Baird v. Chesapeake & Potomac Telephone Co.

Collins, J., delivered the opinion of the Court. This is an appeal by William- F. Baird, Sr., William F. Baird, Jr., and Robert S. Baird, a partnership trading as Baird Seating Company, (Baird), from the. amount of a judgment rendered, in its favor against the Chesapeake and Potomac Telephone Company of Baltimore City, (the Telephone Company), and from a judgment for costs in favor of Reuben.H. Donnelley Corporation, (Donnelley). On October 8, 1952, Baird filed suit against the Telephone Company and Donnelley in the amount of $25,-000.00. The first count or claim was based on breach of contract against the Telephone Company alone.

The second count or claim was based on breach of contract against Donnelley. The third count or claim was based on tort for the alleged tortious action of Donnelley in causing the Telephone Company to breach its contract with Baird and for the alleged tortious action of both the Telephone Company and Donnelley in illegally discriminating against Baird by failure to carry the advertisements of Baird in the classified directory of the Telephone Company issued in June, 1950. Baird has been in business under its present name since 1925. It specializes in supplying seating for churches, schools, other institutions and industry.

It manufactures and sells chancel furniture, pulpits, communion railings, altars and other church accessories. From sixty-five to seventy-five percent of its business is cabinet work made from either ah architect’s or its own drawings for a particular building. Part of this cabinet work is done by from fifteen to eighteen men in Baird’s plant. The remainder, if not manufactured by Baird, is ordered on ²⁴⁹ specification from another church furniture company in the west.

It also sells chairs for Sunday schools and parish houses, handling a large number of steel folding chairs and folding tables. It does not rent any of its products. Its business is competitive, one competitor in Baltimore City being Church House, Inc., which started business in 1946 or 1947. Church House, Inc., also operates under the name of Ave Maria, which is advertised under a separate name.

Baird had maintained its plant on North Howard Street in Baltimore until the end of 1947 when it moved to 2409 West Baltimore Street on January 1, 1948. Baird had been listed and carried advertising in the classified directory of the Telephone Company ever since it had been in business. In the 1949 issue of that directory it carried a number of listings and ads under the listings “Church Furniture”, “School Furniture”, “Folding Chairs”, and “Folding Tables”. On December 13, 1948, Baird entered into a contract with the Telephone Company which provided for listing in capital type under the headings above mentioned and for special inch, two inch and larger insertions under “Church Furniture” and “School Furniture”.

According to the terms of the contract, the Telephone Company agreed “To continue all such advertising in each succeeding issue until this agreement is cancelled by written notice from either party thirty (30) days or more prior to the date on which the succeeding issue goes to press.” The classified listing and advertising, as called for in the 1948 contract, appeared in the 1949 issue of the Telephone Company directory and was duly paid for. It was completely omitted from the 1950 telephone directory which was issued in June of that year, except for a small listing (not capitalized) under “Chairs”. Baird’s rival carried large ads in the 1950 directory, which dominated the whole church furniture classification. Baird claimed that its real damage came from the complete omission of its name under the important classification of its business.

Testimony was offered that ²⁵⁰ Baird’s “Church. Furniture” business came from the clergy, architects, contractors and church boards, who depended upon the classified directory to find Baird’s name. Baird contended that in addition to this loss, the omission of its name was even more important because it had moved its business location. Baird offered testimony that by including the Church House, Inc., advertisement and omitting its advertisement in the 1950 directory, and particularly on account of the fact that Baird had moved, Church House became much stronger and Baird lost considerable business because many • of its customers went to the old location, and not finding Baird there or its advertisement in the telephone directory, thought it had gone out of business.

The same thing applied to its sale of folding chairs and other chair business and also to its sale of school furniture. The importance of advertising in the telephone directory was emphasized by the Telephone Company’s advertising the importance of its listings. When Baird discovered the omission of its advertisements from the 1950 directory it was very much amazed. The Telephone Company was immediately notified and Baird’s attorney was consulted.

An advertising specialist, Mr. McKinless, was employed for advice as to the proper procedure to follow to overcome the damage. The Public Service Commission was also notified. Mr. McKinless recommended a plan of advertising and he was employed at a retainer of $75.00 per month. His plan was adopted and put in use within thirty days.

It was to cost Baird from $5,800.00 to $6,000.00 and approximately that much was spent. In Mr. McKinless’ opinion, even that advertising would not counteract the omission of Baird from the telephone directory. The contract between Baird and the Telephone Company was dated December 18, 1948. It was on a printed form prepared by the Telephone Company which agreed: “To insert in said directory the advertising specified below under ‘In’ for a minimum period of one issue ²⁵¹ beginning with the 1949 issue.” Pursuant to that agreement the advertising was inserted in the 1949 issue.

That contract contained the above quoted clause about continuing the advertising until cancelled by written notice by either party. On the back of the contract in fine print apeared the following clause: “In the event of any error in or omission of the advertising for which application is hereby made, the Telephone Company will not be held liable for an amount exceeding the amount of the advertising charge.” This clause will be referred to herein as the “limitation of liability clause.” Donnelley was not mentioned in that contract and the Telephone Company did not enter into its contract with Donnelley until February, 1949. Baird had never heard of Donnelley. On February 9, 1949, the Telephone Company signed a contract with Donnelley which gave Donnelley an exclusive franchise to solicit and sell advertising in the classified directory and to prepare proof for printing.

Donnelley agreed to sell and solicit advertising in a business-like manner. All contracts were to be taken in the name of and on forms furnished by the Telephone Company. Donnelley was required to furnish the Telephone Company with the advertising contracts and to rewrite and revise when necessary. Donnelley further agreed at its expense to furnish the art work and to employ the necessary engravers.

Donnelley was required to review all advertising proofs and to submit those proofs to the advertisers for approval. Where the advertiser contacted the Telephone Company with instructions to cancel, the Telephone Company was required to refer the matter for investigation to Donnelley. Donnelley was to supply a representative to adjust complaints of advertisers. Donnelley further agreed to indemnify the Telephone Company against “all claims, demands, actions or causes of action arising or growing out of loss or damage resulting in any manner from anything negligently done or omitted by (Donnelley).” ²⁵² Pursuant to these contracts, a Donnelley salesman called on Baird in June, 1949, and inquired whether Baird wanted its advertising continued in the June, 1950, issue of the telephone directory.

The salesman was informed by Baird that the advertisements were to continue as they appeared in the 1949 classified directory under the existing contract between the Telephone Company and Baird. On September 27, 1949, without any explanation, Donnelley delivered to the Telephone Company an instruction to cancel the existing contract with Baird and to omit all the advertising material in the 1950 issue. The Telephone Company made no attempt to contact Baird to verify this order of cancellation. Its instructions from Donnelley came in the form of a sales report which merely instructed the Telephone Company to remove Baird’s advertising.

The Telephone Company then marked the original contract cancelled. It was impossible to determine why Donnelley instructed the Telephone Company to cancel Baird’s advertising. The salesman who contacted Baird was no longer in the employ of Donnelley. He was subpoenaed but did not appear in court.

The salesman’s market card, which was supposed to contain a report, was missing. In answer to an interrogatory, Donnelley stated: “No market cards are available due to the fact that they are only kept in file for a period of one year following the delivery of any particular directory.” The omission of Baird’s listing was discovered by Baird in May, 1950. Baird claimed that it was out of the ordinary for a sales report to be destroyed on which there was a claim pending and neither the area manager nor division sales manager of Donnelley could explain its disappearance. Baird claimed that the testimony of Mr. Haslett, Donnelley’s District Sales Manager, showed that he was not sincere.

In a pre-trial deposition under oath, he admitted that he had investigated the claim. He did not remember anything about the sales report nor did he remember any inquiry about sales reports or about their disappearance. It would have been ²⁵³ normal for him to have called for records of the Baird account. He did not recall receiving them.

He did not admit that their absence was unusual. He insisted that he recalled the facts of the investigation but his examination did not disclose any facts. He was the only one available who apparently had any knowledge of the facts. He did not respond to a subpoena to appear in court.

Donnelley knew of Baird’s contract with the Telephone Company and instructed the Telephone Company to cancel Baird’s contract and listings. Baird never gave any instructions to that effect and there was no reason for Donnelley to so instruct the Telephone Company. Donnelley offered no explanation of its actions and its records have mysteriously disappeared. Baird claimed that the public has been educated to rely on the yellow pages of the telephone directory where substantially all businesses are listed and the omission of such listing is almost a representation that the business does not exist.

Baird also claimed that the failure of the Telephone Company to include its two and three inch advertisements was damaging, particularly in view of its competitor’s advertising and the failure to list Baird under its proper classification was far more damaging. The case was tried before the trial judge without a jury. He rendered judgment in favor of Baird for the sum of $594.00, which he arrived at under the limitation of liability clause by taking the charge of the Telephone Company to Baird for the costs of advertising and listing at $49.50 per month multiplied by the twelve months involved in the 1950 classified directory. He also rendered judgment for Donnelley for costs.

From those judgments Baird appeals. As to the first count of the declaration there is no doubt that the Telephone Company breached the contract. The question therefore arises as to whether the limitation of liability clause limiting liability for omission of advertising to the amount of the advertising charge is valid. Ap ²⁵⁴ pellant relies on “Escape Clause” cases.

See 2 Restatement, Contracts, Sec. 575; Williston, Contracts, (Rev. Ed.) Sec. 1751 (c), at page 4971; Bisso, Receiver v. Inland Waterways Corp., (decided May 16, 1955), 349 U. S. 85 , 79 S. C. 629; Birney v. Telegraph Co., 18 Md. 341 ; Ch. & Pt. Tel. Co. v. B. & O. Tel. Co., 66 Md. 399, 414, 415 , 7 A. 809 .

We do not deem this clause to be an escape clause which relieves a contractor from liability for violation of the contract. It merely limits liability. The escape clause cases are therefore not in point here. Appellant relies strongly on the Mann-Elkins Amendment to the Interstate Commerce Act which permits a telegraph company to file rate schedules with a provision for limited liability unless the sender of a message pays an additional sum for what is known as a repeat message.

In such cases the person who sends the telegram has a choice. He can get the cheaper rate based on limited liability or by paying an additional charge, be protected. Union Pacific Railroad Co. v. Burke, 225 U. S. 317 , 41 S. C. 283. Appellant also places great reliance on the telegraph cases such as Western Union Telegraph Co. v. Nester, 309 U. S. 582 ; Birney v. Telephone Co., supra; U. S. Telegraph Co. v. Gildersleve, 29 Md. 232 .

In those cases an attempt was made by the companies to escape liability in the performance of the transmission of messages which was their primary duty. The measure of liability there established bore no real relationship to the value of the services for which the customers contracted. The transmission of messages is under the jurisdiction of the public authorities and the customers pay only such charges as are