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decided: November 6, 1899.



Author: Gray

[ 175 U.S. Page 92]

 MR. JUSTICE GRAY delivered the opinion of the court.

This was an action brought May 10, 1893, in the district court of Jones County in the State of Iowa, against the Chicago, Milwaukee and St. Paul Railway Company, a railroad corporation of Wisconsin, by seven fire insurance companies, corporations of other States, to recover for the loss by fire, owing to the defendant's negligence, of a warehouse and goods, belonging to the partnership of Simpson, McIntire & Company, and insured by the plaintiffs, who had paid the loss.

The petition alleged that on November 11, 1892, and long before, the partnership was doing business at Monticello in that county, and there owned a cold storage warehouse, situated upon railroad ground by the side of the railway track of the defendant in Monticello, and containing a valuable stock of butter and eggs; that on that day the defendant, while running its engines and cars on its railway track alongside of the warehouse, negligently set fire to and destroyed the warehouse and its contents to the value of $27,118; that at the time of the fire the partnership held policies of insurance against fire on this property from each of the plaintiffs, and was afterwards paid by them, under those policies, the aggregate sum of $23,450; and that the plaintiffs thereby

[ 175 U.S. Page 93]

     became, to that extent, subrogated to the partnership's right against the defendant, and were entitled to judgment against it for the sum so paid, with interest.

The defendant, on May 23, 1893, removed the case into the Circuit Court of the United States for the District of Iowa, and in that court, on September 12, 1893, filed an answer, admitting that the parties to the action were corporations, and that the partnership was doing business at Monticello, as alleged, but denying all the other allegations of the petition.

On April 2, 1894, by leave of court, an amended answer was filed, alleging that the land on which the warehouse stood belonged to the defendant as part of its depot grounds at Monticello; and that the sole right and occupancy of the partnership therein were by virtue of an indenture of lease, dated February 1, 1890, executed by the defendant and by the partnership, under which the partnership entered into and thenceforth occupied the land, and which was set forth in the answer, and was as follows:

The defendant leased the land, (describing it by metes and bounds, showing it to be a strip, one hundred and thirty feet long and fifty-five feet wide, part of its depot grounds, and by the side of its track,) to the partnership, "to hold for the term of one year from the date hereof, for the purpose of erecting and maintaining thereon a cold storage warehouse, the said lessee yielding and paying therefor the annual rent of five dollars in advance: and upon the express condition that the said railway company, its successors and assigns, shall be exempt and released, and said parties of the second part, for themselves and for their heirs, executors and administrators and assigns, do hereby expressly release them, from all liability or damage by reason of any injury to or destruction of any building or buildings now on, or which may hereafter be placed on, said premises, or of the fixtures, appurtenances or other personal property remaining inside or outside of said buildings, by fire occasioned or originated by sparks or burning coal from the locomotives, or from any damage done by trains or cars running off the track, or from carelessness or negligence of employes ir agents of said railway company;

[ 175 U.S. Page 94]

     and further, that the said parties of the second part will in no way obstruct or interfere with the track of said railway company in using said premises.

"And the parties of the second part agree to keep said premises in as good repair and condition as the same are in at the commencement of said term; to pay, as the same become due and payable, all taxes and assessments, general and special, that may be levied or assessed thereon during the time they remain in possession thereof; and to quit and surrender said premises at the expiration of said term, on demand of said railway company; and, in case such demand shall not be made at the expiration of said term, to pay said rent, at the rate and in the installments aforesaid, as long as they remain in possession thereof; and that they will not underlease said premises without the written consent of said railway company.

"And said parties of the second part further agree to quit and surrender said premises at any time before the expiration of said first-mentioned term, or at any time when default shall be made in the payment of said rent or taxes as aforesaid, within thirty days after demand of said railway company; and that upon the expiration of said thirty days, it shall be lawful for said railway company to expel them therefrom.

"The parties of the second part may (and hereby agree that they will, if said railway company shall so require,) remove from said premises, within thirty days after any termination of this lease, all structures owned or placed thereon by them."

The amended answer concluded by alleging "that from the first day of February, 1890, down to and including the time of said fire, Simpson, McIntire & Company remained in possession and occupancy of said premises under the terms and conditions of said original lease, and not otherwise; and were and continued to be tenants holding over under the lease aforesaid, and subject to all its provisions; and that, as to the alleged destruction by fire of the building and property mentioned in the plaintiffs' petition, all such risks, and the loss therefrom, were assumed by said Simpson, McIntire & Company, and this defendant company was released therefrom, as one of the

[ 175 U.S. Page 95]

     express conditions of said lease and occupancy, and plaintiffs cannot now recover therefor. Wherefore the defendant prays judgment herein."

The plaintiffs demurred to the amended answer, on the ground that the stipulation in the lease, by which it was sought to exonerate the defendant from loss by fire caused by the negligence of itself or its servants, was void as against public policy.

At the argument of the demurrer in the Circuit Court of the United States at April term 1894, before Judge Shiras, (as is shown by his opinion copied in the record, and printed in 62 Fed. Rep. 904,) it appeared that a case between other parties, involving the question at issue in this case, was then pending before the Supreme Court of the State of Iowa, under the following circumstances: In that case, entitled Griswold v. Illinois Central Railroad, that court, on October 19, 1892, (by an opinion reported only in 53 Northwestern Reporter, 295,) had held a similar stipulation to be void as against public policy; but, on February 3, 1894, upon a rehearing, had held to the contrary, and had sustained the validity of the stipulation, two judges dissenting. 90 Iowa, 265. A second petition for rehearing was then filed, and was still pending in that Court. Under those circumstances, Judge Shiras suspended action on the demurrer, awaiting the final decision of the Supreme Court of the State. That court afterwards denied the second petition for rehearing, thereby finally affirming the validity of the stipulation; and thereupon Judge Shiras, at September term 1894, overruled the demurrer, and, the plaintiffs declining to plead further, rendered judgment for the defendant.

That judgment was unanimously affirmed by the Circuit Court of Appeals, upon the ground that the stipulation was valid, and was not against public policy; Judges Sanborn and Thayer, however, expressing the opinion (Judge Caldwell non-concurring in this respect) that the decision of the state court was not conclusive upon this question. 36 ...

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