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U.S. Supreme Court

Santa Fe, Prescott & Phoenix Ry Co. v. Grant Bros., 228 U.S. 177 (1913)

Santa Fe, Prescott & Phoenix Railway Company

v. Grant Brothers Construction Company

No. 147

Argued January 24, 1913

Decided April 7, 1913

228 U.S. 177


A rule of law restricting the right of contract which rests on principles of public policy, because of the public ends to be achieved, extends no further than the reason for it, and does not apply to contracts wholly outside of and not affecting those ends.

The rule that common carriers cannot secure immunity from liability for their own negligence has no application when a railroad company is acting outside the performance of its duty as a common carrier. In such a case, the ordinary rules of law relating to contracts control.

A contract made by a railroad company for construction work is one made outside of the performance of its duty as a common carrier, and a stipulation that the contractor, in consideration of lawfully reduced rates for transportation of supplies and employees, will assume all risk of damage of any kind even if occasioned by tho company's negligence is not void as against public policy. Balt. & Ohio Ry. Co. v. Voight, 176 U. S. 498, followed; Railroad Co. v. Lockwood, 17 Wall. 357, distinguished.

In dealing with transportation of supplies and employees of contractors in connection with construction and improvement of its own road, a railroad company does not act as a common carrier; arrangements made in good faith with such contractors for free or reduced rates are not violations of the prohibitions of the Interstate Commerce Act against rebates. See Matter of Railroad-Telegraph Contracts, 12 I.C.C. 10.

Where no rule of public policy denies effect to stipulations in a contract, the highest public policy is found in enforcing the contract as actually made.

Courts are not at liberty to revise contracts. They can only determine what the parties meant by the terms and expressions as used.

In this case, held that expressions to effect that the contractor assumed "all risk and damage" and the railroad company assumed "no obligation or risk" in a contract between a railroad company and chanroblesvirtualawlibrary

Page 228 U. S. 178

contractor for construction of roadbed, and not in connection with duties as a common carrier, included damage caused by the company's own negligence. Quaere to what extent a contractor can, by a stipulation, valid as to himself and in consideration of reduced rate of transportation, exempt a railroad company from liability to his employs for damage sustained by them from negligence of the railroad company while transporting them.

13 Ariz. 186 reversed.

The facts, which involve the construction of a contract between a railway company and a construction contractor and the liability of the former for materials belonging to the latter destroyed by fire, are stated in the opinion. chanroblesvirtualawlibrary

Page 228 U. S. 181

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