Amicus Curiae Brief — Western Union Telegraph Co. v. Poston

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see ANTE BOSE Wk ees STA,

Supreme Court of the United States

OcroneR TERM, 1920.

No, 2938,

WESTERN UNION TELEGRAPH

COMPANY,

Appellant,

against

S. B. Posrox,

Appellee.

BRIEF AS AMICI CURIAE ON BE-

HALF OF APPELLEE.

The construction of the contract between the

appellant and the Postmaster General will affect

generally the rights of numerous claimants against

telegraph and telephone companies arising out of

the operation under Government control. It will

affect particularly the rights of a litigant we rep-

resent in an action entitled Herstein y. New York

Telephone Company, now pending in the Supreme

Court, State of New York, County of New York.

Upon the written consent of the attorneys for both

sides of this appeal, we ask leave of the Court to

file this brief as amici curiae and respectfully

eae esate lg cha SEC ATOR

RSs ESE REI Re OS. Ata ae xe Oe

Seah kat Beats IN RE ELAS

pray that, in the construction of the said contract

aud particularly Sections S(e) and 15 thereof, the

Court take into consideration the facts in the //er-

sien case, supra,

Facts.

Herstein, an infant, while walking on one of the

streets in the City of New York, on February 26,

1919. received serious injuries due to the falling

of a pole bearing telephone wires, The Telephone

Company by its answer admits it erected the pole

long prior to the joint resolution on July 96, 1918,

und the proclamation and orders pursuant thereto,

but disclaims liability for the injuries received by

the plaintiff on the ground that its lines at the

time of the accident were “under the operation and

control of the Federal Government.” The agree-

ment between the New York Telephone Company

and the Postmaster General is identical with the

one between appellant and the Postmaster General

in the present case (Exhibit No. 4, p. 41).

The Supreme Court of the State of South Caro-

lina has affirmed the existence of liability against

the wire company under the terms of this agree-

ment. We submit that the following principles

justify the decision of the Court:

1. We agree with appellant’s view that a tort

Claimant would have no right of action against

the United States (Belknap v. Schild, 161 U. &.,

10, and other cases cited in appellant’s brief). He

either has his remedy directly against the wire

company, or he has no remedy at all. If the con-

tract between the wire company and the Postmaster

General is not capable of a construction that would

protect both the wire company and the public, in-

juries to large numbers of claimants will go with-

out remedy. The sections of the agreement. in-

volved are Section 8(e) and Section 15.

Section 8(e) (p. 46) provides, in part:

“The Postmaster General shall * * *

also pay or save the owner harmless from

all judgments or decrees that may be recov-

ered or issued against, and all fines and

penalties that may be imposed upon it, by

reason of any cause of action arising out of

Federal control, or anything done or omit-

ted in the possession, operation, use or con-

trol of its property, during the period of

Federal control, except judgments or decrees

founded on obligations of the owner to the

Postmaster General or the United States.”

Section 15 (p. 73) provides:

“In presenting this proposal it is under-

stood that only the salient features incident

to the relations of the parties have been de-

scribed and that further details not covered

arising from the operation of the property

by the Postmaster General shall be settled

in conformity with the broad principles

herein enunciated.”

In construing these two sections of the agree-

ment, effect should also be given to the statement

of the Postmaster General in his Order No. 1783

(Exhibit No. 3, p. 40), assuming control of the

lines, that the purpose was to operate the lines as

a national system “with due regard to the interest

of the public and the owners of the property.”

PRET NL See, PEE, SET

TEBE IE

Pesce

SSeS Ess

The sections just cited must be given some

effect; they cannot be considered void. A contract

must be so construed as to give meaning and effect

to all its provisions.

Burdon Century Sugar Ref, Co, v. Payne,

167 US. 127, 142.

Hobbs v. MeLean, WNT UL S., 567, 576.

(. S. ve Central Pacific BR. R. Co., 118

UL S., 235, 241,

l tley Vv. Donaldson, 0A UL S., 29, 46.

Binghamton Bridge, 3 Wall, 51, 73.

It will not be seriously contended by the appel-

lant that either the Government or the wire com-

pany intentionally omitted provision in the agree-

ment for the protection of such of the public as

might be injured during the ordinary course of

operation. The very insertion of Section 15 in the

contract argues to the contrary.

2. Section Sie) and Section 15, taken together

and broadly construed, may be considered to be a

provision for the protection of injured members of

the public in suits against the wire company, as

well as protection for the wire company by reim-

bursement from the Postmaster General. Any other

construction would be harsh and unjust and would

be contrary to the established rule that “When an

instrument is capable of two constructions, one

working injustice and the other consistent with the

right of the case, that one should be favored which

standeth with the right.”

Norman vy. Bradley, 9 Wall., 394, 407.

Utley v. Donaldson, supra.

Binghamton Bridge, supra.

Hoffman vy. Aetna Ins. Co., 32 N. Y., 405.

It must be assumed that the Postmaster General,

ia preparing this form of agreement, did not intend

to deprive claimants of their common law remedies,

and that he knew at the time of the execution of

the agreement that tort claimants could not insti-

tute suits against the Government. We are forced

to the conclusion, therefore, that he intended by

the provisions of Section 8(e) to protect both the

public and the companies; the former, because, by

implication, suits were permitted against the com-

panies; the latter, because, by express provision of

the contract, he agreed to indemnify them against

judgments recovered in such suits. In giving these

provisions this fair and equitable construction no

injury is done to the Government, for it is merely

called upon to do what it agreed to do; no injury

is done to the wire companies, for the Government

is to reimburse them for all moneys so paid out;

no injury is done to the public, for claimants are

not then deprived of remedies for injuries sustained.

The contrary construction urged by the appellant

would be a harsh, inequitable and unjust one which

would benefit only the party who framed the con-

tract.

3. Order No. 2114 (Exhibit No. 4, p. 41), the

agreement in question, is the form provided by the

Postmaster General to all wire companies. If a

doubt in the construction of its provisions arises, it

must be construed strongly against the Postmaster

General, for language must be construed most

strongly against the party employing it.

Grace Vv. American Central Ins. Co., 109

U. 8., 278, 282.

American Surety Co. vy. Pauly, 170 UL S.,

133, 144.

/naurance Companies vy. Wright, 1 Wall.,

456, 468,

H. Lt is respectfully submitted that the judg-

ment of the Supreme Court of South Carolina

should be affirmed.

WM. M. SILVERMAN,

JOSEPH P. TOLINS,

Counsel amici curiae ou

behalf of appellee.

[19212]

SUBJECT INDEX.

Oe On ccccuecevuevedesscssesceccena’ ube eeeee

Specification Of @FTOTs... cee ccc eee eeccecccccese

Re GE GIN ccc ccecsttcecccseccvece seacesnes pesveses

I, Federal possession, control, and operation of the wire

systems and liability of the owner companies there.

SE BWeeeee Web ves chosen ctors caces: beenuecussene

1, Relationship established between the United

States and the wire companies by the seizure

of their systems under joint resolution No,

Sh4o oof Congress of July 16, 1918, and the

proclamation of the President of July 22,

eee SRUdCeahe ehbeeeereseaeteeneretens

2. Notmresponsibility and nomliability of the

owner wire companies for the acts of the

United States during its control and opera-

tion of their systems......... eeveeceveecete

a. Neither the joint resolution nor the

proclamation imposes liability on the

wire companies for the acts of the

CROCE BAGS. ccccncccsscvccececes oe

b. The effect of the presidential action

taken under authority of the joint

resolution was to supplant the owner

wire companies and thus do away

with all their liabilities as com-

MON CArTIOTS. 6... cece ee Coececcccccce

(1) Common carriers are charged

with no duties and respon-

sibilities that may not be

suspended by the paramount

authority of the war power

of the United States,......

(2) Relation of lessor and lessee

did not exist between the

wire companies and the

United Btetebscccccccceses

(3) The United States was not the

agent of the wire companies.

aoe s

INDEX.

(4) The wire companies were not

the masters of the servants

of the United States.......

(5) The wire companies cannot be

held liable on the theory of

the Postmaster General being

a statutory receiver of their

BYSTCMS .cccceccs Seesesvces

Il. Federal possession, coutrol, and operation of the wire

systems and liability of the United States there

WOE and exec ay aed ah OLSEN RES PERRO TOE Tae

1. This suit is based solely on acts of the United

States; hence it is the real party in interest.

v. Authority to sue the United States must he

expressly given by Congress.......... sarees

3. The judgment herein is inoperative against the

United States, and, if effective at all, is effect-

ive against the telegraph compuny..........

a. The proper construction of the contract

between the Postmaster General and

the telegraph company..............

b. The Postmaster General had no au

thority to submit the rights of the

United States to the determination of

Se COR case ce tase hoes evn ee

e If the contract gives authority to sue

the United States, such suit must be

either in the district court or Court of

Olpis 26s: PCE, RT RE a AIA Re ld

III. Constitutional objections to the maintenance of this

suit and the recovery of a judgment therein effect

ive against the owner telegraph company..........

1. Denial of due process of law under the Fifth

ERNE oe ee annie sVaar cana ee es Kane 4

2. Denial of due process of law under the Four-

teenth Amendment.......... ME ree

Eh SO ak scan ave eenes sine oes ied cinaawe eve ase :

INDEX.

TABLE OF CASES.

ili

Page

Attorney: General vs. Old Colony Ro Co. (160° Mass.. 62 22

Je Ie Vg | Sa eerie ie gh ine one AP aeer, StS Ma A Sen MeNAL ND 8 94, 97

saltimore & Ohio R. Co, vs. Burris (111 Fed., 882).......... 60

ecrs YS: Arwanunn (20 How., S273. 656 oes eoes sccbas tenes SS

OPK ED -VBy MCE CPO WT, 00 663 sews > ss 6 devia ef ciwe le 67, 69

Bieviie We. Bios (200 Ped. O08) co.cc divice odie vabecuhe 61

Brady vs, Chicago, etc., R. Co, (114 Fed,, 100)..........6... m4

Brooks Scanlon Co, vs. R. R. Commission (251 U. 8. 396).... WG

purleson: vs, Dempey (2h0°U. S., TO. 5 occ soos booksesceccwic. 14

Canidate vs, Western Union Tel. Co. (SS South. 10) (Ala.—not

ROU OUMIAiUY “POPGIURE Ys 5') 6:06 60 vio Wh So 000s bake ienaocs 15, 24, 54, 63

Carr -vs,United (Stites: (OR. 8.) 483). 60.0 s cccsassaeceeens 71,84

COME VS, DOPCOH Cet WAI, PUR os -6 Xoo sce celles oooacukadus S4

Castle vs. Southern R. Co. (112 8. ¢., 407; 99 S. E.. 846).... 4

Central Trust Co. vs, Charlotte, ete. Ro Co. (65 Fed... 257).. a 49)

Chicago, ete., R. Co. vs. Bond (240: U. S., 440)..........<... a

Chicago, ete, BR. Co, vs. Chicago (166 U. S., 226)............ 105

Chicago, ete, Ro Co. vs. Minnesota (1384 U. S., 418).......... 10M}

Ciba ge, Cte, Co. ve, Pow (2a2 VU; GB: 405):..< cece dcakin. 9

Clements vs, Souchern R. Co, (102 8. F., 399) ....... 0 ccc cc cce 45

Cohens va. Virginin: (O° Wheat, O04)).5 oo... e kc ads cécccces, mi

Colon vs. Lisk (153 N. Y., 188; 60 A. S. R., 609)............ 4

Commercial Cable Co. vs. Burleson (250 U. S., 860).......... 15

Commercial Cable Co. vs. Burleson (255 Fed., 99)........ 15, 45.51

Ne er EE ULE AT MAE Dass aw anda Ces ves oe eard oe ne mh

RMON VS, FUDD (208-U. B.S ccs ce tsy sce bee cceekckan, 44

Dakota Central Telephone vs. South Dakota (250 U. &..

Reese os va oes: gE sak Ee Ee ED Eig ke ae 11, 13, 45, 52, 78

Daugherty vs. Thomas (174 Mich., 371; 140 N. W., 615)...... 93

VOR, Ee OT WERT, ROT ss oe cicsike paak eee ake ce (0, 72, 8B

District of Columbia vs. Camden Tron Works (181 U. S.. 458). 6S

Erie R. Co, et al. vs. Caldwell (264 Fed.. 947).............. 3

Eubank vs. Richmond (226 U. S., 137).........ccccccccccoce 9

soil pcespsal. pias, ceil ei, Se | A ens ee 13, 90

Bs parte Virginia (100 U. &., 38D)... 2... cece ccccuncccce, 106

yum ve. United Stites (198 UO. B.. 237)... 0... cc cccccsccccece 71,85

Poster vs. Western Union Tel. Ce. (219 S. W., 107).......... 16, 27

Gableman vs, Peoria, ete., R. Co. (82 Fed., 790).............. 60

Renee WM. GRAWIS (A WOM, DOOD 6 oa ois ik iccaawscckinccnn.. GS

wiltam vs. A. ©. t B. Co. (908 B. B., 10)... ccccsceccoces 45

Goldberg vs. Daniels (281 U. S., 218) ......c.ccccceccs ae sacs

lv INDEX,

Page,

Souge Ve. Eart (200 Wed,, BOR) ccckcvccoscecsvecreass evens 8

Great Northern R. Co. vs. Cahill (— U. 8S. —, net yet re

CRI Siac ona te CAG aw els Cetin dis Ke Chad oa hele Oe eek a Reema 6

Hamilton vs. Kentucky Distilleries, ete., Co. ont U.S., 146). ™M)

Hatcher & Snyder vs. A. T. & S. F. . Co. (258 Fed.

MUR ow chiang Wieleiucndwie eid oan'is, ke ets mea ere 15, 31, 54, 63, 100

Haubert vs. B. & O. R. Co. (259 Fed., 361).... 15,31, 54, 68, 67, 102

Haverhill Bridge Co. vs. Essex County (108 Mass., 120; 4

es He, GIB 6 cans pa ace anise AS alka aris ACRE oe oa Daan Kee 97

Heil vs. United States ( Fed... not yet reported)........ SS

Hill vs. Director General (178 N. C., 607; 101 8S. E., 376).... Hi

Bill vs. United States (9 How., 386) .........cccccccccvcsccs 70.72

a a oe Ss! 2 ee rr rr re R2

Hodgson -vs. Dexter (1 Cranch, 345) .........cccccccccccccces 6S

Home Tel., ete., Co. vs. Los Angeles (227 U.S. 278).......... 106

Houston vs. Ormes ( U. S.. —, not yet reported).......... “7

Illinois, ete, R. Co. vs. Public, ete. Commission (245 UL 8.

(Re DESPISES nae Oe pA AC ge 5 NS iy EN oy Seen @h, 72,87

ie NE Ae hy MI Rg re oy ges we vice ainape “7

International Postal Supply Co. vs. Bruce (194 U. S., 60).... 71.78

Jacob Hoffman Brewing Co. vs. McElligott (259 iy ‘321 Pecac Sj

Bansas ve. Burleson (250 U. S., 188)... ccsccconcccccccces “ os)

Kansas vs. United States (204 U. S., 331)....... ccc ccc ccce 4.71

Knoxville Traction Co. vs. MeMillan (111) Tenn. 521: 65

Ree Me NE ae bois pauaite cay Go ieee Te eos ks eke teh ecann 4

Krichman vs. United States (263 Fed., 588).................. 52, 78

ps A ge 5 5 rr 60

Lane vs. Hines (— Fed., —. not yet reported)............... 108

meen Gonder Casee (iS WAIL, GIT) 6. coo cc cc ccccccvcccccece 48,

Los Angeles vs. Los Angeles Gas, ete.. Corp. (251 U. S., 82). 6

Bema: Wa, Cheaatield (200 W. G., TO) <5. cco kcces cccocccoccs 71,74

Louisiana vs. McAdoo (234 UW. S., 627). ....... ccc cece cece ees 64, 65

Louisville, ete. Co. vs. Central Stockyards Co. (212 U.S.

MEN Ms ste Miwa eA aa tiara ee ofan rad oie gina Se eed din dashes eon M7

McLeod vs, New England Tel., ete. Co. (250 UL S.. 195)...... 14, 66

paaraie vs. Hines (268 Fad... 945) ......<sccccccecccccos 15, 30.53, 68

Memphis, ete. R. Co. vs. Hoechner (67 Fed., 456).......... 5S

Minnesota vs. Hitchcock (185 aa ose 2 re Ne . 64,67

Minnesota vs. Hitcheock (185 U. PEP S54 tea elu Wale aahie sere 71

Missouri Pac. R. Co. vs, aaah “64 U. ae GEN vcienes's eas a)

Missouri Pac. R. aot vs. Nebraska (217 U. S., 196).......... 95

INDEX, Vv

Page.

Mitchell vs. Cumberland Tel. Co. (188 Ky., 268; 221 8. W..

aaa nh aly dixie Wes, oad ¢:9'6 A Hk oS 99. Cao oa alo debe a ek c 16, 29, 63

Murray vs. Hoboken Land, ete, Co. (18 How., 272).......... 70

Naganab vs. Hitcheoek (202 U. S., 478)........cccccceccecs 71

Nash vs. Southern Pacifie Co. (260 Fed., Y80)..... 15, 82, 47, 51, 102

Nations vs. Johnson (24 How., 195)..........ccccccccccccece 70

New mexico vs. Lane (245 U.S. BD) .i.6c cc 6cco0o0cecccesecce 71

New Orleans, ete, Ro Co. vs. Hanning (15 Wall, 649)........ DA

Nicholl vs. United States (7 Wall. 122)..........cccccee 70, 72, 88

Northern Bank vs. Stone (SS Fed.. 418).......ccccccecceees SD

North Dakota vs. NOW. Tel Ew. Co. ( Fed., . hot vet re

NORE Per iceawna Data teeta sees aes wees kG Rabe De bel kg 25

Northern Pacific Ro Co. vs. North Dakota (250 1. Bs, BI. sa 1;

Gehoe vs. Hernandez (230 U. S., 199) .......cccccccccccccce 92

Oregon VA. TAMeNCoCR (O02 ES. GD) soi c vag bcos cc vcceciconce 64,71

Pennsylvania Ro Co. vs. Jones (155 UL SS. BBB)... eee eee cece 60

Postal Tel.. ete.. Co. vs, Call (255 Fed., S50).........cccc0e. 36

epee, i ON OU WWM OUI ao usavnaccsudsueeccdtecnce ND

Public Service Com. vs. New England Tel, ete. Co, (282 Muass.,

ts Se MN isd ne shane ds bo 040.0 Rann sp nbee skeen oak 14, 66

Railroad Commissioners vs. Burleson (255 Fed., 604)... 15, 28,54, 68

Railroad Commissioners vs. Cumberland Tel, ete., Co. et al,

= Bis —, OE FOP Peparted) o.oo. oes vccecstaccecccoces ss 67

Railroad Tax Cases (136 Fed., 233)........ccccccccccccccce &

Raymond vs. Chicago, ete. Traction Co, (207 U. Bi BON sank ee 106

Reed vs. Southern R. Co. (75 8. C.. 162)........ccccccccccce 49

Roberts vs. United States (176 U. S.. 219)................ 67

Rutherford vs. Union Pacifie Ro Co. (204 Fed., 880)...... 380,47, 57

Schillinger vs. United States (155 1 ae SEN othe tca sia ts nce ec 72, 88

Schumacher vs. Pennsylvania Ro Co. (106 N.Y, Mise., 564;

SS) SIRES ra aes ena aren 21,52, 98

anew Wi Oe GOO WIM, BOD ooo soos vs asceccccdseciers. 106

Selective Draft Law Cases (245 U. S., 266).............. 45

Singer Mfg. Co. vs. Rahn (182 U. 8, 518).........ccce0c05, HN

I I os oOo ara ne odes cals 70, 72

Southern Cotton Oil Co. vs. ALC. 1. Re Co. (257 Fed... 188). . 53

Southwestern Bell Tel. Co. vs. State (181 PRG ETDs xccwiaa ee 63, 66

Southwestern Tel., ete., Co. vs. Houston (256 Fed., 690)...... 12, 45

St. Louis, ete. R. Co. vs. Wynne (224 U. ive | | Vee . 95

Spring vs. American Tel.. etc. Co. (208 BS. Tl... BOO ocnccéieccs D

Standard Oil Co. vs. Anderson (212 U. By BAD) vacceane : a 54

Stanley vs. Schwalhy (147 U. S.. MOET kaha wash ‘ be 71

vl INDEX.

Page

Stanley vs, Sehwalby (162 UL S., LM... ee ee eee eee 71, 72, 74, 85

State vs. Burleson (S82 So, HIS)... eee eee eee eee newness Mh

State vs. Cumberland Tel, ete., Co, (120 Miss., 25. 81 So. 404;

BO Bo: DER i.cadecx acta hee s he tec thee ents Oss Nee eos ew eee Mh

State vs. Wisconsin Tel. Co, (172 No W., 225)... 6. eee eee eens aT

United States vs. Clarke OS Peters, 480)... .... 060. e ee ee ee ni)

United States vs. Cress (243 UL S., BIB)... cee cee eee eee eee 1D |

United States vs. Gleeson (124 UL Si 2K. cee eee eee eee 71

United States vs. Lee (106 U.S. DWBb Lee eee ee eee 69, 71.85

United States vs. MeLemore (4 How., 280)... 6c eee eee eens mi

United States vs. MeVeagh (214 Ul S.. T24b cee eee eee eee “7

United States vs. Pearson (251 Fed., 270)... cee cence cece ees Ni

United States vs. Thompson (98 UL 8. ASG)... eee eee es 7

United States vs. Tillon (6 Wall, ANd... ee eee ee ee eee 7

Washington, ete, R. Co. vs. Brown (17 Wall, 445).....6-- AS. 43S

Wells vs. Roper C246 UL S.. SBI cee ee eee eee eee es 65.71.74

Westbrook vs. Director General (268 Fed, 211)........-- 333, 8, 102

Western Union Tel. Co. vs. Conditt (228 8. W., 224; Texas,

not yet officially reported) oo. eee cee eee cence eee eens 12

Western Union Tel. Co. vs. Davis (218 8. W., 833) 16, 27, 54, GS

Western Union Tel. Co. vs. Ferguson (157 Ind., 64)........6- 1K)

Western Unien Tel. Co. vs. Glover (— Ala., —, not yet re-

POND) oahu cayexs) he pines sera apne aba tenn e eee Henes +98 15, 26, 54

Western Union Tel. Co. vs. Wallace (— Texas, -—-, not yet re-

GODIER) Sainekims cv eknn aS es co nehs saa na se ne DRE REET. - 15, 24.5

Witherspoon vs. Postal Tel, ete., Co, (257 Fed., TOO) sdeu% a

SUPREME COURT OF THE UNITED STATES,

OCTOBER TERM, 1920.

No. 293.

WESTERN UNION TELEGRAPH COMPANY,

PETITIONER,

Us,

Ss. B, POSTON

ON WRIT OF CERTIORARI TO THE SUPREME COURT OF THE

STATE OF SOUTH CAROLINA,

BRIEF OF WESTERN UNION TELEGRAPH COMPANY.

Statement of Case.

The question involved in this case is whether the Western

Union Telegraph Company, herein called the telegraph com-

pany, can be held liable for failure to transmit. or for error

or delay in transmitting, messages handled over its telegraph

system in the United States during the period between Au-

gust 1, 1918, and August 1, 1919, while its lines were in the

exclusive and complete possession and control of the United

States. and bemeg operated hy the United States, under the

pro sions of joint resolution of Congress No, S84, adopted

July 16. P9ES. and the proclamation of the President: issted

pursuant thereto, July 22, TOTS,

The controversy thus arose: On October 2 and 3. Ts,

certain telegraras patssed between the respondent, S. B. Dos.

ton, at Johmsonville, South Carolina, and W. B. Ravenel &

Company, cotton brokers in Charleston, South Carolina, tov

the PrULD pease of effecting a sule of two hundred bales of cot

ton. Alleging im his compiaint that in response to his in

(guar aan offer for the cotton had been made ly the brokers,

beat that by reason of delay in transmitting the offer and the

veceptaner thereof, he had lost a sale of the two hundred

bales of cotton at the price quoted and was compelled, hy

reason of a decline i the market, subsequently to sell the

cotton ata reduced price, the respondent commenced this

aetion against the telegraph company, in the Court of Com:

rion Pleas for Williamsburg County, South Carolina, to re-

cover as damages the ditference between the price offered and

the price at whieh he actually sold the two hundred bales of

cotton (Transeript, yp v4) The telegraph COTE RTEN be

defendant in the action, answered the complaint, and, be-

sides pleading in substance a general denial and a speeitic de-

nial that it was operating «telegraph line at the time the

Catise of aetion aweerued, alleged ly way of atlirmiative defense

that under jount resolution of Congress No, SO4, adapted July

16, TODS. the proclamation of the President, dated July 22.

1G1S. and the orders of the Postmaster General, its entire

system Was taken over by the United States and at the time

the cause of aetion vecrued Was Un the possession and control

of and was being operated exclusively by the United States

CTranseript, pp. 4-6),

In due course the case Cane on for trial in the lower court

and the defendant saved all of its nights and contentions as

to its non-liability by appropriate objections to testimony and

requests for instruetions in its faver, MI of its positions

having been overruled, a verdict in favor of the plamtil wae

rendered, Judgment was thereupon entered, and an appea!

Was prosecuted to the Supreme Court of the State,

Ih this appeal the telegraph company contended

I. That the possession, control and operation of its tele

graph system by the United States at the time the cause of

action acerued was such, under the Federal Constitution, the

joint resolution of Congress and the proclamation of the

President, as to prevent the maintenance of this suit against

it, because such possession, control and operation on the part

of the United States was in its sovereign capacity and was so

complete and exelusive as to leave no ground upon whieh to

hase ability of the telegraph company, and the United

States being the real party in interest, the suit could not be

mamitained against the United States in a State court. but.

under the provisions of the Federal statutes, could only be

maintained in the Distriet Court or the Court of Claims of the

United States, and

2. That the complete and exclusive possession, control anid

operation of its telegraph svstem by the United States in its

sovereign capacity under the joint resolution of Congress and

the proclamation of the President precluded any liability on

the part of the telegraph company, for the reason that. te

hold otherwise would deprive the telegraph company of its

property without due process of law and deny to it the equal

protection of the laws, in violation of the Fifth and Four-

teenth Amendments to the Federal Constitution (Transcript,

py. 57-50).

\Il of these contentions on the part of the telegraph com.

pany were overruled, and the judgment of the lower eourt

aflirmed by a unanimous opinion of the court filed on Janu-

ary 26, 1020 (Transeript. pp. 59-61). In this opinion, the

bb SE At i ae Seta

Che

ate Rtas

court stated that the judgment was “in form against the

Western Union Telegraph Company” but “in effect against

the Postmaster General,” and that by reason of this the tele.

graph company could not successfully contend that ino pay-

ing such judgment it would be deprived of its property with-

out due process of law, as it would have the right to apply to

the United States for reimbursement CTranseript, p. 61),

The telegraph cotapany immediately filed a petition for a

rehearing, in which it sought to show that the court had

failed to apply te the decision of the ease the principles of

Federal law by which it was controlled: that under the facts

as found by the court, judgment could neither be rendered

hor liability established against either the telegraph com

pany or the United States, for the reason as to the telegraph

company that it was not engaged in the telegraph business

or in any way concerned with the transactions set out in the

complaint, and as to the United States that it was the real

perty in interest, and suit could not be maintained against

it in a State court without consent granted by Congress,

which had not been done, and therefore that the judgment

rendered should have been held a nullity as to both (Tran-

script, pp. 62-63). The telegraph company contended fur-

ther in this petition for a rehearing that by the affirmance

of the judgment below the court had established liability

against it for the acts of the United States and had placed a

hen on its property and net on the property of the United

States; that the plaintiff haa the right to collect such judg:

ment by the sale of its property under the levy of an execu

tion, that the effeet of this was not only to take its property

to pay the debts of the United States, but in addition to allow

a third party to take such property in enforcing a liability

against one in no wav legally responsible for it, and that such

a result deprived it of its property without due process of law

and denied to it the equal protection of the laws, in violation

of the Fifth and Fourteenth Amendments to the Constitu-

tion of the United States (Transcript, pp. 64-68),

The contentions of the telegraph company so made in its

petition for a rehearing were overruled, and the petition dis-

missed by an order filed February 28, 1920 (Transcript, p.

H9), Thereupon, the telegraph company applied to this

court Under the provisions of section 237 of the Judicial

Code as amended by the act of September 6, 1916 (39 Stat.

at 1. 726) for a writ of certiorari to the Supreme Court of

South Carolina, Upon consideration of such application,

the writ Was granted by this court on April 26, 1920, and

the case comes here pursuant thereto,

Specification of Errors.

While there is no formal assignment of errors, since the

ease comes Up by certiorari, vet logically it is essential to the

determination of the existence of error in the final result of

adjudication of liability against the defendant that the errors

committed in reaching this result should be fully exposed, for

if it be shown that the premises are without legal foundation,

manifestly the deduction drawn therefrom falls for the lack

of support,

As fairly appears from the record, and especially from the

issues raised by the defendant, the errors so committed may

he thus stated:

| Error in holding, notwithstanding the exclusive and

complete possession, control, and operation of the system of

the telegraph company by the United States at the time the

ease Of action herein acerued and the fact that such cause

of action arose out of a transaction had exclusively with the

United States in the operation of such system, that this suit

could be maintained and a judgment rendered therein

against such telegraph company.

2. Error in holding that an individual citizen has the

right to recover against the telegraph company on a cause of

detion growing out of a transaction had exelusively with the

United States in the operation of the telegraph system of such

company While such system was in the complete and excl

sive possession and control of the United States, a judgment

in the State courts which will be effeetive and operative

auainst the United States, when neither consent to bring nor

jurisdiction to maintain in the State courts such indirect suit

has ever been given,

8. Error in holding that a recovery against the telegraph

company in this ease does not deprive such company of its

property without due process of law, and in not holding that

the entire system of such company having been seized in

mmoeitom, the joint resolution would violate the Fifth Amend:

ment to the Federal Constitution if it imposed ability: upon

such company for the aets of the United States during the

period of Federal possession, control, and operation of its

system, because this would make the company liable for the

debts of the United States and authorize the taking of its

property for the private use of persons whose real claims were

against the United States and would thus deprive sueh con

pany of its property without due process of law,

4. Error in holding that a recovery against the telegraph

company in this case does not deprive such company of its

property without due process of law, and in not holding that,

the entire system of such company having been seized) i

imeitem and the joint resolution of Congress not) having

attempted to dmipose any Hability upon such company for the

vets of the United States during the period of Federal pos:

seession, control, and operation of its system, the aetion of

the State courts in imposing such liability upon the come

pany would violate the provisions of the Fourteenth Amend:

ment to the Federal Constitution, as it would compel stich

company to pay the debts of the United States and authorize

the taking of the property of the company for the private use

of w person whose real claims were against the United States

and thus deprive it of its property without due process of law

and deny to it the equal protection of the laws.

The issues thus raised will be considered under three heads.

to Wil:

1, Federal possession, control and operation of the tele-

graph systems, and liability of the telegraph company there-

under (first error),

2. Federal possession, control, and operation of the tele-

graph systems, and liability of the United States thereunder

(second error),

4. Constitutional objections to the maintenance of this suit

and the recovery of a judgment therein effective against the

oWner telegraph company (third and fourth errors)

BRIEF OF ARGUMENT.

FEDERAL POSSESSION, CONTROL, AND OPERATION

OF THE TELEGRAPH SYSTEMS, AND LIABILITY OF

THE TELEGRAPH COMPANY THEREUNDER.

This issue presents two aspects, Viz:

1, Nature and extent of Federal POSSESS TON, control, and

operation of the telegraph systems pursuant to the joint

resolution of Congress and the proclamation of the President,

2, Liability of the telegraph company under the joint

resolution and the proclamation for the acts of the United

States during its possession, control, and operation of the tele-

graph system.

These two propositions will be diseussed in their order.

1, Nature and extent of Federal possession, control, ind

operation of the telegraph systems pursuant to the joint

resolution of Congress and the proclamation of the President.

On July 16, 1918, the Congress of the United States passed

joint resolution No. 834 (40 Stat. at L., 04, chap, 1545 Ped

Stat. Ann., 2d ed., Supplement 118, po 884), which pro-

vided :

“That the President during the continuance of the

resent war is authorized and empowered, whenever

he shall deem it necessary for the national security

or defense, to supervise or to take possession and ax

sume control of any telegraph, telephone, marine

cable, or radio system or systems, or any part thereof,

and to operate the same in such manner as may be

needful or desirable for the duration of the war,

which supervision, possession, control, or operation

shall not extend beyond the date of the proclamation

by the President of the exchange of ratifications of

the treaty of peace: Provided, That just compensation

shall be made for such supervision, possession, control,

or operation, to be determined by the President,

* * * Provided further, That nothing in this aet

shall be construed to amend, repeal, impuir, or affect

existing laws or powers of the States in relation to

taxation or the lawful police regulations of the sev-

eral States, excent wherein such laws, powers, or regu:

lations may affect the transmission of Government

communications, or the issue of stocks and bonds by

such system or systems.” (Italics added.)

Six days thereafter, on the 22d of July, the President ex-

erted the power thus given. Its exercise was nianifested

by a proclamation which, after reciting the resolution of

Congress, declared :

otine, ei Se et api Se BS

“It is deemed necessary for the national security

and defense to supervise and to take possession and as-

sume control of all telegraph and telephone systems

and to operate the same in such manner as may be

needful or desirable :

“Now, therefore, 1, Woodrow Wilson, President of

the United States, under and hy virtue of the powers

vested in me by the foregoing resolution, and by vir-

tue of all other powers thereto me enabling, do hereby

take possession and assume control and supervision

of each and every telegraph and telephone system,

and every part thereof, within the jurisdiction of the

United States, including all equipment thereof and

appurtenances thereto whatsoever and all materials

and supplies.

“It is hereby directed that the supervision, pos-

session, control, and operation of such telegraph and

telephone systems hereby by me undertaken shall be

exercised by and through: the Postmaster General.

* + + + * * +

“From and after twelve o'clock midnight on the

dist day of July, 1918, all telegraph and telephone

systems included in this order and proclamation shall

conclusively be deemed within the possession and con-

trol and under the supervision of sid Postmaster

General without further act or notice.” (Exhibit 2,

Transcript, pp. 38-39.) (Italies added.)

The proclamation further gave to the Postmaster General

plenary power to exert his authority to the extent he might

deem desirable through the existing “owners, managers,

boards of directors, receivers, officers, and employees of said

telegraph and telephone evstems,” and it was provided that

they should continue the operation of the various systems

“in the usual and ordinary course of the business of said

systems, in the names of their respective companies, associa-

tions, organizations, owners, or managers, as the case might

be,” until the Postmaster General by general or special

orders should otherwise provide,

These provisions as to the retention in the service of the

eRe =

BAe AAR SS

petrdass

—

Me Se ee NS,

™

oWners, officers, and employees of the companies, however, in

ho sense signified an intention on the part of the President

to exert over the wire systems “a mere public supervision of

an operation by private owners.” On the contrary, their sole

and manifest purpose was to provide for the uninterrupted

operation of the systems by retaining in the service trained

and competent persons to conduct the business for the Gov-

ernment,

Under authority of the proclamation the Postmaster Gen-

eral assumed possession and control of the wire systems, and

on August 1, 1918, made provision for condueting the busi-

ness thereof by issuing a bulletin, in which, after reciting

that he had assumed possession and control, he stated that the

systems should “continue operation in the ordinary course

of business.” and directed that “all officers, operators, and

emiplovees”” of the companies would “continue in the per-

formance of their present duties” (Exhibit 3, Transcript,

p. 40).

On October 9, 1918, the President, through the Postmaster

General, in carrying out the duty imposed upon him by the

joint resolution to make compensation, concluded a contract

with the telegraph company of the most comprehensive char-

acter, covering the whole field while the possession, control,

and operation of its system by the United States continued

(exhibit 4, Transeript, pp. 41-51). By its terms, stipulated

atnounts were to be paid as compensation for the possession,

control, and operation of the system by the United States,

and the earnings resulting therefrom became the property

of the United States. Although concluded in October, 191s,

the contract, by its express terms, Was made retroactive so as

to be held effective from the time the President took over the

property.

The status between the United States and the telegraph

company thus created by the joint resolution and the pro-

ceedings taken pursuant thereto continued until August 1,

1910, when the wire lines were returned to their owners (Act

of Judy 11, 1919, 41 Stat. L., 157, Fed. Stat. Ann., 2d ed.,

M19 Supp. 350). All questions as to the legal relationship

resulting from such status would seem to be set at rest by the

recent adjudications of this court on this and the closely

analogous situation of the transportation companies,

The leading case respecting the wire companies is Dakota

Central Telephone Co. vs, South Dakota ex rel, Payne, 250

UL S., 168 (68 1. Ed., 910), where the nature ond extent

of the possession and control of their properties by the

United States were fully considered and determined by this

court.

The case involved the right of the United States, through

the Postmaster General, to fix intrastate rates on the wire

lines during Federal control and operation, and it was strenu-

ously urged in behalf of the State in denial of the existence

of such a right on the part of the United States that by the

resolution “only a limited power as to the telephone lines was

conferred upon the President, and hence that the assump-

tion by him of complete possession and control was beyond

the authority possessed.” Answering such contention this

court said :

“But although it may be conceded that there is

some ground for contending, in view of the elements

of, authority enumerated in the resolution of Con-

gress, that there was power given to take less than

the whole if the President deemed it best to do so, we

are of opinion that authority was conferred as to all

the enumerated elements, and that there was hence a

right in the President to take complete possession and

control to enable the full operation of the lines em-

braced in the authority. The contemporaneous of-

ficial steps taken to give effect to the resolution, the

proclamation of the President, the action of the Post-

master General under the authority of the President,

the contracts made with the telephone companies in

pursuance of authority to fix their compensation, all

establish the accuracy of this view, since they all

make it clear that it was assumed that power to take

full control wag conferred, and that it was exerted xo

ag to embrace the entire business and the right to the

entire revenues to arise from the act of the United

States in carrying it out. Indeed, Congress, in sub.

sequently delinn with the situation thus produced,

would seem to have entertained the same conception

as to the scope of the power conveyed by the resolu.

tion, and dealt with it from that point of view. Act

of October 30, 1918, 40 Stat. at L., 1017. (Italies

added. )

The decision of the Supreme Court of the State denying

the authority of the United States to fix the rates under con-

sideration was based on its conclusion that the power of the

State with reference thereto had been preserved by the pro-

viso of the resolution saving “the lawful police regulations

of the several States.” Concerning this, the court said:

“Conceding that it was within the power of Con-

gress, subject to constitutional limitations, to trans-

plant the state power as to intrastate rates into a

sphere where it, Congress, had complete control over

telephone lines hecause it had taken possession of

them and was operating them as a governmental

agency, it must follow that in such sphere there

would be nothing upon which the state power could

be exerted except upon the power of the United

States ; that is, its authority to fix rates for the services

which it was rendering through its governmental

agencies. The anomaly resulting from such condi-

tions adds cogency to the reasons by which, in the

North Dakota Case, the error in presuming the con-

tinuance of State power in such a situation was

pointed out, and makes it certain that such a result

could be brought about only by clear expression, or

at least from the most convincing implication.”

(Italics added. )

We would remark in passing that a similar construction

had been previously given the proviso by the district court

in the case of Southwestern Tel, & Tel. Co. vs. Houston, 256

Fed., 690.

On the same day and preceding the decision of the tele-

phone case, this court decided the case of Northern Pacific

Railway Co, vs, North Dakota ex rel. Langer, 250 U. S.,

185 (68 L. Ed., 897), involving the right of the United

States, through the Director General, to fix local or intrastate

rites for transportation services. Such authority on the part

of the United States was affirmed to exist, and referring to

that case this court in the opening paragraph of its opinion in

the Dakota Central Telephone Company case has this*to say:

“Involving, as this case does, the existence of State

power to regulate, without the consent of the United

States, telephone rates for business done wholly

Within the State, over lines taken over into the pos-

session Of the United States, and which, by the exer-

cise of its governmental authority, it operates and

controls, it does not in principle differ from the North

Dakota case just announced (250 U, S., 155), where

it was decided that, under like conditions, the State

had no such power as to railroad rates, We consider

this case, as far as may be necessary, by a separate

opinion, however, because the authority under which

the control was exerted is distinct, and because of the

assuinption in argument that this distinction begets a

difference in the principles applicable.” (Italics

added. )

In the North Dakota case we find this pertinent language

concerning the nature and extent of the possession and con-

trol of the transportation systems by the United States:

“No elaboration could make clearer than do the act

of Congress of 1916, the proclamation of the Presi-

dent exerting the powers given, and the act of 1918,

dealing with the situation created by the exercise of

such authority, that no divided but a complete pos-

session and control were given the United States for

all purposes as to the railroads in question. But if it

be conceded that, despite the absolute clarity of the

provisions concerning the control given the United

States, and the all-embracing scope of that control,

there is room for some doubt, the consideration of the

general context completely dispels hesitancy. — [low

can any other conclusion be reached if consideration

be given the comprehensive provisions concerning the

administration by the United States of the property

which it was authorized to take, the financial obliga.

tions under which it came, and all the other duties

and exactions which the act imposed, contemplating

one control, one administration, one power for the ac-

complishment of the one purpose, the complete pos-

* session by governmental authority to replace for the

period provided the private ownership theretofore ev

isting? This being true, it must follow that there is

no basis for the contention that the power to make

rates and enforce them, which was plainiy essential

to the authority given, was not included in it.”

(Italics added, )

The case of Burleson vs, Dempey, 250 UL S8.. 191 (63 1,

Ed., 929), involved. the same question as to the telegraph

companies. In disposing of the case the court said:

“As there is no difference in legal principle as to

the question of power between the Dakota Central

Telephone Company case and this, it follows that the

decision in that case is conelusive here and makes cer-

tain the error committed below.”

In Public Service Commission vs. New England Tel. &

Tel. Co., 232 Mass., 465, 122 N. E., 567, which was affirmed

by this court in MeLeod vs, New England Tel. & Tel. Co, 250

ULS..195 (68 1. Ed., —), the Commission sued the telephone

company to enforce State rates, and the company set up the

joint resolution of Congress and the seizure of its lines there-

under and the operation thereof by the Postmaster General;

that the United States, the President or the Postmaster Gen-

eral was a necessary party, and that to grant the relief prayed

would in effect restrain the United States. The court, speak-

ing through the Chief Justice, held that the United States

was alone concerned, and that the effect of the congressional

| 15

and presidential action and the action of the Postmaster

General was—

“Not a mere public supervision of an operation by

private owners, fi was a complete assumption of ab-

solute and complete possession and control to the ex-

clusion of every private interest. No distinction is

made by their terms between interstate service and in-

trastate service. Both alike are taken into the posses-

sion of, the United States. Powers so extensive as

were thus assumed can be exercised only through

Various governmental agencies but the right and

power of the Government are paramount and admit

of no associates.” (Italics added. )

The same rulings have been made in the following cases:

Kansas vs, Burleson, 250 UL S., 188 (63 L. Ed., 926),

Commercial Cable Co. vs. Burleson, 250 U. S., 360

(63 L. Ed., 10380).

Commercial Cable Co. vs. Burleson, 255 Fed., 99.

Railroad Commissioners vs. Burleson, 255 Fed., 604.

Southwestern Tel., ete.. Co. vs. Houston, 256 Fed..

690, and cases cited.

Mardis vs. Hines, 258 Fed., 945.

Hatcher & Snyder vs, Atchison, etc., R. Co., 258 Fed.,

952.

Haubert vs. Baltimore & Ohio R. Co., 259 Fed.. 361.

Nash vs. Southern Pac, Co., 260 Fed., 280,

State vs. Cumberland Tel., ete., Co., 120 Miss.. 25: 81

South., 404, and 82 South., 311.

State vs. Burleson ( Ala.), 82 South., 458,

Canidate vs. Western Union Tel, Co. (Supreme Court

of Alabama), 85 South., 10—(not yet officially re-

ported ).

Western Union Tel. Co. vs. Wallace (Texas Court of

Civil Appeals)—not yet reported,

Western Union Tel. Co. vs. Glover (Court of Appeals

of Alabama)—not yet reported.

Foster vs. Western Union Tel Co. (Court of Appeals

of Missouri), 219 S, W., 107,

Western Union Tel, Co, vs. Davis (Ark.), 218 8S. W,,

833.

Western Union Tel. Co. ox, Conditt (Texas Court of

Civil Appeals), 225 8. W., 224)-—-not vet officially

reported.

Mitchell vs. Cumberland Tel. Co, 188 Ky., 26%, 221

S. W., 547.

In brief, these decisions definitely and indisputably estab-

lish two propositions respecting the status arising from the

seizure, in invitum, of the systems of the wire companies by

the United States, viz: (1) that “/t was a complete axsump-

tion of absolute and complete possession and control, to the

exclusion of every private interest” and all State authority,

the resolution ‘contemplating one control, one administra-

tion, and one power for the accomplishment of the” govern-

mental purpose; and (2) that in carrying on the business of

such systems, the United States not only had exclusive eon-

trol, but was actually “operating them as a governmental

agency.’ Therefore, in the light of these controlling adjudi-

vations, there can be no question but that during the period

of Federal possession and control extending from August 1,

1918, to August 1, 1919, the United States was in the abso-

lute, complete, and exclusive possession and control of the

systems of the wire companies and was vperating then as

governmental agencies.

2. Liability of the telegraph company under the joint reso.

lution and the proclamation for the acts of the United States

during its possession, control, and operation of the tele.

graph system.

It being conclusively established that the wire systems were

in the absolute, complete, and exclusive possession and con-

trol of the United States, which operated them as govern-

mental agencies, the question next logically arising is

whether under these conditions suit can be maintained by

and judgment rendered in favor of a private citizen against

an owner telegraph company for an act of nonfeasanee or

malfeasance of the agent of the United States in the per-

formance of his duties to the United States in the conduct

of the telegraph business,

If the possession und contro! of the entire system by the

United States was complete, absolute, and exclusive, then

there Was no possession and control left in the corporation

owner, and such owner was in no way concerned with the

property, and if the conduet of the telegraph business by the

United States was the operation of a governmental agency,

then the owner corporation was excluded from such opera-

tion, From these premises, the conclusion irresistibly fol-

lows that the owner telegraph company cannot be held liable

toa private citizen respecting a transaction had between such

citizen and the United States in the conduct of this agency

of the Government, unless either expressly or impliedly

made so by valid congressional or presidential action, or by

force of law in existence at the time of and unimpaired by

the acts of the United States in seizing its property.

The State Supreme Court in its decision expressed the

opinion that authority for a recovery against the telegraph

company was to be found in both the proclamation of the

President and the order of the Postmaster General (Tran-

script, p. 61). This conclusion, however, would seem to be

unfounded, for examination of the proclamation and order

discloses that nothing therein contained contemplates or

provides for either the maintenance or the bringing of a suit.

It is true, the proclamation permits the Postmaster General

to perform the duties imposed “so long and to such extent

and in such manner as he shall det mine through the

owners, managers, boards of directors, receivers, officers, and

employees of said telegraph * * * systems,” and con-

tinues these in the operation of the business in the usual and

ordinary course until the Postmaster General shall by gen-

eral or special order otherwise provide (‘Transeript, p. 3%).

The order of the Postmaster General issued in assuming: po

session and control of the systems merely carries out the

authority granted to him by the proclamation as to the opera-

tion thereof by retaining the officers, operators, and eim-

ployees in the service and entrusting to them the duties of

actual operation (Transeript, p. 40).

The evident purpose of the authority so granted and exer-

vised was, as We have already said, to prevent any interrup-

tion in the business by having it conducted by trained and

competent men, but they were none the less agents and em-

ployees of the United States engaged in a business erelv-

sively and completely iw the possession and control of the

United States, Hence, no basis for the asserted lability of

the telegraph company can be found either in the proclama-

tion of the President or the order of the Postmaster General,

Nor ean any basis for liability against the owner corpora-

tions be found in the joint resolution which authorized the

seizure of their properties. In fact, this joint resolution gives

ho permission to sue either the corporations or the Postmaster

General. It is true that by a proviso the joint resolution

<aved “the lawful police regulations of the several States,”

but as we have already seen, this court, in the Dakota Central

Tel. Co. case, held that this provision had reference only to

“State power to deal with the health, safety, and morals of

the people,” and that the systems of the telephone and tele-

graph companies had been taken into a sphere where Con-

gress had complete control over the lines, “because it had

taken possession of thei and was operating them as a goe-

ernmental agency.” Under this state of facts, the court said

that “it must follow that in such sphere there would be noth-

ing upon whieh the State power could be exerted except

upon the power of the United States” and that the anomaly

of allowing the State a right of operation on the power of the

(ieneral Government was such a result that “could be brought

about only by clear expression or at least from the most con-

vineing implication.” Neither clear expression nor con-

\incing implication was found in the resolution to authorize

interference by the State with the making of intrastate rates

by the Government during the period of its control and oper-

ation; neither is there clear expression nor convineing im-

plication to be found in the resolution allowing suits against

the owner telegraph corporations for acts of the Federal Gov-

ernment in operating their properties, and if in the one case

such a power was denied as being neither expressed nor im-

plied, it necessarily follows that for the same reasons it must

he denied in the other.

The soundness of this conclusion is further demonstrated

by a comparative examination of the action authorizing and

providing for Pederal control of the railroad lines. In the

proclamation of the President of December 26, 1917, taking

possession of these lines, it was distinetly provided that suits

might be brought against the carriers and judgments ren-

dered as theretofore until the Director General by general

order should otherwise determine. Thereafter, on Mavch

21, 1918, Congress passed an elaborate Federal control act re-

lating to these carriers (40 Stat. at L., p. —. Fed. Stat. Ann.,

2d ed., 1918 Supp., p. 757). seetion 10 of which expressly

provides :

“Actions at law or suits in equity may be brought

by and against such carriers and judgments rende red

as now provided by law; and in any action at law or

suit in equity against the carrier, no defense shall

be made thereto upon the ground that the carrier is

an instrumentality or agency of the Federal Govern-

ment. Nor shall any such carrier be entitled to have

transferred to a Federal Court any action heretofore

or hereafter instituted by or against jt which was not

so transferable prior to the Federal control of such

carrier.’

Leaving out of view for the present all questions as to the

constitutionality of this provision, the point to be emphasized

is that neither the joint resolution granting nor the proclama-

tion exerting the authority to seize the wire systema contains

anything analogous thereto. On the contrary, they are ab-

solutely silent both as to the liability of the owner corpora-

tions and of the United States; and equally silent respecting

the right to bring and maintain suits. Nor was this silence

the result of accident. On the contrary, it was the result of

deliberate design, for, as appears from the discussions in the

Senate when the joint resolution was adopted and when the

act providing for the return of the wire systems to their

owners was under consideration, the question of incorporat-

ing in each a provision similar to section 10 of the Federal

railroad control act, supra, was fully considered and inten-

tionally omitted. These discussions appear in the Congres.

sional Record of July 13, 1918, and of June 10, 1919, re-

spectively, and the relevant portions thereof will be found

fully set out in the Appendix hereto as Exhibit A. So that

there is no room for contending that while the joint resolu-

tion does not expressly attempt to fix liability on the owner

corporations, yet impliedly, at least, this must have been the

intention of Congress, for the reason that such contention is

utterly incompatible with what was deliberately and design-

edly done by Congress in refusing to make such a provision

a part either of the joint resolution or of the subsequent act

returning the properties.

Following the passage of the Federal control act of Mareh

21, 1918, the Director General of Railroads issued, pursuant

thereto, a number of general orders, which were approved be-

fore issuance by the President, and in which, while distinetly

recognizing the right of suit, he directed that all suits must

be brought against the Director General and not against the

owner corporations, The reason for this is thus given in the

preamble to the Director General's General Order No, 50:

“Whereas, since the Director General assumed con-

trol of said systems of transportation, suits are being

brought and judgments and decrees rendered against

carrier corporations on matters based on causes of

action arising during Federal control, for which the

said carrier corporations are not responsible, and it

is right and proper that the actions, suits, and pro-

ceedings hereinafter referred to, based on causes of

action arising during or out of Federal control, should

be brought directly against the said Director General

of Railroads and not against said corporations.”

* * * (Then follows an order directing the suits

to be brought against the Director General and not

otherwise.) (Ialies added.)

In the case of Schumacher ve. Pennsylvania Railroad Com-

pany, OG N.Y. Mise., 564; 175 N.Y. Supp., 84, the court

holds that section 10 of the Federal control act, authorizing

suits against carrier corporations during the period of Fed-

eral control on causes of action arising during such control,

violates the Fifth Amendment to the Federal Constitution,

and that the foregoing order of the Director General, stating

that the carriers were not responsible for these causes of

action, Was designed to remove seh constitutional objection.

At page 91 we find this language :

“It is safe to assume that the Director General of

Railroads would not have issued the order in question,

except upon the advice and after consultation with

the highest legal advisers of the Government, and that

it was promulgated only after the most careful and

mature consideration of the constitutional and legal

questions presented, We are safe, we think, in eon-

cluding that the order represents the considerate judg-

ment of the Government authorities on the questions

we have been considering in this opinion.”

Whether a provision in the act granting authority to take

over the lines similar to that found in section 10 of the Fed-

eral control act, supra, fixing liability on the owner corpora-

tions for the acts of the United States, would be constitution:

is a question we reserve for subsequent consideration. Su

fice it to say at this stage that no such provision, either

pressly or impliedly, exists; hence so far as congressional «

presidential action is concerned, the liability of the telegrap

company depends on the status created by the seizure of a

of its properties by the United States. As was held by th

court in the North Dakota case, supra, this status was “1

divided but a complete possession and control” by the Unit

States “for all purposes,” “contemplating one control, o

administration, one power for the accomplishment of the o

governmental authority to replace for the period provided tl

private ownership theretofore existing.” thus affording 1

room for contending that the telegraph company as such he

any control whatever over either the system or its operatio

Nor is this result altered in the least degree by the fact th

the operators and agents who handled the messages involve

herein were originally the employees of the telegraph cor

pany. At this time they were solely and exclusively t]

agents of the United States, and the telegraph company he

been completely excluded from all connection with the pro

erties. Hence, instead of finding congressional or preside

tial action either expressly or impliedly asserting liabili

against the owner corporations, we find such action negatt

ing such liability by ereating a status, the nature and effe

of which was to take the systems absolutely away from the

owners and exclude such owners from any participation |

their operation. "The instant ease is therefore governed |

the principles of the North Dakota case and the Dakota Ce

tral Telephone Company case, under whieh principles neith

can liability be predicated nor recovery had against the tel

graph company for the negligent or wilful acts of the er

ployees of the United States in their conduet of the telegray

business.

The conclusion thus reached as the result of independet

reasoning is fully supported by numerous recently decid

and well-considered cases.

In North Dakota vs, Northwestern Telephone Exchange

Co, etal. (U.S. Dist. Ct., North Dakota), — Fed., — (not

vet reported), a bill in equity was filed by the State to enjoin

the collection of intrastate telephone rates promulgated by

the Postmaster General, The corporation moved to dismiss

the bill as to it, which motion was granted, the court. by

Jadgve Amidon, saying :

“In the case of the telephone companies there is

no reservation in the joint resolution of Congress

authorizing the President to take over telegraph and

telephone lines, permitting either the companies or

the Postmaster General to be sued, nor is any such

permission contained in the proclamation of the

President. The acts of the National Government in

regard to telephone and telegraph lines in this par-

ticular are wholly different from the statute that was

passed authorizing the taking over of railroads, By

section 10 of that statute full provision is made in re-

ard to suits against the companies and clothing the

Freteretate Commerce Commission with power to super-

vise any changes in rates made by the President or

under his authority while the railroads remain in his

control. As no such permission is contained in the

joint resolution and the proclamation of the President

in regard to the telephone and telegraph companies,

it seems to me that the general principle must hold,

and that is, that no suit can be brought in respect of

those properties while they are so held either by the

State or hy any officer acting under authority of the

State.’ (Italics added. )

The case of Railroad Commissioners vs. Burl: son et al,

255 Fed., 604, likewise sought to enjoin the putting into

elect of a schedule of intrastate telephone rates. The court

refused the injunction, and held that the owner telephone

corporation Was “not responsible for the regulations” of the

United States, was “not a proper party to the bill and as to it.

the bill should be dismissed.”

This precise question of the liability of the owner tele-

Sesivoe

a ae

co nanos Fe ty

ow is

graph corporation on transactions had between the public

und the United States in the operation of its system has been

recently presented to and passed upon by the courts of Ala-

bama, Arkansas, Kentucky, Missouri, and ‘Texas, and each of

these courts has declared that suit cannot be maintained

against the telegraph company.

The case of Canidate vox, Western Union Tel. Co. (Supreme

Court of Alabama), 85 South., LO-—not yet officially re.

ported—was a suit against the corporation to recover damages

for the failure, during Federal operation, to transmit a tele.

gram. Ruling that the action would not lie, the Supreme

Court of Alabama said :

“The complete control and the exclusive possession

of this, as well as all other wire lines within the resolu-

tion of Congress, as elfected through the proclamation

of the President, having passed to the United States,

the defendant (appellee) was not and could net have

been engaged in the business described in the com-

plaint except, and that only, under the derivative

authority, a mere agency, imposed upon the telegraph

company by the paramount govertumental processes

set forth in the plea, to the end that whatever service

the physical properties and the company’s personnel

might render in the transmission of intelligence by

wire should be and was a public, governmental service

or function, to or in respect of the discharge of

which,—within the realm of the company’s legitimate

activity under the complete control and exclusive pos-

session of the Government,—ncither the company,

as such, nor the persons so serving in the operation

of any of the functions of the company so dominated,

were subject to individual corporate or personal lia-

bility to third persons for a breach of a contract or for

a tort (the breach of a publie duty) predicated alone

on a contract for the transmission of intelligence by

wire.” (Italics added. )

Western Union Telegraph Co. vs. Wallace (Texas Court of

Civil Appeals)—not yet reported—was an action to recover

for mental anguish alleged to have resulted from delay in

the transmission of two telegrams on the 20th and 21st of

October, 1918. The judgment for the plaintiff in the court

below was reversed, the court using this language:

“It can hardly be seriously contended that if the

Government of the United States, either by lawful

means or by force, dispossessed appellant of its tele-

graphic system and operated the saime through and

under the direction of the officers, agents, and em-

ployees of the Government, appellant could be held

liable for any wrongful act of the Government

whereby another suffered injury. This is true re-

gardless of whether or not appellee has a remedy for

the wrongs committed by the Government resulting

in injury tohim. Schumacher vs, Ry. Co., 175 N.Y,

Supp., R., 84; Edwards vs. Jones, 12 Daly, N. Y.,

415. By what process of reasoning can it be held that

appellant can be held liable for the acts of the Gov-

ernment over which it had no control whatever? Can

it be thought that where one person takes property of

another, without his consent, and against his protest,

and thereafter wrongfully uses the same so as to bring

about damage to a third person, such third person can

recover against the owner such damages so suffered,

solely because such third person has no remedy

against the wrongdoer?” (Ltalice added. )

After reviewing the congressional and presidential action,

the action of the Postmaster General, and after considering

the North Dakota and the Dakota Central Telephone Co.

cases, the court concluded :

“Having reached the conclusion that no liability is

shown against appellant, the judgment of the trial

court is reversed and judgment is here rendered for

appellant.”

This case has been followed in the subsequent case of West-

ern Union Tel. Co. vs. Conditt (Texas Court of Civil Ap-

peals), 223 S. W., 224—not yet officially reported.

The next case is Western Union Telegraph Co, vs. Glover

(Court of Appeals of Alabama)—not yet reported—which

Was an action for breach of contract in failing to deliver a

telegram promptly. The plaintiff! recovered judgment,

Which Was reversed on appeal, the court ruling :

“Whatever contract was made with reference to the

Inessage, Was with the manager of the telegraph otlice

at Selma, Alabama, November 14, 1918S, at a tine

When all of the defendant's property was in the pos.

session of the United States Government, and the de-

fondant corporation, together with all of its oper:

ators were under the direction and control of the

Federal authorities, acting under the powers con-

ferred by Congress by joint resolution July 14, To.s,

and the proclamation of the President, Juiy 22, 191s,

* * * But whatever services were being rendered

by the corporation to the Federal Government, (f «as

no part uf its duty to make contracts for the trans

nussion of messages. This service had been assuined

by the Government itself and was being carried on

by ita employees and agents in charge of the local

officers who acted under instructions, not from: the

corporation, but from the Postmaster General. Under

these circumstances telegraph services and facilities

afforded the public by the Government during the

period of its control, were afforded, not as a matter of

right which the publie couid demand, but as a matter

of discretion on the part of the Government and as to

which, the corporation was in no way concerned. In

other words, when the Postmaster General, acting

under the law, took possession of the physical prop-

erties of defendant and control of the defendant, the

defendant became the agent of the Government sub-

ject to instructions, just as any other instrumentality

drafted for service during the war. True, it main-

tained its corporate existence, but certain of its pow-

ers were suspended, and it retained no control over its

property or employees, except subject to the orders of

the Government. Dakota Cent. Tel. Co. vs. South

Dakota, Vol, 39, Sup, Ct. Reporter, 507,

“This being the law, the plaintiff as weil as every

one else was charged With knowledge and hence. it

cannot be claimed he Was dealing with an agent who

did not disclose his principal. Being an agent of the

Government, even if i! did make the contract sued on,

the contract was public and not personal. Modgson

rs, Dexter, 1 Craneh (VU. 8.), 345. Being a public

and not a private contract it imposes no personal ii-

ability.” (Italies added. )

In the case of Foster vs, Western Union Telegraph Co. et

al. (Missouri Court of Appeals), 219 8. W.. 107, the ques-

tion arose and was decided in favor of the company, the court

saving:

“No suit could possibly be instituted against th

Western Union Telegraph Company, because it Was

heen expressly held by the highest authority. that

when the President, acting under the power given

him by C®ngress, took charge of the telegraph lines

of the United States, sch lines were then operated as

a Government agency * * *

“The judgment in this case is clearly erroneous

and without foundation of Jaw, and ust be re-

versed.” (Italics added. )

The next case is Western Union Telegraph Company vs.

Davis (Supreme Court of Arkansas), 218 S. W. 835,

Wherein the lower court alowed a recovery for mental

anguish alleged to have resulted from delay in the trasmis-

sion and deliver’ of a messige, whieh was reversed by the

Supreme Court of Arkansas, which said:

“Appellant pleadec the complete control of the

(ro ernment over the physical properties of the com-

pany in the operatior of the telegraph business as a

defense against any liability which acerued by reason

of negligence during such Government control and

operation.

“The question presented by this plea is the sole

question involved in te case, and the contention now

is that the telegraph company is not liable for dam-

ages caused by the servants of the Government in Op.

Spur

we ee

bes!

AER Ras Rae ERS

Ota nee is

Pe RARE

Smee

ako

erating the lines, and that there is no authority under

the Federal law for maintaining an action against

the telegraph company for a cause of action which

arose under Government control.

“We are of the opinion that this contention is

sound and must be sustained,

“Learned counsel for appellee defend the judgment

below under authority of the proviso in the Federal

statute which preserves the authority to the States in

the exercise of ‘lawful police regulations,” The argu-

ment is that the liability imposed on telegraph com-

panies for damages by way of mental anguish result

ing from negligence in the transmission of messages

is in the nature of a police regulation, the vitality of

which is preserved in the Federal statute,

“This contention overlooks, however, the decision

of the Supreme Court of the United States in the re-

cent case of Dakota Central Telephone Co, vs, State

of South Dakota, 250 UL S8., 1635939 Supp. St., 907;

63 L. Ed., 910, which interprets the language of the

joint resolution of Congress and gives a definition to

the term ‘police regulations’; that it means the exer-

cise of the police power of the State in a restricted

sense, limiting it to that phase of the power whieh

deals with ‘health, safety and morals,’ and not in the

comprehensive sense which embraces the substance of

the whole field of State authority. The assumption

of control by the Postmaster General was complete,

and constituted a substitution of the Government for

the owners of the telegraph lines in the operation of

the same. The possession and control of the owners

was entirely displaced, and the act of negligence cow-

plained of was committed, not by the servants and

employees of the telegraph company, but by the serr-

ants and agents of the Government. There was no

liability resting upon the telegraph company for th

act of the Government and no such liability was cre-

ated by statute. * * *

“We see no escape from the conclusion that there

is no liability in this case for the injury complained

of. The judgment is therefore reversed, and the ac-

tion dismissed.” (Italics added.)

The question came before the Kentucky Court of Appeals

in Mitchell vs. Cumberland Tr lephone, ete., Co. et al., 188

Ky., 263; 221 8. W.. 547, which was a suit to recover for per-

sonal injuries received by plaintiff while assisting in unload-

ing some telephone poles from a car, and liability was held

not to exist, the court, aftersa full review of the cases, saying:

“As suid in the cases, supra, if suits of this kind

could be maintained under the circumstances, then

indeed could property be taken without any process

of law, since the only pretended claim to it would be

that the defendant owned the property which was be-

ing operated at the time of the happening of the in-

jury sued for though it was then entirely out of his

control and was taken without his consent. The fact

that the plaintiff might he remediless because there is

no provision for any suit against the United States

(although regrettable) cannot strengthen his case.

Numerous instances exist in this State where there is

no remedy furnished for similar injuries. No county

can be sued for negiigence in the maintenance of its

public roads; nor can a municipality, however negli-

gent, be made to respond in damages for injuries in-

Hicted while exercising a governmental function. In

neither of those cases is there as potent reasons for

withholding liability as exists in this case.

“The case of Witherspoon & Sons vs. Postal Tele-

graph & Cable Company, 257 Fed. Rep., 758 (de-

cided by the United States Distriet Court for the East-

ern District of Louisiana), relied on by appellant is

the only one announcing a contrary view, and it is ex-

pressly discarded by some of the cases, supra, and

was decided before the opinion of the Supreme Court

was rendered in the Dakota case. We do not, there-

fore, regard it as authority,

“From the foregoing authorities there seems to be

no alternative but to affirm the judgment, which is

accordingly done.”

Notwithstanding the broader scope and the more elaborate

provisions, including one respecting suits, of the congres-

sional legislation and the action pursuant thereto in respect

Sp Stic hae PoaU ig

SOARES Rip AO GPS: Sg RLS Doge ratte Seager tinal iA

to the transportation lines, the Federal decisions on Federal

control of railroads all establish the non-liability of the cor.

porations for the acts of the employees of the Director Gen.

eral. Hence they strongly sustain the position that the wire

companies cannot be held lable for the aets of the employees

and agents of the Postmaster General in his operation of the

properties for the United States, Reference will be made to

a few of these decisions.

Thus in Rutherford vs. Union Pacifie R. Co. 254 Ved,

880, we find this statement:

“Tt would have been an anomaly to have given thi

actual control of the railroads to the Director Gen.

eral, and to have provided that suits arising out of his

acts should be brought against the corporations who

had been divested of authority over those acts.”

And in Mardis vs, Hines, 258 Ped... 945, the court save

“From the time that the proclamation of the Presi-

dent became effective on December 28, 1917, the Di-

rector General as the representative of the President

has been in the exclusive possession and control of the

railroad. The railroad company exercises no contro!

whatever. The railroad is operated under the orders

of the Director General, The railroad company ha-

nothing to do with such operation, When the Direc:

tor General assumed control all the employes on th:

railroad ceased to be cmploves of the railroad com.

pany and became employes of the Director General

At that time the relation of master and servant ccoased

to exist between the employes operating the railroad

and the railroad company. That relation then began

and still exists between such employes and the Di-

rector General.

* * * * + * +

“In my opinion the judgment sought to be recov:

ered against the railroad company is) inconsistent

with the acts of Congress and the order of the Presi-

dent.”

Again, in Hatcher & Snyder vs. Atehison, ete.. R. Co.,

258 Bed., 952, we find this ruling:

“Since the opinion in the North Dakota case there

is no further doubt as to the extent of the power given

the President by the congressional acts, * * *

Ve know, as a matter of public information, that the

construction there given as to what was intended by

Congress should be done has in fact been done, The

railroad companies have been entirely excluded from

participation in the operation of their properties,

They receive none of the income from them, — [t goes

to the Government. They have no voice in the em-

ployment and discharge of men engaged in the up-

keep and repair of their roads and rolling stock, and

the operation of trains, All of their properties, of

every kind, needful for transportation purposes have

been taken over by the Government, and their pos-

session and operation rest in the exclusive control of

the Director General.”

Further, on page 954, the court says:

“Certainly there is no power in Congress tu make A

liable and suable for the acts of B. Fundamental

principles of justice cannot be overturned hy legis-

lative fiat, to say nothing of constitutional guarantees,

Non-hability of the company was sustained at nisi

prius in Schumacher vs, Pennsylvania RR. Co. 175

N.Y. Supp. 84. The construction of the act there

given is in accord with that in the Dakota case, and

the reasoning on which the conclusion was reached

appears to me sound.” (Italics added.)

In Haubert vs, Baltimore & Ohio R. Co., 259 Fed., 361,

it is said:

“It is now conclusively settled that coluplete pos

session and control of ail such railway lines us are

under Federal control, and not a divided possession

und control, have been transferred to the United

States by virtue of the act of August 29, 1916 (Comp,

Stat., see. 1974a), the proclamation of the President

th S Fag PORN BIAS:

of December 26, 1917 (Comp. Stat. 1918, see.

197da), the act of March 21, 1918 (Comp, Siat.,

ITS, see, STLO8 4a, and following sections), and the

President's proclamation of March 29, 191s. qj

seems equally clear that all lability for all actions of

the Director General of Railroads during Federal

control is imposed upon the United States, and does

not remain upon the railroad company, Which has

thus been entirely ousted from: the possession, control

and operation of its property,

mn moneys and other property derived from the

operation of railway lines under Federal control ure

the property of the United States,

* * * * * * *

“Manifestly it seems to me that in view of these

conditions no liability exists against the railroad com-

pany itself for a personal injury due to operation

under Federal control, and that no judgment can be

rendered therefor which will become a lien upon the

corpus of its property or payment compelled there-

from.” (Italics added. )

And on page 364:

S58 2 8 Sa PEER RE BS OE SEL

“My conclusion is that liabilities due to operation

by the agencies having possession by virtue of the

acts creating and authorizing Federal control are not

liabilities of the railroad companies that have been

ousted from such possession and control, that suits

cannot be brought against such companies and prose-

cuted to judgment against them, and that such

claimants are limited to a right of action against the

Federal control agency and to such sources of pay-

ment as are provided by the Federal Control Act.”

(Italics added. )

Again, in Nash vs. Southern Pacific Company, 260 Fed.,

280, we find, quoting from page 284:

“As the terms of the act at once disclose, it was the

purpose and intent of Congress that the possession

and control of the systems of transportation taken

over in whole or in part by the President was to be

an exclusive one, to no extent shared in hy the owners,

If the latter or their oflicers were retained as oper-

ators, they were to act merely as servants and under

pay of the Government; and while the owners were

to be compensated for the use of their properties,

everything earned or accruing from their operation

in excess of such compensation was to be the property

of the Government, Such a taking involved in no

sense the element of ageney by the Government for

the owners, Agency implies a consentual or con-

tractual relation, but this was not such. It was more

nearly analogous or akin to a taking by the sovereign

in the right of eminent domain; and the result of

such a taking was necessarily to relieve the owners

of systems so taken from any le gal responsibility to

the public arising out of their operation, and quite as

necessarily an assumption of such responsibility by

the Government.” (Italics added. )

And on page 287:

“But that it was intended as the purpose of section

10, as urged by plaintiff, to authorize suits against tie

owners of these properties in causes of action arising

out of transactions had with the Federal Railroad Ad-

Ininistration, or through torts committed by its agents

while under its control—things for which, we repeat,

the owners could be in no way responsible—may not

for a moment be indulged: such a construction would

clearly render the provision obnoxious to the objec-

tion of authorizing the taking of property without

due process of law, a purpose which may not be im-

aed to Congress.”

Minally, in Westbrook vs, Director General, 263 Fed., 211,

it is said:

“The effect of the President's action and this act

Was not to take over the corporate owners of the trans-

portation systems or their franchises, but only their

properties. Postal Telegraph Co, vs. Call, 255 Fed.,

SHO; — COL AL. The persons who had been

officers and employes of the owning companies couse

In general to be such and became agents and eniployes

of the Director General, Service of process tipo

them ne longer bound their former employers,

Southern Cotton Oi Co, vx, AOL RR. Co, (De)

247 Fed. 188: Wood ox, CTyde 8.8. Co, (D, C.), 257

Bed, S79 The Federal control was exclusive and

complete. Northern Pacitie Railroad Co, evs, North

Dakota, 250 U0 S8,, 185; 39 Sup. Ct, 502; 68 1. Bd.

SUF. Plainly, therefore, railroad operations beeane

those of the United States, no matter in whose tare

carried on, They were for months carried on over

each line of railroad in the name of its owner. bat

these names were all aliases of the United States. The

Inevitable confusion of names with rights occurred,

and the Director General issued his General Orders 30

and 50a, directing suits to be brought against his of.

fielal titie, and providing, perhaps unnecessarily, for

service on his agents,

“Since the owning companies could no longer eon.

trol, the railroad officials and employes were not their

agents, and the eonpanies could not be held for their

acts, Brady vs, C&G, WOR, RCo. WA Ped... Lou.

105, 107; 52 C. C. A., 48; 57 UL. R.A. 712.) The

United States owned what was carned, and they alone

could be treated as the business operator of each raii-

road.’ (Ttalies added, )

In the case of Brie R. Co. et al. ve. Caldwell, 264 Fed.

‘M7, which Was a joint suit against the railroad company

and the Director General, the railroad company moved for a

directed verdiet in its favor at the close of the evidence, which

metion Was refused, On writ of error, the Cireuit Court of

Appeals reversed the ruling, saying:

“The trial court should have sustained this motion

and distnissed the Erie Railroad Company from the

suit. The Director General of Railroads having lav:

fully taken full possession and control of this con-

pany s property, the company itself could not be held

liable for negligence resulting in injury to employees

or others during the time its property was being oper:

ated hy governmental agencies over which it had no

control.” (Ttalies added. )

Our research discloses only two cases asserting the right to

sue and recover against the wire corporations on causes of

action accruing during the period of Federal control, viz

Witherspoon vs. Postal Telegraph, ete,, Co., 257 Ped., 75s,

and Spring vs. American Telegraph, elec. Co, (W. Va.).

103 8. B., 206, .

The Witherspoon ease was a suit for damages for delay in

delivering a cablegram. The court recited that the Presi-

dent's proclamation direeted that the corporation's employees

should continue the operation of the lines in the usual Way

in the names of the owners or managers, as the case might be,

and admitted that neither in the joint resolution nor the

proclamation of the President was there a provision. similar

to section LO of the act of Mareh 21, 1918. taking over the

railroad systems of the country, but said:

“Tt seems to me, however, that it was the intention

of Congress, in authorizing the President to take over

the lines, that the companies should go ahead with

private business the same as theretofore, This would

contemplate the institution and defense of suits. Uf

the company is allowed to take and send private mes-

sages, there should be some method of holding it liable

for damages occasioned through negligence, netwith-

standing the Postmaster General had the direction

and control of the company. See Postal Tel. & Cabli

Co, vx, Call, Dist, Judge, 255 Fed. Sav. c. ©.

A., —.

“The joint resolution provides for just compensa

tion to the companies and the method of settling dis-

putes as to same between them and the Government.

If the companies are held for damages occasioned

while under Government control, compensation will

certainly extend to reimbursement. In the meantime

litigants should not be delayed in liquidating their

claims. Therefore I think it proper that the plaintiff

in this case should be allowed to establish his liability

against the company, if there is any, Delay in the

trial of the case may result in hardship to either side.”

At the outset, we direct the court's attention to the facet

that the case relied on, Postal Telegraph-Cable Company vs.

Call, 255 Fed., 850, in no way supports the conelusion

reached, That case was an application for a mandamus

against a United States district judge to require him to hear

and determine a controversy between a telegraph company

and a railroad company for the condemnation of a right of

way for a telegraph line upon and along the right of way of

such railroad company, the condemnation proceeding hay-

ing arisen subsequent to Federal control. ‘The Cireuit Court

of Appeals for the Fifth Cireuit directed the mandamus to

issue. In the course of its opinion, the court expressed the

view that under section 10 of the Federal control act, a plain.

tiff had a right to recover a judgment against a carrier com-

pany. ‘This construction was subsequently distinetly repudi-

ated by the action of the Direetor General in: promulgating

General Orders 50 and 50¢@ and, as shall be later shown in this

brief, it leaves out of view entirely the constitutional objec-

tion to giving such meaning to the aet. But aside from all

this, section 10 did make provision for suit, while the joint

resolution contains no such authority, hence a construction

based on a statute of one kind ts totally inapplicable to a

statute of a wholly different nature.

The opinion in the Witherspoon case, whieh, as a matter

of fact, attempts no real discussion of the issues, is based on

two assumptions, viz: (1) that the company aecepted the

message, and (2) that it was the intention of Congress in

authorizing the taking over of the lines “that the companies

should go ahead with private business the same as thereto

fore.” If these premises are sound, the conclusion deduced

therefrom as to the right to bring suit respecting matters in-

volved in the business so privately conducted by the com-

panies may also be sound, But what the premises really

assume is that the status existing between the wire companies

and the United States by virtue of the congressional and

presidential action was a “mere public supervision of an

operation by private owners,” and not a “complete assump-

tion of absolute and complete possession and control” by the

United States, “to the exclusion of every private interest.”

When this court in the North Dakota case and the Dakota

Central Telephone Company case denied the theory of a

supervised private control and asserted the faet of a complete,

absolute, and exclusive possession and control by the United

States, it swept away the entire basis of the decision. because

a company that had been exeluded from every vestige of eon-

trol over and all participation in the operation of its system

not only did not and could not accept a message for transmis:

sion, but did not and could not conduct the telegraph busi-

ness. Henee, when the premises fail, the conclusion deduced

therefrom must likewise fail,

This view of the value of the ease asa precedent, in the

light of the rulings of this court above referred to, finds

judicial sanction in Canidate vs. Western Union Tel. Co.,

supra, and Mitchell vs, Cumberland Tel. & Tel. Co. et al.,

supra,

The additional deduction made hy the court in the Wither-

spoon case from the provision in the joint resolution as to

compensation to the companies, that the corporations whose

lines were seized might be held liable for the vets of the em-

ployees of the United States, and would presumably receive

reimbursement from the Government for any damages paid

upon sueh judgments, is Wholly illogical. It is settled by an

unbroken current of decisions of this eourt. to which we shall

have oecasion hereinafter to refer, that the sovereign is ex-

empt from suit, exeept where consent to bring such suit has

been expressly granted by Congress, Therefore, if the Goy-

ernment itself is not suable under the joint resolution, the

corporation held liable for the act of the Government's em-

are

ployee would have no right of action against the Govern-

ment. The immunity of the Government from suit would

extend equally to sit against it by the corporation which

paid damages to an individual for an act of the emplovee of

the Government in the control and operation of such corpora-

tion’s property, and for the simple reason that Congress has

not seen fit to grant in the joint resolution such right of suit

against the Government; and if the Government be tmiune

from suit, how could the corporation obtain reimbursement

from the Government through a settlement of accounts of

the Government's transaction of business on the corporation's

lines? In such aecounts the corporation could assert no

claim against the Government not enforcible by law.

In the acts taking over and providing for the operation of

the railroads, express provision, as we have seen, was made for

the bringing of suits against the owner corporations; vet by

administrative order fully authorized by the legislation, this

provision was deliberately superseded, for the reason, as de-

clared therein, that such corporations could not be responsible

for the acts of the United States. But if the transportation

corporations could not be held personally responsible for the

acts of the Government where an act of Congress expressly

declared they could be so held, how can the wire companies

be held personally responsible therefor under a statute that

not only does not, but, as we have seen, it was deliberately in-

tended should not, make them so liable? — Liability cannot

he created by legislation by implication if it cannot exist by

legislation expressly enacted: henee, we cannot have the

anomaly of a right of action against the wire companies im-

pliedly existing, notwithstanding the silence in’ reference

thereto of the legislation authorizing the taking of their

properties, and no right of action against the transportation

companies, even though expressly provided for in the legis-

lation taking over and directing the control of their proper-

ties. These considerations render further discussion of the

_——_

Witherspoon case unnecessary, as they fully demonstrate its

unsoundness.

The other case contra, Spring vs. American Telegraph &

Telephone Co., was a suit to recover damages for an injury to

plaintiif’s automobile, resulting from a collision with one of

defendant's motor trucks on a highway, which the complaint

alleged was due to the negligence of the defendant, through

its agents, in the management of the truck. The defendant

demurred to the complaint on the ground that at the time of

the accident its entire system was in the possession of and

being operated by the United States, and hence no liability

existed against it. The demurrer was overruled, and on ap-

peal this ruling was sustained. In the course of the opinion,

reference was made to the exclusiveness and completeness of

Federal control of the systems as established by the North

Dakota case and the Dakota Central Telephone Company

case, and to the fact that predicating their rulings thereon,

the courts of Arkansas, Alabama, and Texas. respectively, in

Western Union Tel. Co. vs. Davis, supra; Canidate vs. West-

ern Union Telegraph Co., supra, and Western Union Tel.

Co. vs. Wallace, supra, had denied liability of the corporation

for negligent delay in transmitting telegrams during such

control. The court then stated that as the wrongs there com-

plained of grew out of transactions directly involved in

Federal operation, these decisions were perhaps sound, but

that they were inapplicable to a case against the corporation

for an injury inflicted by it in the use of its property during

Federal control. As the facts of the instant case bring it

within the class of cases directly referred to as arising out of

Federal operation, and as the court refused to rule on the

soundness of the cases denying the right to sue the corpora-

tion under such conditions, the Spring case Inay properly be

regarded as having no application.

The case was heard on a demurrer to a complaint which al-

leged use of the motor truck in construction, maintenance,

and repair, and the only point really decided was that there

TT ome era a aie sii shots Sein i

was nothing to show that the truck was not rightfully ae-

quired by the corporation subsequent to the seizure of its

properties by the Government, and was not being rightfully

used by it in and about its own (dep ndent business when

the aceident happened. Obviously, this is no holding that

the corporation was liable for a transaction involved in Goy.

ernment control and operation, but only a holding that if the

corporation, which did not cease to be an entity when the

Government took over its property, afterwards aequired other

property and by means of it inflicted injury while about its

own independent business or while trespassing Upon the do

main of the United States, it would be lable therefor. I

may well be that the court, in view of the fact that the proe

lamation took over not only the systems. but all “equipmen

thereof and appurtenances thereto whatsoever,” and the fur

ther fact that a corporation without either business or the

means of doing business would not likely be engaged in an

kind of work with a motor truck for which it could be liable

was wholly unwarranted in the presumptions it indulged t

save this complaint from demurrer: vet conceding that it

action in this regard can be sustained, still it is no authorit

whatever for a recovery under the circumstances of the pres

ent case.

Neither the congressional nor the presidential action

therefore, affords any warrant, cither express or implied, fo

holding the owner wire corporations liable for the acts of th

employees and agents of the United States while the system

of such corporations were in the possession and control ¢

and being operated by the United States.

But the conclusion thus reached, that the asserted labilit

is not supported by anything found in either the congre

sional or the presidential action, does not finally dispose

this branch of the case. Indeed it has been contended, or ¢

least assumed, in some quarters that the wire corporation

being common carriers existing and operating by virtue

State laws at the time the United States commandeered the

properties, owed such a duty to the public of the States in

which they existed and operated that they could not be ren-

dered exempt by any action of Congress and the President

from liability to the public for the aets of the Government of

the United States while sueh Government possessed, con-

trolled, and operated their systems, Predicating the argu-

ment on this supposed absolute duty and responsibility to the

public inherent in the Very nature und constitution of a

common earrier, it is reasoned that the relation between u

wire corporation and the United States resulting from the

taking over of its properties was that of lessor and lessee, prin-

cipal and agent. or something similar, and that in any event

the ability of the corporation for the acts of. the United

States is absolute. This was the view of the learned trial

judge in the court below, as will be seen by reference both

to his reasons given for refusing to direct a verdict and to

his charge to the jury (Transcript, pp. 52-53). The un-

soundness of these views can best be demonstrated by first

considering the basis on which they rest, viz: the supposed

absolute duty of a common carrier as a State corporation to

render at its own responsibility service to the public and the

asserted want of Federal power to alter or interfere therewith ;

for if this be unsound all the deductions made therefrom

are likewise unsound.

We freely concede that both telegraph and telephone com-

panies are common carriers, having been expressly made so

by section 1 of the Interstate Commerce act as amended by

the act of Congress of June 15, 1910 (36 Stat. at L.. 544).

We further concede that when a telegraph company is

chartered by a State or being chartered is authorized to do

business therein, and it actually engages in such business, it,

a a common carrier, owes a duty to render adequate and

prompt service to the publie without discrimination. and pub-

lie policy forbids that it be allowed to divest itself of its re-

sponsibility in this regard created by virtue of its franchise,

and shift it either to its lessee or to its agent. But while

aes

such is the measure of the responsibility of a telegraph com-

pany as a common carrier and the extent of its powers in

respect to aetions taken of its own volition, vet it must be

quite obvious that they have no application where the com.

ton-law duty and the corresponding common-law liability

are Hot sought to be either evaded or avoided by the voluntary

vet of the commen carrier, but have both been either dis-

placed or suspended for the time being hy the action of the

United States as the paraincant sovereign exerting its consti-

tutional powers in time of war.

To assert that the obligations and responsibilities of a com-

Hon Carrier so inseparably inhere in its very being that the

power of the United States is not such as to reach to and sus-

pend or supplant them is but to deny the supremacy of the

United States over these agencies created by State action,

But under article 1, section S. of the Constitution, Congress

is not only given the power “to declare war” and “to raise

und support armies,” but also “to make all laws which shall

be neeessary and proper for carrying into execution” these

powers. Hence, during the existence of war, Congress. un-

der the Constitution, possesses plenary power to use in the

common defense the entire resources of the nation, both of

men and materials, and to State possesses the authority to

create an entity and impose upon it such duties and obliga-

tions as to place its properties beyond the reach of this cousti-

tutional war power of the United States. But if the United

States exerts the power to reach out and seize, ie caesium,

the system of any common carrier corporation created and

existing by virtue of State law, and to use it in the national

defense, necessarily by such exertion it reaches to, and sus-

pends and supplants for the time being, the duties and obliga-

tions owed by such common carrier to the public, for it is

inconceivable that these should still subsist when all ability

to discharge them has been taken away under paramount

authority.

These conclusions are fully vindicated by the decisions of

this court. Thus, in the separate opinion of Chief Justice

Chase in Ex parte Milligan, 4 Wall., 2 (18 L. Ed., 281).

it is said:

“Congress has the power, not only to raise and sup-

port and govern armies, but to declare war. It has,

therefore, the power to provide by law for carrying on

war. This power necessarily extends to all legisla-

tion essential to the prosecution of war with Vigor and

success, except such as interferes with the command

of the forces and the conduct of campaigns. That

power and duty belong to the President. as Com-

mander-in-Chief. * °

“The power to make the necessary laws is in Con-

gress; the power to execute in the President. Both

powers imply many subordinate and auNiliary powers.

Kach includes all authorities essential to its due exer.

cise.”

Again, in the Legal Tender Cases, 12 Wall., 457 (20 1,

Ed., 287):

“It is absolutely essential to independent national

existence that government should have a firm hold on

the two great sovereign instrumentalities of the sword

and the purse, and the right to wield them without

restriction on oceasions of national peril. In certain

emergencies government must have at its command.

not only the personal serviees—the bodies and lives-—

of its citizens, but the lesser, though not less essential.

power of absolute control over the resources of the

country. Its armies must be filled. and its navies

manned, by the citizens in person. Its material of

war, ifs munitions, equipment, and COMM SSary

stores, must come from the industry of the country.”

(Italics added. )

Virtually this same denial of national power to displace

State authority respecting the duties and responsibilities of

common carriers was made in all of the cases involving th

nght of the United States, while possessing and operating

their systems, to make and enforce intrastate rates, and was

conclusively answered by the unanimous judgment pro-

nounced by this court in the North Dakota case, supra.

There it was argued that since State control over rates was

the rule prior to Federal control, the statute must be inter.

preted in the light of a presumption that no change in State

control had been made. Answering such contention, this

court said:

“The presumption in question but denied the power

exerted in the adoption of the statute, and displaced

by an imaginary the dominant presumption which

arose by operation of the Constitution as an inevitable

effect of the adoption of the statute, as shown by the

following :

“(a) The complete and undivided character of the

war power of the United States is not disputable.

Selective Draft Law cases (Arver vs, United States),

245 U. S., 366; 62 L. Ed., 352; L. R. A., 1918C, 361:

: 38 Sup. Ct. Rep., 159; Amn. Cas. L9TSB, 856; Ex

: parte Milligan, 4 Wall, 2; 18 L. Ed., 281 Legal

Tender Cases, 12 Wall., 457; 20 L. Ed., 287: Stewart

vs. Kahn (Stewart vs. Bloom), 11 Wall., 498; 20 L,

Ed., 176. On the face of the statutes it is manifest

that they were in terms based upon the war power,

since the authority they gave arose only because of the

existence of war, and the right to exert such authority

was to cease upon the war's termination, To inter

pret, therefore, the exercise of the power by a pre-

sumption of the continuance of a State power limit.

ing and controlling the national authority was but

to deny its eristence, Wt was akin to the conten-

tion that the supreme right to raise armies and use

¥ them in case of war did not extend to directing where

: and when they should be used. Cor vx, Wood, 247

a U.S., 3; 62 L. Ed., 947; 38 Sup. Ct. Rep., 421.

“(b) The elementary principle that, under the

Constitution, the authority of the Government of the

United States is paramount when exerted as to sub-

jects concerning which it has the power to control, is

indisputable. This being true, it results that al-

;

‘

‘;

Te Nie of

“a

though authority to regulate within a given sphere

may exist in beth the United States and in the States,

when the former calls into play constitutional author-

ity within such general sphere the necessary effect of

doing so is, that to the extent that any conflict arises

the State power is limited, since in case of conflict that

which is paramount necessarily controls that which is

subordinate.

“Again, as the power which was exerted was su-

preme, to interpret it upon the basis that its exercise

inust be presumed to be limited was to deny the power

itself. Thus, once more it comes to pass that the

application of the assumed presumption was in effect

hut a form of expression hy which the power which

Congress had ererted was denied. \n fact, error aris-

ing from indulging in such erroneous presumption

permeates every contention.” (Italies added. )

To the same effect are:

Nelective Draft Law cases, 245 U, S., 366 (62 L. Ed...

349),

Cor vs, Wood, 247 U.S, 3 (62 L. Ed., 947).

Dakota Central Tels phone ('o, vs, South Dakota ex

rel. Payne, 250 U. S., 163 (63 L. Ed., 910),

Commercial Cable Co. vs, Burleson. 255 Fed., 99.

Southwestern Tel., ete., Co. ve. Houston. 256 Fed.,

690,

Castle vs, Southern BR. Co.. 112 8. C., 407: 99 S. FE.

RAG,

As illustrative of the efforts in some jurisdictions to hold

the transportation companies liable on this theory of their

absolute and inherent duties to the publie as common car-

rers, attention is directed to three recent eases in the Supreme

Court of North Carolina, viz: Hill vs. Director General, 178

N. C., 607; 101 S. E., 376; Clements vs. Southern R. ('o.,

179 N. C., —; 102 S. E., 399, and Gilliam vs. Atla) tic Coast

Line Railroad (o., 103 8. ., 10.

In the Hill case the railroad company and the Director

(reneral were sued jointly, and it was held that a cause of

action Was stated against the corporation alone and that the

Director General was “only a party as having control and

management of the defendant road sued.” The ground

of the ruling was based on the assertion that as the lessor

the carrier was liable for the acts of its lessee, the United

States.

The Clements case, which was also a suit against the rail.

road company and the Director General, held that under see.

tion 10 of the Federal control act of March 21, 1918, the

corporation was liable to be sued, that the Director Genera!

was “to be considered a party only as being in the manage:

ment and control of the defendant railroad,” and that thy

Director General was “simply in effect a statutory receiver ap-

pointed by the President under authority of the act of Con-

gress.” It was further held that by the contract concluded

between the railroad company and the United States, the

status of lessor and lessee was created, with consequent

liability to the railroad as lessor for the lessee’s acts.

The Gilliam case was likewise a joint suit against the rail-

road company and the Director General, and the court went

so far as to hold the railroad system was not seized by the

Government in /nritum, but was taken over by contract, and

that under such contract the railroad lessor was liable for thi

acts of its lessee.

Two of these cases. [77/7 and Clements, assert that the D-

rector General had merely succeeded to the management and

control of the defendant railroad corporation, and therefor

he was merely a nominal defendant on the record. This i

but a restatement in different form of the fallaey underlying

all the cases affirming liability of the corporation for the aets

of the United States, namely, the assertion of mere Federa

supervision of an operation by the owner corporations as dis

tinguished from an absolute, complete and exclusive assump

tion of possession and control of the properties of such cor

porations and the operation of such properties by the agents

of the Government to the complete exclusion of the corpo-

rations. Under the principles adjudicated by this court in

the North Dakota case and the Dakota Central Telephone

Company case, the Director General never was for a moment

in the control and management of the defendant railroad

company, but was only in the control and management of ita

property. It is quite true, the corporation did not, by the

congressional and presidential action, cease to exist as a sep-

arate entity, but it is equally true that it ceased to function

asa common carrier, Thus in Rutherford vs. Union Pacific

Railroad Company, 254 Fed., 880, it is said:

“From and after the taking of possession of. the

railroads by the President, the corporations or pe PROWUS

who had previously controlled them evased their

functions and obligations as CAPPIERS. While goods

and passengers continued to be carried, the carriaze

was conducted by the Director General, The acts of

the former officers and employees who retained their

positions and conducted the details of operation wer

the acts of the Director General.” (Italics added.)

Again, in Nash vs, Southern Pacific Company, 260 Fed.,

280, we find:

“What was authorized by this legislation to be

taken under Federai control was specific property

that is, solely the transportation systems of the coun-

try—and that was all the proclamations of the Presi-

dent assumed tu take into his control, The corpo-

rations owning these properties were not taken, they

were left untouched and free to continue their fune-

tions as such in all respects other than in the oper-

ution of their carrier systems.” (Italies added.

Hence the ground first asserted as a basis of liability on the

part of the carrier corporation must fail.

Nor is there any more of merit in the ground that the

status between carrier corporations and the United States,

resulting from the congressional and presidential action, was

in effect u lease by the corporations tu the United States and

that on common-law principles governing common carriers

the corporation lessors are liable,

No question is or can be made as to the want of power in

a common carrier to relieve itself of its duties and liabilities

to the public, for as said by this court in Washington, ete,

R. Co, ve. Brown, 17 Wall, 445 C21 1. Bd. 675):

“Tt is the accepted doctrine in this country that a

railroad corporation” (and we may add, any common

carrier) “cannot escape the performance of any duty

or obligation imposed by its charter or the general

laws of the State by a voluntary surrender of its road

into the hands of lessees, The operation of the road

by the lessees does not change the relations of the

original company to the public.”

The cases are collated in:

5 RK. C. L., p. 59.

10.C. J., 881.

In the Gilliam case the court declared that, “with very

few exceptions, the control and management of the various

railroads in this country were acquired by an actual lease

from each company,” which was a palpably incorrect state.

ment, as every court should take judicial notice of the fact

that the systems of both the transportation companies and

the wire companies were first actually seized and taken over

by the United States and thereafter contracts providing for

compensation, not voluntary leases, were entered into be

tween the companies and the United States, This was ex

pressly ruled by this court in the Dakota Central Telephone

Company case, supra, Disposing of the same contention the

Circuit Court of Appeals for the Second Cireuit in Arich-

man va, United States, 263 VFed., 538, said:

“The claim that the railroads were taken over in

pursuance of contracts made by the Director General

of Railroads is nut borne vut by the facts, The con

tracts were we rely agreenien ts for CONLpt nasation made

under the Federal control act of Mareh 21. 1918."

(Italics added.)

But the principle upon which a lessor carrier corporation

is held liable for the acts of its lessee is that in accepting a

charter such carrier assumes the performance of all duties to

the public imposed upon it by the charter or the general laws

of the State, and it cannot, consistently with public policy,

be permitted to absolve itself from such duties by voluntarily

transferring its chartered rights and privileges to another, in

the absence of statutory authority so to do,

Washington, ete., R. Co. vs, Brown, supra,

Central Trust Co, vx, Charlotte, ete., BR. Co,, 65 Fed.,

257,

Reed vs, Southern R. Co., 75 8. C., 162, and cases

cited,

It is thus apparent that this inability of the common car-

rier only obtains when its action is voluntary and does not

exist When the transfer is either (1) involuntary, or (2)

made under legislative authority. In the instant case, how-

ever, the telegraph company had no choice whatever in the

matter, for its property was seized in invitum by, and it was

compelled tu contract in regard to compensation therefor,

willingly or unwillingly, with the sovereign Government of

the United States, an authority paramount to the State from

which the carrier received its franchises, and which in thus

acting Was but exerting its constitutional power to utilize the

material resources of the country in a time of national peril,

This predicating of carrier liability on a supposed relation

of lessor and lessee created between the carrier and the Gov-

ernment, as was so well pointed out by this court in dispos-

ing of a similar contention in Northern Pacific Railroad Co.

v8. North Dakota ex rel, Langer, and Dakota Central Tele-

phone Co. va, South Dakota ex rel. Payne supra, is but an-

other way of asserting that the authority of the United states

in taking over the transportation, telegraph and teleplione

lines was net exclusive and unlimited, but that State control

existed to the same extent and over the same tiatters as liad

existed prior to the asstmption of coutrol by the Federal Gov.

ernment. As was stated by the Chief Justice in the Vorth

Lakota case, this errotivous assumption of continued State

control permeated every contention made i that case as well

as in the Dakota Central Telephone case, and the court held

that the control, possession and operation by the United

States Was complete and exelusive and free from any linita-

tion or restriction Whatever by the States. The conelusion

so reached in these cases ix utterly incompatible with any

idea of linbility on the part of the corporation for the wets

of the Govertinent committed: in its sovereign capacity,

If the relation between the United Stutes and the telegraph

company Was terely that of lessor and lessee, or principal

ond agent, this would be a simple question of contract and

the authority of the United States as the lessee or agent would

be wholly derivative and could rise no higher than its source,

namely, the will of ite lessor or principal Assuming sueh

to be the relation between the Government and the telegraph

company, it is manifest that such contract could have been

terminated by the lessor or principal at any time, and if in

properly terminated the only redress left to the United States

would have been an action for damages, In other words, the

application to the relation between the parties of the rules

applying to ordinary contracts between lessor and lessee, ot

prineipal and agent, would have left it wholly within the

power of the telegraph company to destroy at any time the

Government's control and operation thereof. But, as ha

Leon seen, this was not the relation between the United States

and the company. On the contrary, the United States, act

ing under the supreme and paramount war power created by

the Federal Constitution and called into play by the aet of

Congress, assumed a complete und exclusive supervision, pos

session, control and operation of the telegraph companies

systems, Which could not be in any way affected or interfered

with by such telegraph companies, not only for the duration

of the war but until “the date of the proclamation by the

President of the exchange of ratifieations of the treaty of

peace,”

In the case of Commercial Cable Company vs, Rurleson,

255 Fed., 99, the cable company questioned the authority of

the President to take the supervision, possession, control ane

operation of its lines, but this contention was denied. the

court saving that under the war powers granted to the Presi

dent, he had the right to condemn, as it were. the property

of the cable company for the use of the Government in prose

euting the war to a suecessful conclusion

\nd in Nash vs, Southern Pacifie Co., 260) Fod.. 280. we

find this statement:

“As the terms of the act at once disclose, it was the

purpose and intent of Congress that the possession and

control of the systems of transportation taken over in

whole or in part by the President was to be an. ex-

clusive one, to no extent shared in by the owners, Tf

the latter or their officers were retained as Operators,

they were to act merely as servants and under pany ot

the Government; and while the owners were ta by

compensated for the use of thei properties, every

thing earned or accruing from their Operation in

excess of such compensation was to be the property of

the Government Such a tak mag involved in ne sense

the element of agency hy the Government for the

owners, Ageney implies a consentual or contractual

relation, but this was net such, 7f was amore nearly

analogous or akin toa taking hy the sovereign in thi

right of eminent domain: and the result of such oa

taking was necessarily to relieve the owners af ays

fems so taken from any legal responsibility to the

public arising out of their operation, and quite as

necessarily an assumption of such responsibility. by

the Government.” (Ttalies added.)

In other words, the act of the United States in taking over

the telegraph systems to be used as governmental agencies in

the prosecution of the war was in effect a condemnation of

such systems to the uses of the United States for the period

of the emergency, and the contracts subsequently entered

into between it and the various companies were but methods

‘of making the compensation required by the act authorizing

the condemnation. .

Crozier vs. Krupp, 224 U.S., 290 (56 L, Ed., 771).

Dakota Central Telephone Co. vs. South Dakota ez

rel. Payne, supra.

Krichman vs. United States, supra.

From these considerations it inevitably results that no re-

lationship of lessor and lessee existed, and hence no liability

can be placed on this ground.

It is next in order to examine the proposition that lability

‘an be based either on a relationship of principal and agent

existing between the carrier corporation and the United States

or on a relationship of master and servant existing between

such corporation and the agents and employees of the United

States in the management of the business.

Respecting the contention that the Government, in its con-

trol and operation of the systems, was acting merely as the

agent of the companies we find in Schumacher vs. Pennsyl-

rania R. Co., 106 N. Y. Mise., 564.175 N.Y. Supp.. 84. this

statement:

“The Federal Government, in the control and op-

eration of the railroad properties taken over, is in no

sense the agent or representative of the railroad com-

panies to whom the systems belong. * * * The

Federal Government, in the operation of the systems

taken over, acts as the principal and not as the agent

of the owners of the transportation system.”

wv)

And in Mardis vs. Hines, 258 Fed.. 945, the court declares

in reference to the alleged relation of master and servant:

“From the time that the proclamation of the Presi-

dent became effective on December 28, 1917, the Di-

rector General as the representative of the President

has been in the exclusive possession and control of the

railroad. The railroad company exercises no control

whatever. The railroad is operated under the orders

of the Director General. The railroad company has

nothing to do with such operation. When the Di-

rector General assumed control all the employees on

the railroad ceased to be employees of the railroad

company and became empiovees of the Director Gen-

eral, Af that time the relation of master and servant

ceased to exist between the cm ployees operating the

rairoad and the railroad company. That relation

then began and still exists between such employees

and the Director General.” (Italies added, )

Again, in Southern Cotton Gil Co, vs, Atlantic Coast Line

R. Co., 2507 Fed., 138, it is said:

“When the Director General assumed control, the

acts of the former officers and employees, who re-

tained their positions and conducted the details of op-

eration of the railroads, were the acts of the Direc-

tor General. Rutherford vs. Union Pac. R. Co. (D.

C.), 254 Fed., 880. Their employment bu the Di-

rector General made them exclusively the servants

or agents of the « mployer, There could be no di-

vided allegiance as agents of the railroad corporation

and of the Director General, so as to accomplish the

purpose of Congress. "The acts of Congress, the proc-

lamation of the President. and the general orders of

the Director General neither expressly nor by impli-

cation contemplated a dual agency of employees en-

geged in the operation of the railroads.” (Atalies

added. )

All of these rulings are fully supported by the decisions in:

Railroad Commissioners vs, Burleson, 255 Fed. 604.

Hlatcher& Nnyde rvs. Atchison, ete.. R. Ca., 258 led

952.

Hanhert vs, Baltimore & Ohio R. Co., 259 Fed. SAI.

Canidate vs. Western Union Tel, Co. (Ala.). supra,

Western Union Tel. Co. vs. Wallace (Tex.), supra,

Western Union Tel, Co, vs, Glover (Ala.), supra,

Western Union Tel. Co. ve. Davis (Ark. ) supra,

But whether the relationship of principal and agent, or of

master and servant, exists in a given case is always to he de-

termined “by ascertaining who has the power to control and

direct” the agent or servant in the performance of the work.

Stondard OW Company vs. Anderson, 242 UL8., 215 (531.

Md. 480). Or, as said by Judge Sanborn in delivering th

opinion of the Cireuit Court of Appeals in Brady vs. Chicaqo,

ete., R. Co, 114 Fed., 100; 57 L. R. A., 712:

“The power of control is the test of lability, under

the maxim respondeat superior. If the master can-

not command the alleged servant, then the acts of th

latter are not his, and he is not responsible for then

If the principal cannot control and direct the alleged

agent, then he is not his agent, and the prineipal is not

hable for his acts or his omissions. In such case the

maxim respondeat SU pe rior has no application, he-

cause there is no superior to respond. Tn an action

against an alleged master or principal for the act of

his alleged servant or agent under the maxim re

sponde at Rupe rior, there can he ho recovery in the ab

sence of the right and power in the former to com-

mand or direct the latter in the performance of the

act charged because in such a case there is no superior

to answer.” (Italies added.)

The same principle has been stated and applied by this

court in the following cases: |

New Orleans, ete., R. Co. vs. Hanning, 15 Wall., 649

(21 L, Ed., 220).

_—

Singer Mfg. Co. vx, Rahn, 182 UL 8., 518 (83 L. Bd.

440).

Chicago, ete., R. Co ox, Bond, 240 US... 449 (GO J,,

Ed., 735).

That neither the wire corporations nor their officers Jvad

any power whatever to comrol either the operation und man-

agement of the systems or iny of the agents or employees en-

gaged in such operation and management was strikingly ii-

lustrated by the action of the Postmaster General in connec.

tion with the control of the cable lines of the Commercial

Cable Company,

On November 2, 1918, the President, pursuant to the joint

resolution of July 16, 1M TS, issued a proclamation hy which

he took possession and assumed control of all of the marine

cable systems, this proclamation being practically identical

with that by which he assumed possession und control of the

land lines. Thereafter, just as in the case of the land lines.

the Postmaster General issued an order directing the oflicers,

operators and employees of the cable companies to continue

in the performance of their existing duties until further no-

tice, Subsequent to the issuance of this order, the Post-

master General, acting on behalf of the United States. de-

cided to effect a “unification in operation” of the cable Vs-

tems Under one managemert, and in order to carry out such

unification, directed that Mr, George G. Ward, Vice-president

of the Commercial Cable Company, and the operating head

of such company, assume the management and operation of

the systems. The officers of the Commercial Cable Company

refused to acquiesce in the directions of the Postmaster Gen-

eral, and by Order No, 2474, issued December 12, 1918. the

Postmaster General excluded Clarence H, Mackay, George G,

Ward, and William W. Cook, official heads of the Commer-

cal Cable Company, “from any connection with the super-

vision, possession, control or operation of any and all marine

cable systems or any part thereof, the supervision, possession,

control and operation of which was taken over and assumed

by the President,” and directed an officer of an entirely dif.

ferent company to assume the management and operation of

all the marine cable systems. This order will be found set

out in full as Exhibit “B" in the appendix hereto,

If the ofticers of the telegraph company, who had been

continued in the service during the operation of its lines by

the United States, had refused to carry out any similar orders

of the Postmaster General, they would have been removed

in the same manner as were these officers of the cable com.

pany. But if the United States had the right not only to

remove them from its service, but, in addition, to exclude

them from any connection with the “supervision, possession,

control or operation” of the systems, clearly neither the cor-

poration nor the officers thereof, through whom it must

necessarily act, had any power whatever to control the actions

of the United States or those of its agents, servants and em-

ployees. From this it results necessarily that there was no

power of control on the part of the corporation or its officers,

and hence nothing upon which to base liability.

It must therefore follow, under the facts as they exist,

in the light of the legal principles to which we have adverted

that any case that holds a carrier corporation liable for the

acts of the United States during the possession, control, and

operation of its property by the United States, on the theory

of a relationship of principal and agent existing between such

corporation and the United States, or a relationship of master

and servant existing between such corporation and the agents

and employees of the United States, is without foundation

in fact and without authority in law.

In the Clements case, however, the North Carolina court

asserted that the Director General was “simply in effect s

statutory receiver,” and from this drew the deduction that a

such he was “to be considered a party only as being in the

management and control of the defendant railroad.” Thi

so-called “statutory receiver” was then treated by the court

as a merely nominal defendant, and liability was adjudged

against the corporation,

The analogy between the Director General or Postmaster

General and a receiver, which seems to have been first sug-

gested in Rutherford vs. Union Pacific R. Co., 254 Fed., 880,

is, however, by no means perfect; the principal difference

being in the case of the Director General or Postmaster Gen-

eral, the enforced taking of all the property of the corpora-

tion at an enforced rental and an appropriation by the sov-

ereign taker to its own use of all revenues derived by it from

its operation thereof, and in the case of the receiver, the

taking over of the corporate business and affairs into the

custody of the court and there managing them for the sole

benefit of the corporation and its creditors.

But we concede there is sufficient analogy between the two

cases to make directly applicable to corporations whose prop-

erties are in the hands of the Director General or of the

Postmaster General, as the case may be, the rule administered

by this and the lower Federal courts as to the personal lia-

bility of the corporation for the acts of its receiver when by

the receivership it has been divested of all control over both

its property and those who operate it, under which rule the

result in the Clements case was entirely unwarranted.

In a recent text work, 23 R. C. L., p. 51, title Receivers,

sec. 54, the rule is thus tersely and accurately stated:

“The authorities agree that, in the absence of any

absolute liability created by statute, a railroad com-

pany whose road, with all its appurtenances, is in the

exclusive possession, use, and control of a receiver who

has power to employ, control, and dismiss all the

agents, servants, and employees engaged in its opera-

tion, is not liable for injuries resulting from the negli-

gence of the agents and servants of the receiver oper-

ating the road. The company, under such cireum-

stances, has no power to control either the receiver

or his employees. His possession is not that of the

company, but is antagonistic thereto. But the com.

puny is not relieved from: lability, unless the posses.

sion of the receiver is exclusive and the servants of

the road are wholly employed and controlled by tin.”

This court, in) Washington, ete, Re Co. ex, Brown, Vi

Wall. 445 (21 LL. do. 675), stated the law in these words:

“The operation of the road by the lessees does not

change the relations of the original company to the

public, Tt is argued, however, that this rule is not

applicable where the proceeding, instead of being

voluntary, is compulsory, as in the case of the transfer

of possession toa receiver by a deeree of a court of

competent jurisdiction, Whether this be so or not,

we are not called upon to decide, because if las never

heen held that the COM pay is relieved from Hiahility,

unless the Posse xxiou Di the receiver is exclusive and

the servants of the road wholly employe d and con

trolled by him. ln this ease the possession was tot

exclusive, nor were the servants subject to the re-

ceiver’s order alone, On the contrary, the road was

run on the joint account of the lessees and receiver,

and the servants employed and controlled by them

jointly. Both were, therefore, alike responsible for

the act complained of, and if so, the original company

is also responsible, for the servants under such an em-

ployment, in legal contemplation, are as much the

servants of the company as of the lessees and receiver.”

(Italies added. )

And Judge Lurton, in delivering the unanimous opinion

of the Cireuit Court of Appeals for the Sixth Cireuit, in

Memphis, ete. RCo. vs. Hoechner, 67 Fed, 456, said:

“The receivers, as such, are Hable for their negli

gent acts. soth to the public and to employees they

stand responsible to the full extent of the earnings re-

sulting from their management, and, under some cir

cumstances, the property itself may constitute a fund

whieh may be reached and subjected by those sustain-

ing injuries. But we know of no legal principle

ye)

which would justify a court in holding a corporation,

which is excluded from all control and management,

responsible for the torts of such receivers, or for the

negligent acts of their servants. The relation of mas-

ter and servant does not exist between the excluded

corporation and the servants of the receivers. If the

POSsession of the rPECEIVERS he exclusive, as Was the Case

under the decree appointing MeGhee and Fink, the

corporation can neither employ, discharge nor control

such servants; and it would be a gross injustice to say

that, under such circumstances, it should be liabli for

the conduct of servants which it neither employed nor

controlled,

“In High on Receivers the rule js thus stated:

“Since the receivers of a railway who are vested

with its absolute control and management are thus

liable for injuries resulting from negligence in oper:

ating the road to the same extent that the company

might have been liable, if would seem to he clear,

upon principle and in the absence of any absolute lia-

bility created by statute, that the corporation itself

cannot he held responsible for the negligence of SPT =

ants of a receiver operating the road. The receiver's

posse ssion is not the Possession of the corporation, hat

is antagonistic thereto, and the company cannot con-

frol either the receiver or his ¢ miploye oe. High. Ree.,

see, 396.

“This is in accord with the doctrine as stated hy

other text writers of repute: Rorer, Ro Ro. p. Soe;

Jones, Ry. Secur.. p. 285: Patt. Ry. Ace. Law, see.

134: Wood, R. R.. sees. 385-482.. The direet ques

tion has not often arisen for decision, but, when it has,

the courts have almost uniformly announced the doc-

trine we have stated. Metz vs. Railroad Co., 58 N.Y...

66: Turner vs. Railroad Co.. 74 Mo... GO4: Ntate vs.

Wahash Ry. Co., 115 Ind., 466; 17 N. EE. 909: God-

frey vs. Railroad Co., 116 Ind., 380; 18 N. E., 61:

Railroad Co. vs. Stringfellow, 44 Ark., 822; Railway

Co. vs, Dorough, 72 Tex., 111: 108. W.. 711: Meara

8, Holbrook, 20 Ohio St.. 145, 146; Thuriian vs,

Railroad Co., 56 Ga., 3876; Davis vs. Duncan. 19 Fed.

477. The principle upon which the doctrine rests is

that applicable to the liability of the lessor for the

torts of the lessee company when the lease is author.

ized by law. Arrowsmith vs, Railroad Co., 57 Fed,

178; Byrne vs. Railroad Co., 9 C. C. A., 666; 61 Fed,

605. When the possession or control is in faet ¢

joint one, the rule is otherwise, for the obvious reason

that the servants are the joint servants of two masters,

and each would be liable. But the cases making this

distinction recognize the general rule to be as we have

stated it. The nonliability of the corporation de-

pends upon the control being really and exclusively

in the receivers. Railroad Co. vs. Brown, 17 Wall,

445-450; Railroad vs. Jones, 155 UL S., 854; 15 Sup.

Ct., 186; Railway Co. vs. Johnson, 76 Tex., 4215 18

S. W., 463." (Italies added. )

To the same effect are:

Pennsylvania R. Co. vs. Jones, 155 UL S.. 388) (38

L. Ed., 176).

Landers vs. Felton, 73 Fed., 311.

Gableman vs. Peoria, ete., R. Co., 82 Fed., 790.

Baltimore & Ohio R. Co. vs. Burris, 111 Fed., 882.

Judge Lurton, in the quotation above made, has stated the

precise condition obtaining, according to all the decided cases

to which we have referred, between the United States and

these carrier corporations whose properties were taken over

and if exelusion from all control and management of. the

property, and all right to direct, employ, discharge, or con-

trol the servants, during a receivership, will render a. cor:

poration immune from suit on causes of action arising out

of the receiver's possession and operation, a fortior?, similar

exclusion will render these corporations immune from suits

on causes of action arising out of the possession and opera

tion of their properties by the United States through. th

Director General of Railroads or the Postmaster General.

So that from a critical analysis of the faets, and the appli

‘ation thereto of the controlling principles of law laid down

by this and other courts. we are foreed to conclude that

neither anything, express or implied, in the joint resolution

of Congress or the proclamation of the President, nor any

principle of the law governing common carriers, renders the

owner corporation liable for the acts of the United States not

performed in its behalf, or under its direction, control, or

authority, or for its benefit, and as to which it has no relation

of principal, master, or beneficiary, or in which it in no way

participates.

As was well said in the recent case of Blevins ve. Hlines,

264 Fed., 1005:

“On common-law principles, it goes without saying

that the carrier is not in the least de + responsible

for the injury, has no interest im the controversy, and

hence is not properly joined as a defendant.”

It therefore follows that the telegraph company having

been entirely eliminated from both the possession and opera-

tion of the property, and the United States being in absolute

control and dominion, even though exereising such control

through individuals who had been officers and agents of the

company but who had become agents of the United States.

this suit is noe more maintainable against it than it would

he against any other outside or disinterested person.

IT.

FEDERAL POSSESSION, CONTROL, AND OPERATION

OF THE TELEGRAPH SYSTEMS, AND LIABILITY OF

THE UNITED STATES THEREUNDER.

Under this head we consider these three propositions :

1. The acts and omissions complained of in the present

case were those of the United States, and not those of the

telegraph company : hence the United States is the real party

in interest.

2. The United States being the real party in interest, ay

thority to bring and maintain this suit indirectly against the

United States must be found in an act of Congress or it does

not exist,

4. The judgment herein is ineffective against the United

States, and, if effective at all, is effective solely against the

telegraph company,

These will now be considered in the order stated,

|. The acts and omissions complained of in the present

case were those of the United States, and not those of the

telegraph company, hence the United States is the real party

in interest,

Federal possession, control, and operation of the telegraph

svaterms commenced August 1, TODS, and ended August |

119 (Aet of July 11, 119, dt Stat. L., 157). The transae

tions out of which this suit arises were had on the 2d and si

days of October, LOTS CTranseript, pp. 23), henee they obyp

ously fall within sueh period of Federal possession, control

and operation, ‘The three telegrams, invelved were, 1

spectively, (1) a request for an offer on the cotten, (2) an

acthal offer, and OS) an aeeeptance of the offer, and the eon

tracts for the transmission and delivery of the first ane third

were entered into between Poston himself and the agent in

the telegraph office at Johnsonville, while the contraet 1

lating to the second was entered into between Poston’s broker

and the agent in the telegraph offiee in Charleston) and any

breach of such contracts by delay in the transmission and de:

livery of these telegrams Whereby Poston sustained loss a

alleged in his complaint resulted solely from the aets of now

feusance or misfeasanece of these and other agents and ser.

ints engaged in carrying on the telegraph business, [tis

true, these agents and servants prior to Federal operation may

have been agents and servants of the telegraph company,

since both the proclamation of the President and order No,

1788 of the Postmaster General continued all such ino the

wrvice; but when the United States assumed the absolute and

complete possession, control, and operation of the telegraph

system, it exeluded the telegraph company from all interest

and participation therein, and the company's former agents

and servants retained in the service ceased to be the agents

and servants of the telegraph company, and became solely

the agents and servants of the United States. This conelu-

sion results as a necessary corollary from the decisions of this

court in the Dakota Central 7 lephone Company case and the

North Dakota cane, supra, It is also expressly ruled in:

Railroad Commissioners vs, Burleson. 255 ed., G04

Mardis vs. Hines, 258 Ped. 045.

Hatcher & Snyder vs, Atehison, ete. Ro Co., 258 Ped.

952.

Haubert vs, Baltimore & Ohio R. Co., 259 Ped. Bol.

Southwestern Bell Tel, Co, vs, State (Okla).. 181 Pae ;

487,

Canidate vs, Western Union Tel, Co.. supra,

Western Union Tel. Co, vs, Wallace, xupra,

Western Union Tel, Co, vx, Glover. supra,

Western Union Tel, Co. ve. Davis, 218 8. W.. 833.

Mitchell os, Cumberland Tel, Co,, 221 8. W., O47

Further than this, the joint resolution embraced and the

action of the President exerted the right of the United States

hot only to take over the entire business, but the right of the

United States to appropriate as its own property all the

revenues arising from: its operation thereof, So that the ex-

cluded owner corporation had no connection with the eVstens,

ho control over the agents and servants, no voice in its mane

agement, no right to the revenues, all of these powers having

passed to the United States under an express agreement in the

“atute authorizing the taking of the properties to make just

compensation to the owner for the loss thereof.

—

This being the ease, manifestly the telegraph company

had no interest 1 the transactions whieh give rise to this suit,

but these were solely the concern of the United States, But

if this be true, then it would seem: that the United States. and

not the telegraph company, was the real party in interest,

That such must be the result is readily demonstrable,

The determining principle in ascertaining whe is the real

party in interest Wher the suit i= against officers or agents of

the United States, or concerns transactions with which the

United States is either connected or in some way interested

has been stated by this court in Minnesota va, Hiteheock, 185

U.S... 373 (46 L. Bad, 54), to be this:

“Now, the legal title to these lands is in the United

States, The officers named as defendants have no in-

terest in the lands or the proceeds thereof. The

United States is proposing to sell them. ‘Phis suit

seeks to restrain the \ nited States from: such sale, to

divest the Government of its tithe and vest it in the

State. The United States is, therefore, the real party

affected by the judgment and against which, in faet,

it will operate, and the officers have no pecuniary in

terest in the matter. [If whether a suit is one against

a State is to be determined not by the fact of the party

named as defendant on the record, but by the result

of the judgment or decree which may be entered, the

same rule must apply to the United States. The

queation whether the United States ix a party toa

controversy is not determined by the merely nominal —

party on the record but by the question of the effect

of the judgment or decree which can be entered,

(Italics added. )

The rule thus laid down has been approved and applied

by this court in the following eases:

Oregon va. Hiteheock, 202 Ul S., 60 (50 1. Bd., 085)

Kansas vs, United States, 204 U,S., 331 (51 L, Ed,

, O10).

Louisiana vs, MeAdoo, 234 t os.. 627 (58 L. Ed,

1506).

——

Applying t) is test to the facts of the instant case we have

this result: ‘Tie action is for breach of contract made with

the agents of the United States, hence the liability is that of

their principal, the United States, and if this he true, the

judgment recovered for such breach should be enforeible |

only out of the property of the United States, and particu-

larly the income earned by it from the telegraph business.

It therefore follows that while the telegraph company is

named ux the defendant on the record, the rights of the

United States affected by the judgment are such as to make

it the real party in interest. This conclusion is abundantly

sustained by the decisions,

In the case of Louisiana vs, MeAdoo, 234 U. S., G27 (58

L, Ed., 1506), the State of Louisiana, as a producer of sugar,

sought leave of this court to file a petition against the Secre-

wry and Assistant Secretary of the Treasury of the United

States to review their official judgment as to the rate of duty

to be exacted on importations of Cuban sugar. ‘The United

States contended in opposition that the suit was against it

and could not be maintained without its consent, Leave to

file was denied, this court holding that the effect of the suit

would be to “affect the revenues” of the United States, which

rendered it a suit against the United States.

The case of Wells va. Roper, 246 U, S,, 835 (62 L. Ed.,

755), was a bill in equity to enjoin the First Assistant Post-

master General from annulling a contract between the plain-

iff and the Postmaster General, acting for the United States,

for furnishing certain specially equipped automobiles to be

wed for a stated period in collecting and delivering mails in

the City of Washington, and from putting into effect in lieu

thereof an experimental combined sereened automobile or

wagon collection and delivery service, as contemplated under

an act of Congress dated March 9, 1914, The bill was dis-

missed, this court saying

been hee AS ei Phen LD

6 tet TE,

se.

Bins at Sis ae es Ses a

“The effeet of the injunction asked for would fave

been to oblige the United States to accept continued

performance of plaintiff's contract, and thus prevent

the inauguration of the experimental service con.

templated by the Aet of 1914—a direct interfere nes

with one of the PPOCESSES of govern ment, * ‘ *

That the interests of the Government are so dircetiy

involved as to make the United States a necessary

party, and therefore to be considered as in etlect a

party, although not named in the bill, is entirely

plain js (ttalies added. )

These two cases decided by this court cannot be distin-

vuished in principle on this point from: the instant case,

hence they would seem to be conclusive of it.

Ina number of the cases seeking to enjoin the charging

and collecting during Mederal control of all the carrier =v.

tems of tutrastate rates other than those prescribed by State

wuthority, the precise question has arisen and each time it

has been held that the United States was the real party in

interest. The court's attention is directed to a few of sueli

Causes,

In Public Service Commission es, New England Tele

phone _ete., Co.. 232 Mass., 465: 122 N. E., 567, the plaintitt

brought suit to enforce by injunetion iitrastate rates qiade

pursuant to State law, and the defendant telephone company

im its answer, infer alia, averred that the relief prayed would

in effect restrain the United States. This contention of the

defendant was sustamed, the court holding that the case on

this point was indistinguishable from Louwascana ve. Meddoo,

supra, and Wells vs, Roper, supra. On writ of certiorari) to

this court, the decision was aflirmed in WeLeod vs. New bLug-

land Telephone & Telegraph Co., 250 US, 195 (63 L. Ed.

-).

In Nouthwestern Bell Tele phone Co. vs, Oklahoma

(Okla.), ISL Pae., 487, the State brought suit to enjoin the

charging of tolls in excess of those authorized by State law.

The court denied the injunction, holding that the Postmaster

General was an indispensable party to the action, as the ef-

fect of the decree would be “to interfere with his operation

and control,”

In Railroad Commissioners vs. Cumberland T+ lephone,

te, Company and A. NS. Burleson, Postmaster General

(La.), — South., — (not vet reported), the plaintiffs ob

tained an injunction in the lower court preventing the cou

pany and the Postmaster General from enforcing intrastate

rates promulgated by the Postmaster General. On writ of

certiorarl to the State Supreme Court, the plea of the Post.

master General to the jurisdiction on the ground that the

suit Was against the United States was sustained, and the in-

junction dissolved, the court saving:

“The suit is clearly against the Government, and

the courts of the State are without jurisdietion

over it.” :

To the same effect are the rulings in:

State of Wisconsin vs. Wisconsin Tel. Co, (Wis), 172

N. W., 223.

Hlauhert vs, Baltimore & Ohio R. Co., 259 Fed., 56)

It is well settled that where, in a suit against an officer or

agent of the United States, the act complained of, considered

apart from the official authority alleged as its justification, is

the personal act of such officer or agent constituting a breach

of personal duty owed to the plaimtiff, the United States is

not the real party in interest, and the suit will He against the

officer or agent,

In re Ayers, 1283 US. 4480051 L.Ed. 216),

Roberts vs. United States, 376 US. 219 (44 1. Bad,

443).

Minnesota va, Hitchcock, (RH UL S.. 878 (46 1. Ed...

954).

United States ex rel. Parish vs. MeVeagh, 214 UL &..

124 (58 1, Ed., 936).

Houston ve, Ormes, — U.8,, — (64 L. Ed., —), de-

cided April 19, 1920.

ee :

we >

a Na ae

tad hea

This principle, however, is wholly inapplicable to the pres.

ent case. As this court held in the Dakota Central Tels.

phone Company case, when the United States took over the

wire lines and entered into the conduct of the telegraph busi.

ness it was operating such business “as a governmental

agency. "The contracts for the breach of which this suit is

brought were made with agents of the United States in the

aetual course of the operation of such governmental agency,

henee the breach of duty by failing to transmit and deliver

the telegrams promptly was a breach of duty le the United

States as the carrier conducting the business. and not a breach

of a duty owed personally by such agents to the plaintiff

The case, therefore, falls squarely within the principle an.

nounced in the leading ease of Hodgson vs, Derter, 1 Craneh,

845 (2 L. Ed. 180), where was invelved the question of the

right to maintain # suit against the Secretary of War per.

sonally on a lease made to him and his successors, and re.

specting which this court, speaking through Chief Justice

Marshall, said:

“The court is unanimously and clearly of opin-

ion that this contract was entered into entirely on be.

half of the Government, by a person properly author.

ized to make it. and that its obligation is on the Goy-

ernment only, Whatever the claims of the plaintiff

may be, it is to the Government and not to the defend.

ant he must resort to have them satisfied.”

This case has been cited with approval in the following

CUuses :

Garland vs, Davis, 4 Howard, 131 (11 L. Ed., 907).

Belknap vs. Schild, 11 UL S8., 10 (40-1. Ed., 599),

District of Columbia vs. Camden Tron Works, 181 0.

S., 458 (45 1. Ed., 948),

The authorities, therefore, conclusively establish that the

United States, and not the telegraph company named as de-

fendant on the record, is the real party in interest in this

ease.

2. The United States, being the real party in interest,

authority to bring and maintain this suit indirectly agains‘

the United States must be found in an act of Congress or it

does not exist.

But if, as shown, the United States, and not the defendant

telegraph company, is the real party in interest, the question

then arises as to the authority to bring this suit and recover

indirectly against the United States

Whatever may be the true prineples on which it) is

founded (1) SN. rs, Lee, 106 U8. 196; 27 L. Ed. 171), it

is a rule firmly established by an unbroken current of de-

cisions Of this court dating back to its very beginning that

the United States, like all sovereigns, is exempt from: suit da

any court, either at law or in equity, without its consent,

The rule is thus clearly stated in the leading ease of Belknap

va, Schild, 161 USS. 10; 40-1, Bd. 599;

“The United States, however, like all sovereigns,

cannot be impleaded in a judicial tribunal, except so

far as they have consented to be sued. This doctrine

has been affirmed by this court in cases too numerous

in be cited. and was clearly stated by Mr. Justice

Field delivering judgment in the case of The Siren,

as follows. ‘It is a familiar doctrine of the common

law that the sovereign cannot be sued yn his own

courts, without his consent. The doctrine rests upon

reasons of public poliey—the inconvenience and

danger which would follow from any different rule.

It is obvious that the public service would be hindered,

and the public safety endangered, if the supreme

authority could be subjected to suit at the instance of

every citizen, and consequently controlled in the use

and disposition of the means required for the proper

administration of (ie Government. The exemption

from direct suit is, therefore, without exception. This

doctrine of the common law is «qually applicable to

the supreme authority of the nation, the Unite

States. They cannot be subjected to legal proceed.

Ings at law oor in equity without their consent. and

whoever institutes such proceedings must hiring h

cause within the authority of some achoof Congres,

Such is the language of this court in (nited States vs

Clorke S Peters, 444. The same exemption from jy

dicial process extends to the property of the United

States, and for the same reasons. As justly observe

by the learned judge who tried this cease, Mere iene

distinction between suits against the Governiceut di

reetly and suits against its property. The Siren. 4

Wall, 152, 154. So much of this statement asp

yards suits against the United States or against they

property Was repeated by the present Chief Justice iy

the recent case of Stanley vs, Sehwalhy, WV Us

DOS, 51207 CT talies added, )

Among the numerous cuses in this court announeme and

applying the rule we may cite

Cohens ve. Virginia, 6 Wheat.. 264, 880 05 1. Ed,

2457).

United States va. Clarke, S Peters, 486 (8 LL. Ed.

1001),

Inited States va, MeLemore, 4 How., 286 011 1. Ed

977).

All vs. United States, 9 TIow.. 386 018 TL. Ed.. 183)

Murray vs. Hoboken Land, ete., Co. IS Wow,, 272

(15 L. Ed., 372).

Nations vs, Johnson, 24 Tow. 199 (16 1. id. 628),

Vnited States vs, Tillou, 6 Wall. (Sd CES Lo Ea.

920),

Nicholl vs. United States, 7 Wall, P22 C18 1b. Ed.

125).

The Siren, 7 Wall., 152 (19 L, Ed., 129),

The Davia, 10 Wall., 15 (19 L. Ed., 875),

United Ntates vs, Thompson, 98 U.S., 484 (25 T.. Ed.

194).

-_-

Carr vs, United States, OS US. 438 (25 1. Ed. 209),

United States vs, Lee, LOB ULS., 196 (27 L, Ed. 171).

Finn vs, United States, 128 Ul 8., 227 (31 1. Ed.,

}ZS),

United Ntates vs, Gleeson, 124-0, S,. 205 (31 L., Ed..

420),

Stanley vs, Schwalhy, 162 Ul 8., 255 (40 L. Bad..

HOU),

Minnesota vs, Hitcheoek, 185 UL S.. 374 (46 1. Ed.

HO4).

Internatioval Postal Supply Co, vx, Brace, WA UOS.,

WHOL (AS LL. Md, 1134).

Oregon 08, Mitehcock, 202 U8. GO (50-1. Badd,

035),

Naganah ox, Miteheock, 202 U8. ATS (50-1. Bad..

1118),

Nansas vs, United States, 204 U8. 8831 (51 L. Ed.

510),

Louisiana vs. Garfield, 211 UlS.. 70 (53 L. Ed. 92).

New Merico vs, Lane, 2438 U- S., O2 (61 L. Ed., 588).

Ilinvis, ete, R. Co, os, Public, ete., Com... 245 0. S.,

493 (62 1. Ed., 425),

Wells vx, Roper, 246 US8., 335 (62 L. Ed., 755).

Not only, however, is the United States eXemipt frome suit

in any court, except by its consent, but such consent must

le given by un act of Congress in express terms, This is set-

led bevond dispute by the decisions of this court,

Thus in United States vs, Clarke, 8 Peters, 436 (8 L, Ed.,

1001), Chief Justice Marshall, speaking for the court, de-

clared :

“As the United States are not suable of common

right, the party who institutes such suit must bring

his case within the authority of some act of Congress,

or the court cannot exercise jurisdiction over it.”

(Italics added. )

PPT IT Oe Te SE LS

This statement of the rule has been approved and followed

in The Siren, 7 Wall, 152 (19 L. Ed., 129), Belknap vs

Nehild,

supra, and other cases,

In Stanley vs, Schwalhy, W208, 250 (40 IL. Bal, 860).

the principle is stated in these words:

The

Cases |

The

“Tt is a fundamental prine:ple of pubite law, af

firmed by a long series of decisions of this court, and

clearly recognized in its former opinion in this case,

that no suit can be maintained against the United

States or against their property, ome any court, with

out express authority of Congress, IAT USS. oR

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