Water Co., infra p. 1386, with his opinion in Ultramares Corp. v. Touche, Niven & Co., digested in the Note infra p. 1377. The Moch opinion was written in 1928, a year after the opinion in the principal case; the Ultramares opinion was written in 1931.3
2. Do you take Cardozo's approach to the true meaning of the Hadley rule (or to the theory of "special damages") to be the same as Holmes' approach in the preceding principal case? If not, how does it differ? How would you expect Cardozo to have decided the Globe case, bearing in mind that "the relativity of causation" is the "key" to Hadley v. Baxendale and that Globe Refining was buyer vs. seller, not message-sender vs. telegraph company (as in Kerr) or shipper vs. carrier (as in Hadley itself)?4
3. To protect themselves against liability for large consequential damages, telegraph companies long ago began inserting explicit disclaimers in their message forms; typically, such disclaimers state that the telegraph company's liability to the sender is limited to the cost of the transmission, unless the message in question is "repeated" (for which, of course, the sender has to pay an additional charge). In the absence of gross negligence on the company’s part, the validity of such disclaimers has almost always been upheld.5
The Mann-Elkins Amendment, 36 Stat. 539, 49 U.S.C. §§1 et seq. (1910), made telegraph companies subject to the Interstate Commerce Act. Section I of the Act (as amended) authorized telegraph companies, subject to the approval of the ICC, to classify messages into repeated and unrepeated "and such other classes as are just and reasonable" and to charge different rates for different kinds of messages. In Western Union Telegraph Co. v. Priester, 276 U.S. 252 (1928), the Supreme Court held that the rates established by telegraph companies for unrepeated messages pursuant to §1 of the Act6
became the lawful rates and the attendant limitation of liability became the lawful condition upon which messages might be sent. . . . What had previously been a matter of common-law liability, with such contractual restrictions as the states might permit, . . . became [with the enactment of the Mann-Elkins Amendment] the subject of federal legislation to secure reasonable and just rates for all without undue preference or advantage to any.
276 U.S. at 259.8
Telegraph message cases like Kerr v. RCA appear to have largely disappeared from the reports (as a result, perhaps, of the widespread use of disclaimers and the codification of this whole area of law). Their place has been taken, appropriately enough, by the telephone cases — a line of cases in which the plaintiff typically is suing for consequential damages allegedly caused by the telephone company's failure to publish his advertisement as promised. See, for example, Mendel v. Mountain State Telephone & Telegraph Co., 117 Ariz. 491, 573 P.2d 891 (1977).9
June 02, 2014
Kessler, Gilmore & Kronman
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