# Appellees Brief — United States v. Reading Co.

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Appellees Brief
- **Published:** January 1, 1926
- **Citation:** 270 U.S. 320

## Text

GENERAL INDEX

—_

Page

No. 398. The United States v. The New York, New Haven and
Hartford Railroad Company ...........0.ecceceeee 1-12

No. 399. The United States v. Central New England Railway
EU RCMAGEUDatkRianaekheabdavaeskdc ana tec huus 13-17

No. 400. The United States v. The New England Steamship
SOE oA ae RKeRRnadubdcidndakarcksddedabenudacan 19-22

i

No. 398.

THE UNITED STATES, APPELLANT, v. THE NEW YORK,
NEW HAVEN AND HARTFORD RAILROAD COMPANY.

INDEX
Page
STATEMENT OF THE CASE.................cccceecess 1
SIE 000064463 dace bdapBenndedndpedoncsbbebedecece 4
PEE. RaAdnadaneedanesdbesdbaddcersababunciledaueccce 4
I. The United States is the proper party defendant...... 4
II. The final contract of settlement between the Director
General of Railroads and the appellee is not a bar
to recovery against the United States .............. 11
Mes GRUIEDEND Sb ddndccndscetccuéencnesesencandcadactese 12
CASES CITED.
Missouri Pacific Railway Company v. United States, 56 C. Cis.
DUE: Nesdsnddsebddadudhaduncksenabesdosdbnedacasehananacoedas 4
Alaboma and Vicksburg Railway Co. v. United States, 56 C.
GUNA cectusbeuudannsaccinncacsuencesacdsecbeecenedééevese 4
Sandoval v. Davis, Director General, 278 Fed. 968 ..............
In re Tide Water Coal Exchange, 280 Fed. 648 ................ 9
STATUTES.
Act of August 28, 1916 (Ch. 418, 39 Stat. 619, Ge Gishunacdwas
Transportation Act of 1920 (Ch. 91, 41 Stat. a 2
PROCLAMATION.

December 26, 1917 (40 Stat. 1733) ..........cccecceccceceeeece 2

yee

SEITE OK Lat
errs 2 :.

.

du the Supreme Court of the Hnited States

OctosBer TERM, 1925

No. 398

Tue UNITED STATES, APPELLANT
v.

Tue New York, New Haven anp Hartrorp
RaiLroap CoMPANY

BRIEF FOR APPELLEE

STATEMENT OF THE CASE

At different times during the years 1916 and
1917, The New York, New Haven and Hartford
Railroad Company (hereinafter referred to as the
New Haven Company), and its connecting ear-
riers, at the request of the proper officers of the
United States Army, transported as freight, cer-
tain Government property, known as military im-
pedimenta, in connection with movements of
United States troops (R. 13).

The New Haven Company, as last carrier, ren-
dered its bills to the disbursing quartermaster, for

1

the transportation of said impedimenta, based
upon rates contained in current freight tariffs
(R. 13). There were fifteen bills in all (R. 8, 13,
14). Twelve of the bills were paid to the New
Haven Company prior to J anuary 1, 1918, and
hence prior to the date of the Federal control of
railroads (R. 13). The remaining three bills were
disallowed by the Auditor for the War Depart-
ment after the termination of Federal Control
(R. 14). The Court of Claims found that on these
three bills the New Haven Company was entitled
to $3,015.11 (R. 14), and as the Government does
not resist this portion of the judgment of the
Court of Claims, the only bills involved in this ap-
peal are the twelve bills which were paid to the
New Haven Company prior to J anuary 1, 1918,
and which are set forth by numbers in Finding
VIII (R. 18).

On December 28, 1917, the operation of the New
Haven Company, with other railroads, was taken
over by the Government (Act of August 28, 1916,
Ch. 418, 39 Stat. 619, 645; President’s Proclama-
tion of December 26, 1917, 40 Stat. 1733), and the
control and operation was relinquished by the
Government on February 29, 1920 (Act of Febru-
ary 28, 1920, Ch. 91, 41 Stat. 457).

The Auditor for the War Department, in audit-
ing the disbursing officer’s accounts, disallowed
the payments made to the New Haven Company
on its twelve bills, to the extent of $9,160.89, under
a ruling of the Comptroller (24 Comp. Dec. 774)
(R. 11), that the Government was entitled to have
had its military impedimenta carried free at the

2

_———

rate of one baggage car for each group of twenty-
five men transported (R. 13).

The New Haven Company was called upon by
the Auditor of the War Department to refund the
$9,160.89 disallowed, and upon its refusal to do so,
the Auditor deducted this amount from bills of the
United States Railroad Administration which had
been presented to the Auditor for the War De-
partment for payment (R. 13). The Railroad Ad-
ministration subsequently charged the deduction

. of $9,160.89 to the New Haven Company, and, in
January, 1921, this amount was paid by the New
Haven Company to the Railroad Administration
through the so-called ‘‘trustee account”’ which had
been created by General Order No. 68, issued by
the Railroad Administration to take effect at the
termination of Federal control. The New Haven
Company charged the amount on its own books in x
a suspense account against the War Department
to await action by the Auditor or the Court of
Claims (R. 13, 14, 18, 19, 20).

4+ On April 26, 1919, the Director General of Rail-
roads and the New Haven Company entered into
an agreement concerning the operation of the New
Haven’s railroad by the Director General, and the
material portions of said agreement are set forth
in Finding XII (R. 15, 16, 17).

On March 21, 1922, the New Haven Company in-
stituted suit against the United States in the
Court of Claims, to recover the amount of the de-
ductions (R. 1).

On October 26, 1923, a final settlement contract
was entered into by and between the New Haven

3

Company and the Director General of Railroads,
acting on behalf of the President and the United
States. The final account and final settlement
agreement are fully set forth on pages 22, 23, 24
and 25 of the Record.

ARGUMENT
I
THE UNITED STATES IS THE PROPER PARTY
DEFENDANT.

The Government’s argument consists of two
contentions; first, that the items involved in this
suit were included in the so-called final settlement
contract, and that hénce suit is barred by said con-
tract and release; and, second, that if the items
were not included in the final settlement contract
then the New Haven Company has an ‘‘open ae-
count”’ which should be settled with the Director
General of Railroads. This latter contention will
be discussed first.

It has been decided by the Court of Claims that
the theory of the Comptroller that the Government
was entitled to free transportation of its property
on the basis of one baggage car for every twenty-
five men transporte’, was erroneous, and that the
deductions were unlawful.

Missouri Pacific Railway Co. v. The
United States, 56 C. Cls. 341.

Alabama and Vicksburg Railway Co. v.
The United States, 56 C. Cls. 496.

The fact that the Government is not offering
any resistance to that portion of the judgment of
the Court of Claims which relates to the amounts

4

a —_

which were disallowed directly from the New
Haven Company’s own bills, leads to the obvious
conclusion that no appeal would have been taken
had not the question of Federal control been in-
volved. It therefore becomes necessary to exam-
ine the relationship of the parties concerned and
to determine what effect, if any, the period of Fed-
eral control had upon the situation brought about
by the deductions made by the Auditor for the
War Department.

It should be borne in mind that the transporta-
tion services were performed and the freight bills
paid to the New Haven Company before Federal
control began (R 13). The matter was a closed
issue until, in the month of April, 1918, the Comp-
troller issued the so-called ‘‘free baggage car rul-
ing’’ (24 Comp. Dec. 774) (R. 11).

Under that ruling, the Auditor for the War De-
partment figured that the New Haven Company
had been overpaid to the extent of $9,160.89, and
demand was made upon the New Haven Company
to return this sum, which it refused to do. The
Government then could have instituted suit
against the New Haven Company to recover the
amount which was claimed to have been overpaid.
It did not choose to pursue this course. It was
much easier to deduct the amount from future bills
to be presented by the New Haven Company. But,
at that particular time, the New Haven Company
was not operating its property, the Government
having assumed complete control through its
agent, the Director General of Railroads. As the
New Haven Company was not operating, it had

5

no transportation bills to present to the Govern-
ment, hence there was no opportunity for the
Auditor to deduct the $9,160.89 from bills of the
New Haven Company. However, there was still
another method which could be used and was used,
The Director General of Railroads, operating the
property of the New Haven Company, had bills
for transportation which were presented to the
War Department for settlement. These bills were
allowed, but in making payment, the Auditor for
the War Department charged against the Director
General’s bills, the $9,160.89 which the Auditor
wanted to get back from the New Haven Company.
The Director General, having thus paid the claim
which the War Department had against the New
Haven Company, very properly charged the $9,-
160.89 to the New Haven, as it had the right to do
under the so-called Uniform Contract which
existed between the Director General and the New
Haven Company (R. 13, 14, 15). Under the terms
of that contract, the Director General was made
the agent of the New Haven Company to pay all
expenses and claims arising out of the operation of
the railroad prior to January 1, 1918, the date Fed-
eral control began. The Director General had the
further right under that contract to charge any
such payments to the New Haven Company, and
he did so in this particular instance (R. 13, 14).

nd, carrying out its obligation to repay the Di-

rect which

pend tters of the Z
ompany, the sum of $9,160.89 was actually paid

by the New Haven Company, in cash, to the Di-
rector General in the month of January, 1921.

6

The payment was made into an account known as
the ‘‘trustee account’’, which was created by Gen-
eral Order No. 68 of the United States Railroad
Administration, to take effect at the termination
of Federal control. By this order the New Haven
Company was made trustee for the Director Gen-
eral to collect the assets and pay the liabilities of
the Director Genera] after the termination of Fed-
eral control. Having paid the amount of $9,160.89
to the Director General, thereby making him
whole, the New Haven Company brought suit in
the Court of Claims to recover this amount from
the Government. coe
Counsel for the Government now contend that
inasmuch as the money was paid into the trustee
account and that account was excepted from the
final settlement contract, that the New Haven
Company has an ‘‘open account’’ which should be
settled with the Director General. It is difficult
to see the logic of such an argument. The New
Haven Company never had any dispute with the
Director General concerning the deductions of
$9,160.89, nor could it have a dispute or claim now,
The transactions, out of which the deductions
arose, all concerned the New Haven Company and
not the Director General. The dispute was be-
tween the War Department and the New Haven
Company as to the correctness of the free baggage
car ruling. When the deductions were made from
the Director General’s bills, he had the right to
charge them to the New Haven and the latter had
no other choice, under the standard contract, than
to accept the charge and make payment to the Di-
rector General. The money was paid to the Di-

a

rector General in January, 1921, and now, nearly
five years later, the Government says the New
Haven Company should seek the return of the
money from the Director General, on the theory

that the trustee account is still open and remains
to be adjusted. There is no finding as to when or

how the trustee account was to be adjusted, so
that the Government’s assumption that the ac-
count is still open, is unwarranted. As a matter
of fact the trustee account is closed, but whether
open or closed, is of little moment as far as this
ease is concerned. Let us assume, for the sake of
argument, that the judgment of the Court of
Claims should be reversed and the New Haven
- Company should seek to get the money from the
Director General on the ground that the money
was paid into the trustee account erroneously.
Could it be reasonably presumed that the Director
General would voluntarily pay back, nearly five
years later, the money which was paid to him by
the New Haven Company to reimburse him for
money spent in payment of a claim against the
} New Haven Company?

It is more reasonable to presume that the Direc-
tor General would stand upon the terms of the
contract which gave him the right to pay the claim
against the New Haven and placed the obligation
upon the New Haven to make good to him. And,
to carry the matter one step further, let us assume
that the New Haven Company should sue the Di-
rector General to recover the amount. How could
the New Haven Company escape the force and
effect of the uniform contract and at this late date
dispute the right of the Director General to have

8

SS

paid the New Haven’s claims, or deny its obliga-
tion to repay the Director General? Furthermore
a suit against the Director General has been held
to be, in effect, a suit against the United States.
Sandoval v. Davis, Director General, 278 Fed. 968;
In re Tide Water Coal Exchange, 280 Fed. 648.
And if the claims were paid by the Director Gen-
eral, either voluntarily or as the result of a suit,
where would he get the money to pay except from
a Congressional appropriation or from some fund
which had previously been appropriated by Con-
gress? The I%frector General was, and is, only an
agent, acting for the President and the United
States, and the money to pay the New Haven’s
claim will have to come out of the United States
Treasury, whether a judgment is secured against
the United States or against the Director General.
The net result would be the same regardless of the
defendant.

The Court of Claims has found that any moneys
erroneously paid into the trustee account by de-
posit in the bank where such account was kept
eould be withdrawn by a railroad company mak-
ing such deposit, with the consent of the Director
General (R. 14). But this is far from a finding
that the money was sly paid into the trus-
tee account by the New Haven Company, which is
the basis of the Government’s argument that the
New Haven should adjust the matter with the Di-
rector General. There is nothing for the Director
General to settle. This is not a question or dispute
“arising out of or incident to Federal control”,
nor does it affect the question of compensation for

9

the use of the New Haven’s property, which are
the only matters which the Director General was
to settle at the termination of Federal control.

It is a mere circumstance that the Director Gen-
eral was in possession of the railroad of the New
Haven Company when the Auditor for the War
Department sought to make deductions on account
of alleged overpayments to the New Haven. The
fact that the Director General, as agent for the
New Haven, paid the claim by means of deductions
from its own bills, and that the New Haven then
made good the money to its agent, does not effect
the legal situation between the Auditor for the
War Department and the New Haven Company.
The result, legally, was the same as though the de-
ductions had been made directly from the New
Haven Company’s assets. The result, practically,
was that the deductions were accomplished by two
operations instead of one.

This suit was properly instituted against the
United States, because the matter involved does
not affect the Director General and does not come
within any of the powers and duties conferred
upon him in connection with the settlement of mat-
ters arising out of Federal control.

The New Haven has been outstanding this sum
of $9,160.89 since January, 1921, and is entitled to
recover this amount from the defendant.

I

THE FINAL CONTRACT OF SETTLEMENT BETWEEN
THE DIRECTOR GENERAL OF RAILROADS AND THE
APPELLEE IS NOT A BAR TO RECOVERY AGAINST
THE UNITED STATES.

The Court of Claims has found that the $9,160.89
was paid to the Director General by the New
Haven Company into a trustee account which “‘is
. expressly excepted from the effect of the settle-
ment agreement”? (R.17). In view of this finding
it is difficult to understand why the Government
advances the argument that suit is barred by the
final settlement contract.

The New Haven case is different from the cases
of The United States v. The Reading Company,
No. 401, The United States v. Southern Railway
Company, No. 403, and The United States v. St.
Louis, Brownsville & Mexico Railway Company,
No. 404. In these cases the deductions were made
from bills of the Director General, who then
charged the deductions to the railroad corpora-
tions in the account “‘corporate transactions”.
The railroads then gave the Director General
credit on their books. In other words the entire
matter was handled by bookkeeping entries.
There was no actual cash payments by the rail-
roads to the Director General as in the New Haven
case. The Government’s attempt to compare the
New Haven case with the cases cited above and its
assumption that the deductions were charged in
the same accounts and hence come within the final

settlement contract, are unwarranted and un-
founded in fact.

11

The New Haven paid the $9,160.89 to the Direv-
tor General in cash. The money was paid into the
trustee account created by General Order No. 68
of the United States Railroad Administration, and
the Court of Claims has found that this account
was not included in the final settlement contract.

It
CONCLUSION
The judgment of the Court of Claims should be
affirmed.
Respectfully submitted,

BENJAMIN D. WINNER,
Attorney for Appellee.

No. 399. THE UNITED STATES, APPELLANT, v. CENTRAL
NEW ENGLAND RAILWAY COMPANY

INDEX

Page
STATEMENT OF THE CAGE. «<5. ccsvccccescccccsccsccss 15
NE es oe ewe AK RIDES AES SAR RRe ROGERS 17

STATUTES
Act of August 28, 1916 (Ch. 418, 39 Stat. 619, 645) ............. 16
Transportation Act of 1920 (Ch. 91, 41 Stat. 457, 459) ......... 16
PROCLAMATION

Be Ey rr 16

13

Iu the Supreme Court of the United States

Octoser Term, 1925

No. 399

Tue Unirep STATES, APPELLANT
v.
CentTraL New ENcLAnp Rar_tway ComPANY

BRIEF FOR THE APPELLEE

STATEMENT OF THE CASE

During the years 1916 and 1917, the Central
New England Railway Company and its connect-
ing carriers transported certain military impedi-
menta in connection with movement of United
States troops (R. 14). As terminal carrier, the
Central New England presented its bills to the dis-
bursing quartermaster on the basis of rates con-
tained in current freight tariffs (R. 14). There
were fifteen bills in all (R. 8,9). The Government
does not offer any resistance to the bills covered
by Findings VII and VIII (R. 14), so the only
bills involved in this appeal are the five bills set

15

a

forth in Finding IX (R. 14,15). These bills were
paid by the disbursing officer, as presented, to the
Central New England Company.

On December 28, 1917, the operation of the Cen-
tral New England Company, with other railroads,
was taken over by the Government (Act of August
28, 1916, Ch. 418, 39 Stat. 619, 645; President's
Proclamation of December 26, 1917, 40 Stat. 1733),
and the control and operation was relinquished by
the Government on February 29, 1920 (Act of Feb-
ruary 28, 1920, Ch. 91, 41 Stat. 457).

The Auditor for the War Department, in audit-
ing the disbursing officer’s accounts, disallowed
the payments made-to the Central N ew England
Company on its five bills, to the extent of $1,843.94
(R. 15), under a ruling of the Comptroller (24
Comp. Dee. 774) (R. 11), that the Government
was entitled to have had its military impedimenta
carried free at the rate of one baggage car for each
group of twenty-five men transported (R. 11).

Thereafter, the Auditor for the War Depart-
ment deducted the amount of $1,843.94 from ac-
counts of the Railroad Administration (R. 14).
The Railroad Administration charged the amount
deducted to the Central New England and the lat-
ter paid said amount to the Railroad Administra-
tion, subsequent to Federal control, through the
so-called ‘‘trustee account’’, which was created
by General Order No. 68, issued by the Railroad
Administration to take effect at the termination
of Federal control. The Central New England
charged the amount on its own books in a suspense
account against the War Department to await ac-
tion by the Auditor on the Court of Claims (R. 15).

16

On February 13, 1919, the Central New England
Company and the Director General of Railroads
entered into an agreement covering the operation
of the property of the Central New England by the
Director General. The material portions of said
agreement are set forth in Finding XII (R. 15, 16,
17).

On March 21, 1922, the Central New England
instituted suit against the United States in the
Court of Claims, to recover the amount of the de-
ductions (R. 1).

On August 1, 1923, a final settlement contract
was entered into by and between the Central New
England Company and the Director General of
Railroads, acting on behalf of the President and
the United States. The final account and final set-
tlement agreement are fully set forth on pages 22,
23, 24 and 25.

ARGUMENT

The Central New England case is similar to the
New Haven Case, No. 398, and reference is made
to the brief and argument in that case to support
the contention of the appellee that the judgment
of the Court of Claims should be affirmed.

Respectfully submitted,

BENJAMIN D. WINNER,
Attorney for Appellee.

17

NA re a eT ee eT OR NET . 7 DICT ee es Oe ee

No. 400. THE UNITED STATES, APPELLANT, v. THE NEW
ENGLAND STEAMSHIP COMPANY

SEEN “nick chaddpudewadsinbutiaéudnkeneus s eacccceses 21
ARGUMENT

SOSHSHHSOHHSHSSCHESOHESEOEOEES OOO EE CEROEOCOEOOSEOS

ad

In the Supreme Court of the United States

Octoser Term, 1925

No. 400

Tue Unirep STATES, APPELLANT
v.
Tue New ENGLAND STEAMSHIP CoMPANY.

BRIEF FOR THE APPELLEE

STATEMENT

The New England Steamship Company trans-
ported a shipment of military impedimenta for the
Government on September 20, 1915, for which a
bill was presented to the Government for $139.00,
which was paid in full (R. 8).

During the period of Federal control, the Audi-
tor for the War Department deducted $124.00
from moneys due the United States Railroad Ad-

‘ministration, claiming that the New England
Steamship Company had been overpaid that
amount as the result of the free baggage car ruling
made by the Comptroller (24 Comp. Dec. 774)
(R. 8).

21

—

The Railroad Administration charged the
$124.00 to the New England Steamship Company,
and in January, 1921, the Steamship Company
paid said sum to the Railroad Administration into
the trustee account, created by General Order No.
68 of the Railroad Administration (R. 8).

On February 28, 1919, the New England Steam-
ship Company and the Director General entered
into a contract covering the operation of the lines
of the Steamship Company during Federal con-
trol (R. 9). The material parts of said contract
are set forth in Finding X (R. 9, 10, 11).

On March 30, 1922, there was a final settlement
contract entered into by and between The New
England Steamship Company and the Director
General of Railroads (R. 9). The final account
and final settlement contract are set forth on pages
24, 25, 26 and 27 of the Record.

ARGUMENT

This case is similar to the case of The United
States v. The New York, New Haven and Hart-
ford Railroad Company, No. 398, and the brief and
arguments in that case are relied upon to support
the contention of the appellee that the judgment
of the Court of Claims should be affirmed.

Respectfully submitted,

BenJaMIN D. Winner,
Attorney for Appellee.

Office Suprame Court,
FiLlspD

IN THE

Supreme Court of the Anited States

Ocroser Téru, 1925

No. 401

Tue Unrtep Sratss, Appellant,

vs.
Reapine Company.

No. 402

Reapine Company, Appellant,
v8.
Tue Unrrep Srares.

APPEALS FROM THE COURT OF CLAIMS

BRIEF FOR READING COMPANY

L. T. MicHEner,
Attorney for Reading Company.
Ws. L. Kites,
F. Carrer Porz,
Of Counsel.

Press or Brzon 8. Angus, WasHINGTON, D. O.

SUBJECT INDEX.
Page

i Me << - 6s coc neagenaanusestssess es 2, 3, 4
Argument on first branch of the case, No. 401 ... 4, 5, 6,7
Argument on second branch of the case, No. 402 ...... 8-20
Argument, summary of
Assignment of errors
Final settlement agreement discussed
That agreement does not include either branch of the
7, 20
Standard contracts considered ............. 5, 6, 7, 19, 20
Discussion of facts under second and third assignments
DT accEbnédawensesencecdsesocsncsetacese< 9-11
Disbursing officer’s allowances or settlements did not
remain undisturbed 12, 17
Decisions in Baltimore & Ohio and Washington & Ore-
gon cases do not apply in law or fact......... 12-18, 20
Reduction of rates agreement effective January 1, 1917,
was made but none was thereafter made 14, 15
aaa (Emigrant Movables) classification not applica-
able

Appellant in No. 402 is entitled to recover upon the
basis of ‘‘Net Cash”’ classification ‘

CASES CITED.

Baltimore & Ohio R. R. Co. vy. United States, 52 C. Cis.
12, 13, 17, 20
Bush, Receiver of Mo. Pac. Ry. Co. v. Unitee States,
56 C. Cls. 490

Mo. Pac. R. R. Co. v. United States, 56 C. Cls, 341
New York C. & H. R. R. Co. v. York & Whitney Co.,
256 U. S. 406

Oregon-Washington Ry. & Nav. Co. v. United States,
255 U. 8. 339

STATUTE CITED.
Act of March 2, 1889 (25 Stat. 862 ch. 381, sec. 22.) . 14, 15

IN THE

Supreme Court of the Gnited States

Ocroser Term, 1925

No. 401

Tue Unrrep Srares, Appellant,
vs.
Reapinc Company.

No. 402

Reapine Company, Appellant,
vs.
Tue Unrrep States.

APPEALS FROM THE COURT OF CLAIMS

The above cases are really one case, No. 401 beire an
appeal by the United States, and No. 402 being a cross-
appeal by Reading Company, which was the plaintiff below.

The opinion below has not yet been reported, but it is on
pages 24-30 of the Record.

Judgment was rendered in favor of Reading Company,
January 5, 1925, for $14,236.04 (R. 29, 42) on the first
branch of the case, and dismissing the petition as to the
second branch (R. 24, 29).

The action was to recover for transportation services
rendered to the United States (R. 1-8), prior to the Federal

ae

2

control of Railroads, and it was prosecuted under the
statute conferring general jurisdiction on the Court of
Claims.

The court below in its opinion divided the amounts sued
for into two classes (R. 27, 29), and so treated them in the
opinion, as will appear later.

STATEMENT OF CASE FOR READING COMPANY

This case was before the Court of Claims several times
(R. 9, 24). That court first awarded judgment to plaintiff
for $14,236.04 (R. 9); then, on motions for new trials by
both parties, the case was dismissed on the ground that a
final settlement between the Director General and plaintiff
operated as a release of these claims against the Govern-
ment and finally, on plaintiff’s motion for a new trial (R. 9),
the plaintiff again had judgment for $14,236.04 (R. 42).
The Government has appealed on the ground that by the
contract of final settlement between the Director General
and plaintiff, the latter released its claims against the Gov-
ernment; and the plaintiff is prosecuting a cross-appeal on
the ground that it should have received a larger judgment.

The facts are as follows:

In the Fall and Winter of 1916-1917, plaintiff, as last
carrier, handled a number of movements of troops and im-
pedimenta from the Mexican Border to various points on
its line in Pennsylvania (R. 8, 14, Finding VIII; R. 16,
Finding X). For the freight service, it rendered bills to
the disbursing officers of the United States Army, basing
its charges for the transportation of the miscellaneous im-
pedimenta—camp equipage, company property, ete.—upon
Class A, Net Cash, and without land-grant deductions
(Finding X).

Subsequently, June 18, 1918 (R. 11, Finding 3), the
Comptroller General decided that under the provisions of
carriers’ baggage tariffs the Government was entitled to
one free car for every twenty-five passengers in the accom-

3

panying passenger movement, and that was the first notifi-
cation that the Government claimed one special baggage
car or its equivalent for every twenty-five soldiers trav-
eling with army impedimenta. Prior to that decision the
Government paid for such impedimenta as freight (Find-
ing 3).

Since that decision of the Comptroller the accounting of-
ficers of the Government have made settlements upon the
basis that the United States was entitled to one baggage
car free for the transportation of its camp equipment and
company property for every twenty-five officers and en-
listed men traveling (Finding 3, R. 12).

Bills were presented to the disbursing officer as above
stated (Finding X, R. 16), and he notified the carrier that
he was not authorized to pay on that basis (Opinion, R. 29),
but only on the basis of the application of ‘Emigrant Move-
ables’’ classification to miscellaneous impedimenta (See
R. 15, Finding 1X), due to decisions of the Comptroller of
the Treasury, and thereupon plaintiff restated the bills on
that basis and they were so paid without protest (Finding
X, R. 16, 17).

With the exception of bill 6629-30-31 (alias 74-76) (see
Finding XI, R. 17), none of the bills was paid to plaintiff.
They were all paid to the Director General of Railroads for
plaintiff’s account, subsequent to January 1, 1918, when
Federal control began. (Appendix A; R. 30.)

Subsequently, upon a review of the disbursing officers’
accounts, the Auditor for the War Department disallowed
them (Finding XI, R. 17) and made deductions to adjust
them to the basis of the current rulings of the Comptroller
of the Treasury that, for the transportation of impedimenta
accompanying troops, the Government was entitled to one
car free for every 25 men (Finding IV, R. 12). This ruling
was erroneous (Opinion, R. 27, 28); it was so held in the
Missouri Pacific case, 56 C Cls. 341, wherein the court held
that neither under the carriers’ baggage tariffs (they are

4

all substantially alike), nor under the military agreements,
was the Government entitled to the allowance. That court
decision was acquiesced in by the Government, has been
followed ever since, and its correctness is not questioned in
this case.

The Auditor for the War Department made deductions of
the equivalent amounts from outstanding bills of the Read-
ing Railroad Administration for services rendered by the
Railroad Administration itself (Finding XI, XII, XIII, R.
17, 18, 19). The Railroad Administration did not stand this
loss. It simply ‘‘charged to the corporation’’ the amount
of the deduction against the original receipts, and when the
account in which the transactions appeared was prepared
for the final settlement between plaintiff and the Director
General of Railroads, plaintiff was credited therein with
only the net proceeds—the amount remaining after the de-
duction of $14,236.04 (Finding XV, R., 20, 21), and the
court found, ‘‘The deduction for free baggage, $14,236.04,
did not enter into said account’’ (Finding XV, R. 21, last
sentence).

ARGUMENT ON FIRST BRANCH OF CASE
COVERED IN NO. 401.

The opinion of the court below divides the case into two
branches (R. 27), the first being ‘‘the amounts alleged to
have been deducted from this plaintiff’s bills because of the
Comptroller’s ruling (24 Comp. Dee. 774) relative to free
transportation of impedimenta accompanying troop move-
eS

THE rig ETTLEMENT AGREEMENT DID NOT INCLUDE, AND
was TENDED TO INCLUDE, THE CLAIMS OR DEMANDS IN
TH CTION.

1. We have setforth in the statement of the case that when

the Auditor for the War Department made equivalent de-
ductions of outstanding bills of the Railroad Administra-

5

tion the latter charged to the Corporation the amount of
deductions against the original receipts, and when the ac-
count was prepared for the final settlement between plain-
tiff and the Director General, plaintiff was credited therein
with only the net proceeds.

The course thus pursued was the natural one. Moreover,
it was the one indicated by the construction given by both
parties to Sections 4 and 9 of the Standard Contract be-
tween the Director General and appellant (R. 23, 24),
whereby, to express it briefly, the plaintiff was to be cred-
ited with everything received for it, charged with every-
thing paid out for it, and any claim for a balance returned
to it as an uncollected account in the final accounting.

2. On June 30, 1922, the Director General of Railroads
and plaintiff had a final settlement of their relations. The
plaintiff went into and emerged from this final settlement
with a credit of $14,236.04 less than it would have had but
for the actions of the Auditor for the War Department in
making the improper deductions on the first branch of the
case and of the Railroad Administration in passing these
deductions back to the plaintiff.

The contract of final settlement was in writing (Appen-
dix C; R. 40) and the material part of it is set forth in
Finding XVI, R. 22, as follows:

The said Director General hereby acknowledges pay-
ment of the sum of eight million dollars ($8,000,000)
by the said companies, the receipt whereof is hereby
acknowledged, in full satisfaction and discharge of all
claims, rights, and demands of every kind and charac-
ter which the said director general or anyone repre-
senting or claiming to represent the director general,
the United States, or the President now has or may
hereafter have or claim against the said companies or
any of them growing out of or connected with the pos-
session, use, and operation of the companies’ property
by the United States during the period of Federal con-
trol, or out of the contract between the parties dated

6

the 18th day of February, 1920, and the said companies
both jointly and severally hereby acknowledge the re-
turn to and receipt by them of all their property and
rights which they are entitled to, and further acknowl-
edge that the director general has fully and completely
complied with and satisfied all obligations on his part,
or on the part of the United States or the United States
Railroad Administration, growing out of Federal con-
trol.

“The purpose and effect of this instrument ts to evi-
dence a complete and final settlement of all demands
of every kind and character as between the parties
hereto growing out of the Federal control of railroads.
* * ** (ITtalies not in original.)

As stated at the outset, jt is this instrument which serves
as the foundation of the Government's appeal, and which it
will urge upon this court, as in the court below, as consti-
tuting a release to the Government of claims for transpor-
tation on which, we submit. the Government has_ paid
plaintiff at least $14,236.04 less than it should have paid.
If the words ‘‘the United States’’ had been left out of the
agreement, it seems probable that contention would not
have been urged. It is plain, we submit, that those words
are pure surplusage, as the contract would have meant the
same thing without them, and that the United States was
thereby released only from any liability of the Director
General’s. It will be noted that the instrument expressly
states that it is a complete and final settlement between the
parties to it,—the plaintiff and its subsidiaries on the one
hand and the Director General on the other.

3. It will also be seen that the instrument acknowledges
the return to and receipt by plaintiff of its properties and
rights,—which include any outstanding claims against
anyone owing the plaintiff, and therefore that statement in-
cludes this case.

4. The court found it to be a fact that ‘‘The deduction
for free baggage, $14,236.04, did not enter into the said
account’? (R. 21) and so held in its opinion and judgment

7

(R. 24-29, 42). The ‘‘account’’ spoken of in that finding
is the one prepared for the final settlement agreement. We
submit that the fact stated in the above quotation takes the
judgment for $14,236.04 out of the final settlement agree-
ment, for the parties did not intend that branch of the case
to be included therein.

It could not have been the intention of the parties to re-
lease to the United States the right to prosecute this case
as, by the language of the agreement, it covers only claims,
rights and demands ‘‘growing out of or connected with
the possession, use, and occupation of the companies’
property by the United States during Federal control, or
out of the contract between the parties dated the 18th day
of February, 1920.’’ This case and right of action grew
out of transactions prior to such control. The statute and
both contracts deal in terms with the period of Federal
control only. Had the parties intended by the final set-
tlement agreement to release this case and right of action
against the United States ‘‘it would have been easy to say
so’’ in clear language, stating the purpose and naming the
ease, or so broadening the releasing language as to make
it cover matters originating before the period of Federal
control. The fact that such language was not used by the
parties leads irresistibly to the conclusion that it was not
intended that the agreement should cover this case, then
pending in the court below, where it was filed December 3,
1920 (R. 1). The date of the final settlement agreement
is June 30, 1922 (R. 21, 40).

5. We submit that further and unanswerable arguments
are stated with clearness and great force in the opinion
(R. 24) in which the court below holds that the services
were performed and the bills rendered long before Federal
control, and so they are beyond the terms of the Federal
control act, the standard contract, and the final settlement
agreement.

We submit that the judgment on the first branch of the
case in No. 401 should be affirmed.

8
ASSIGNMENT OF ERRORS BY READING COMPANY

APPELLANT IN No. 402

This appellant assigns the following errors by the Court
of Claims in this case:

First. The court erred in dismissing the petition as to
the items in the second branch of the case.

Second. The court erred in not rendering judgment in
this appellant’s favor for the additional sum of $2,426.86,
the difference between the amounts stated by appellant in
its original bills at Class A, Net Cash, rates, and after-
wards restated without protest at Class D rates, with
land-grant deductions.

Third. The court erred in not rendering judgment in
this appellant’s favor for the further additional sum of
$4,564.06, difference between the amount allowed on the
Class D rating and the amount due on the Class A, Net
Cash, rating, on those bills (1-73, 77, 78 and 86-88-85-87-88-
90) found to have been originally stated by plaintiff on the
Class D basis.

STATEMENT OF FACTS AND ARGUMENT ON
FOREGOING ASSIGNMENTS

SUMMARY OF ARGUMENT

1. Consideration of the facts on which the second and
third assignments are based.

2. Disbursing officer’s allowances or settlements did not
remain undisturbed.

3. The Baltimore and Ohio and the Oregon and Wash-
ington decisions do not apply in law or in fact.

4. The decisions in the above cases are not even pri-
marily applicable to this case.
' §,. There was an agreement for reduction of rates effee-
tive January 1, 1917, but no agreement was made thereafter
for reduction.

9

6. Class D (Emigrant Moveable) classification is in-
applicable.

7. Appellant in No, 402 is entitled to recover for the
transportation of the miscellaneous impedimenta on the
‘‘Net Cash’’ classification.

8. This second branch of the case is not within the terms
of the final settlement agreement.

ARGUMENT

This second branch of the case covers the bills that were
stated or restated on the Class D (Emigrant Moveables)
basis and were afterwards paid without objection or pro-
test by this appellant (R. foot p. 29).

We shall now state the facts and discuss the law.

1. The items making up the amount named in the second
assignment are among the items stated in Finding X (R.
16,17). Specifically they are as follows:

_ Bill 6629-30-31 for $1,018.50, restated at $657.65, a
difference of $360.85; ~~

Bill 79-80-82-83 for $1,950.60, restated at $633.01, a
difference of $360.85;

ry Bill 81 for $423.90, restated at $194.93, a difference
“ of $228.97;

Bill 84 for $499.53, restated at $255.57, a difference
“ of $243.96;

, Bill 93-103, inclusive, for $1,271.70, restated at
VV $741.21, a difference of $530.49.

These are the bills covered by the sentence at the end of
Finding X (R. 17) in the words:

oa The difference between the amounts stated by
plaintiff in its original bills at Class A, Net Cash, rates

10

| on military impedimenta, $4,909.23 and afterwards re-

) stated by plaintiff without protest, at Class D rates,

with land grant deductions, $242.37, amounts to
32,426.86.”’

It will be noted that in Finding X (R. 16, 17), in deserib-
ing the several bills above named, the court finds that each
was so restated on the basis of Class D with land grant
deduction, and the restated amount was paid by the dis-
bursing officer. All those bills are put in the same category
by the court.

The court followed this by finding (Finding XI, R. 17)
that all restated bills referred to Finding X ‘‘were paid as
restated by the disbursipg officer to the Director General
of Railroads beginning February 4, 1918, and ending June
14, 1918, pursuant to General Order No. 17, and were cred-
ited on the Railroad Administration books to the account
‘Individuals and Companies,’ and were not credited to the
plaintiff.’’

General Order No. 17 is Appendix A (R. 30).

These restated items are of those described in the opin-
ion (R. 27) where the court said the petition also claims

_ “additional amounts which it is alleged the disbursing
quartermaster deducted from its bills as if the shipments
had consisted of emigrant movables under current rulings
of the comptroller.’’ So these bills are in the second of the
‘*two general classes of claims’’ described in the opinion
(R. 29).

2. The third assignment of error is that the court erred
in not rendering judgment in this appellant’s favor for the
additional sum of $4,564.06, a difference over and above the
amount allowed and paid, that was due on the cars of mili-
tary impedimenta covered by bills 1-73, 77, 78 and 86-88-85-
87-88-90, described in Finding X.

We shall now present those bills in their order, as de-
scribed in Finding X (R. 16, 17).

(a) Bill 1-73 as originally stated was corrected and re-

11

stated by appellant at $18,835.92, but $85.60, feeding
charges, was stricken out by someone, and the bill was paid
by the disbursing officer in the sum of $18,750.32. ‘‘The
classification of the military impedimenta in the original
bill and the restated bill was the same and no part of the
difference between the amounts stated in the original and
restated bill was due to a change from Class A, Net Cash,
to Class D’’ (R. 16).

We submit that it follows that the original and restated
bills were on the Class D basis, for otherwise the disburs-
ing officer would not have made the payment. He was fol-
lowing the ruling of the comptroller as to rates on military
impedimenta, as the findings show.

(b) Bill 77 was originally stated at $3,482.06 and was re-
stated and corrected in the sum of $2,134.66 and that sum
was paid by the disbursing officer. ‘“‘No part of the dif-
ference in amount between the original and corrected bill
was due to change from Class A, Net Cash, to Class D, with
land grant deduction on military impedimenta.”’

We submit that it follows fhat the bill was on the Class D
basis, or the disbursing officer would not have made the
payment, for he was following the ruling of the comptroller
as to the rate on military impedimenta, as above stated.

7 (e) Bill 78 was originally stated in the sum of $179.40

on the ‘‘basis of Class D on military impedimenta with
land-grant deduction, and was paid in that amount by the
disbursing officer.’’

PP fins submit that it follows that the bill was thus stated be-

cause of the disbursing officer’s attitude in applying the
decision of the comptroller, as stated above.

(d) Bills 86-88-85-87-90 were originally stated in the sum
of $1,482.42 ‘‘on the basis of Class D military impedimenta,
with land-grant deduction, in which amount it was paid by
the disbursing officer.’’

We submit that if they had not been stated in that way
the disbursing officer would not have made payment, for
his attitude was as we have stated above.

12

All three of these assignments of error relate to the re-
fusal of the Court of Claims to render judgment in this
appellant’s favor for the difference between the amounts
due and allowed by the judgment on the Class D (Emigrant
Moveables) basis and the amounts due on the basis of the
correct classification for the transportation of miscellane-
ous military impedimenta. The second and third assign-
ments are but particulars of the first, and all the assign-
ments can be presented together conveniently.

Dissursinc Orricer’s ALLowances orn Serrtements Dip
Not Remais Unpvistvursep.

We submit that the disbursing officer’s allowances or set-
tlements once made did net remain undisturbed, for it is
shown by Finding XI (R. 17) that at one time the auditor
for the War Department disallowed the disbursing officer's
payments and caused a deduction of $10,853.71; and by
Finding XIII (R. 18) that at another time the disbursing
officer’s payments were suspended and a deduction of $3,-
382.33 was made to adjust the payments on these bills to
the basis ofan allowance of one cat free for every 25 men.

So, even if appellant would have been bound by the orig-
inal settlements with the disbutsing officer, it certainly ean-
not be said to be bound when those settl¢ments were over-
turned and something“else substituted in Jieu thereof, to
which it had never agreed.

‘ Battimort axp Onto anp Orecon anp Wasuincton Dr-
cisions Do Nor Appty.

The effect of the judgment of dismissal is to force upon
this appellant the settlements once made on an admittedly

erroneous basis, settleménts which the Government itself °

had repudiated, and to dismiss appellant’s demand for
judgment on the correct basis. All this on the lower court’s
theory that the case is governed by the decision in the
Baltimore & Ohio case, 52 C. Cls. 468, and by the decision

‘
¢

13

in the Oregon-Washington Ry. & Navigation Co. case, 255
U. S. 339.

We submit that the cases above named do not apply to
this case, are not relevant to it, but if we are mistaken in
that, the facts of this case take it out of the operation of
the rule laid down in those decisions. So clear is it that
we are correct in the alternative that it is sibmitted we
might well rest our appeal bn that ground alone; but we
argue the inapplicability of the decisions relied upon by
the Court of Claims, we hoping for a ruling by this court
which will dispel some confusion now existing in the Court
of Claims decisions, and so reTieve this court of future peti-
tions for writs of certjorari.

In reversing the Court of Claims in St. Louis, Browns-
ville € Mexico Ry. Co. v. United States, decided April 27,
1925 (No. 310, October Term, 1925), this court covered
pretty much the same ground we now ask it to review—the
only difference between the two cases being that in the
St. Louis, Brownsville & Mezico case the bills were arbi-
trarily reduced by the disbursing or accounting officers —
without protest by platntiff, while in this case the bills were
either reduced by the carrier without protest, and to meet .
the attitude of the disbursing officer, to the basis upon which
. he could make payment, or else were originally so stated by
_ claimant for the same reason.

ad ‘

Tue Bautimore ann Onto axp Orecon-WASuinoton De-
cisions Are Nor Even Primart. ¥ APPLICABLE.

In those cases, the carriers, after detaing and receiving
the proper tariff classifications (the lack of which is the ©
basis of this appellant’s complaint), and the proper tariff
rates, deemed that, outside of and beyond any question of
rates and classifications, the Government was entitled to
the right to land-grant deductions. In this they were mis-
taken but, nevertheless, for many years without _interrup-
tion, they rendered their bills and accepted payment on

. : 14
that, basis without protest oF objection. They misconstrued

the law against themselves and, no question of tariff rates
‘or classificatious being involved, the Court of Claims and

this court held that they could not receVer the Ueductions
(or reductions) which they had always conceded and never

claimed. .
‘ But the instant case is quite different. Here The cartier

stated its bitls on wht itgelaimed to‘ be the proper classi-;
fication, and was induced*by the attitude of the disbursing
officéy to restate thent oni the basis of acclassificafion on
which he was authorized by the Comptroller’s rulings to
make payment, or else, for the same reason, it originally
stated its bills on that same basis, one which the Court of
Claims has frequently beld erroneous. The appellant

here simply began or ended by elaiming from the United

-States, in its final bills, less than it was entitled to, just

as the carriers did in the cases of Pitts. C. C. & S¥. L. Ry.
Co. v. Fink, 250 U. S. 577, and N. Y. C. ¢@ H. R. R. Co. v.
York & Whitney Co., 256 U. S. 406, wherein this court held
that carriers were not barred from recoveringyhe lawful
rate merely because of having first demanded, Yeceived

’ and accepted less than was due them. In the — case,

there was not present any of the elements of accord and sat-
isfaction, the Government took all, the carrier nothing,
simply receiving payment from the disbursing officer of
less than was due on the proper tariff basis. ff
Tuere Was AN AGREEMENT FoR Repvuction or Rares Er-
rective January 1, 1917, Bur No AGREEMENS Mape ©
THEREAFTER FOR Repuction. eee

1. By Section 22 of the Act of March 2, 1889 (25 Stat.
862, Ch. 381), it is enacted, ‘‘That nothing in this act shall
prevent the carriage, storage, or handling of property
free or at reduced rates for the United States * * *.”
Accordingly, prior to January 1, 1917, this appellant and
all the other lines parties to the interterritorial military

15

arrangements, which became ‘effective that date, were
parties to agreements, known as ‘‘military agreements,’’
between the carriets and the War and Navy Departments,
which were for the most part similar to and superseded
by the later arrangements (Finding V, R. 12). That find-
ing sets forth the essential terms of that ‘‘military ar-
rangement,’? and Finding VI shows why and how the
Comptroller and the Secretary of War approved it. Find-
ing VII shows that it was in full force and effect as late as
May 20, 1920, that its provisiohs have been observed by
carriers generally, and that under it the Government has
paid for transportation at rates substantially 5 per centum
less than it otherwise would have paid. See also Finding
Vill.

Thus there was a reduction by agreement of rates given
to the Government, effective January 1, 1917, and remain-
ing in force as late as May 20, 1920. We submit that no ad-
ditional reduction of rates could be put on this appellant ,
by the ruling or action of the accounting officers, although
such additional reduction might have been made by agree-
ment at or before the making of a shipment. There is no
‘such agreement in this case. On the contrary, Finding
VIII (R. 14) shows that ‘‘The troops were transported on
regular transportation requests at rates substantially 5 per
cent less than the regular tariff rates, and the Army im-
pedimenta was moved as freight on bills of lading issued
by the Government.’’ (Italics not in original.)

The Government, in executing its ‘‘transportation re-
quests”’ and ‘‘bills of lading’’ could have made a particu-
lar classification or proposed lower rates, and if there had
followed an acceptance by the carrier affirmatively, or by
making the movements without objection, a lawful agree-
ment would have been reached. There is no such agree-
ment in this record. On the contrary, Finding VIII shows
that the regular order prevailed.

We submit that it did not lie in the power of the account-

16

ing officers, after the movements had been completed and
the bills presented, to require a further reduction in the
absence of a previous agreement in one form or another.

2. We have found no case holding that carriers, having
no such agreement with the United States, are less en-
titled to recover their proper charges from the Govern.
ment than from any other shipper. So to hold would be to
hold that there was something in the nature of sanctity
pertaining to Government payments, whether right or
wrong. As a matter of fact, they should be less sacred
than settlements by private parties. It is a matter of com-
mon knowledge that the government does business with
carriers on credit; its settlements with them are based
upon rulings of its own officials and frequently are long
delayed ; it always has its records to defend it against the
subsequent assertion of claims; the transportation charges
it has to pay make no difference in its business. On the
other hand, it is a matter of common knowledge that pri-
vate parties pay cash on delivery of their goods, and they
pay according to carriers’ demands; frequently they keep
no records; and always the transportation charges are an
element in their cost of living, or doing business, or in the
price of their goods for sale. There was much more
equitable reason to declare the carrier estopped in the
Fink case, where its original voluntary demand was satis-
fied, than to declare it estopped in this ease where its orig-
inal demand was either reduced, or was originally stated,
according to the attitude and limitations of the authority
of the agent the Government had established to deal with
its bills, but not to make contracts.

We respectfully submit that this court should hold that a
carrier, by merely understating its claim against the Gov-
ernment in applying the wrong rate or classification is not
thereby or thereafter estopped to claim the correct rate or
classification by failing to make a protest. In other words,
we submit that the Government should be held to be as

17

much subject to the carriers’ lawful classification and rates
as any other shipper. Such a ruling by this court will in
no wise limit the authority of its Oregon and Washington
decision, nor negative the view that, because the Govern-
ment may by an agreement be the beneficiary of lesser rates
than the ordinary shipper, a carrier may be estopped by an
accord and satisfaction in its dealings with the Govern-
ment.

THE FACTS OF THIS CASE TAKE IT OUT OF THE RULE LAID DOWN
IN THE BaLtimore & OnIOo anp Oregon & WasHINGTON
CASES, EVEN IF THEY WERE PRIMARILY APPLICABLE.

What we have to say now relates both to the bills found
to have been originally stated on the Class A, Net Cash,
basis and then restated on the Emigrant Moveables (Class
D) basis, and to those found to have been originally stated
on the latter basis. It may be that the restated bills will
afford a point for discussion merely because they were
originally claimed on the Class A, Net Cash, basis, but we
submit that in the last analysis it makes no difference—
for this appellant’s right to recover on the correct classi-
fication basis on those bills found to have been originally
stated on the erroneous basis is just as clear as it is on the
restated bills.

We submit that we have shown that the Baltimore & Ohio
and Oregon ¢& Washington decisions have no relevancy to
this case; but, as we have also submitted, even if we were
mistaken about that, the facts of this case take it out of the
operation of the rule in the cases referred to.

The only theory upon which the Baltimore & Ohio and
Oregon & Washington decisions could be authoritative here

| would be that the disbursing officer’s settlements, once

made, were final and remained undisturbed. But they
were not final here, nor did they remain undisturbed, as
we have said before. It is shown by Findings XI (R. 17)
and XIII (R. 18) that the Auditor for the War Department

~

18

suspended the disbursing officer’s payments and made de-
ductions to adjust them to the basis of an allowance of one
car free for every 25 men, repudiating and overturning
the settlements and recapturing the money that had been
paid. Certainly, in these circumstances, this appellant is
free to sue for what it regards as its rightful due. In other
words, even if appellant would have been bound by the
original settlements with the disbursing officer, it certanly
cannot be said to be bound when those settlements were
overturned.

We submit that the decisions cited by the Court of Claims
have no bearing on this case, regardless of how the orig-
inal bills were stated, and this appellant should recover
upon the basis of the correct classifications.

Tue Cxiass D (Emicrant Moveasies) Cuassirication
INAPPLICABLE. °

It is not thought that it will be claimed by the Govern-
ment in this case that the Emigrant Moveables classifica-
tion is applicable, since the Court of Claims in numerous
cases has held against that classification in judgments ren-
dered wthout opinions, which have been accepted by the
Government without appeal. However, we point to the de-
scription of the term ‘‘Emigrant Moveables’’ quoted from
the classifications on page 15 of the Record, and we refer
to the fact that this miscellaneous military impedimenta
was not and could not be in fact ‘‘Emigrant Moveables.”’
It may be well, also, to point out that it is evident that the
transportation of emigrant moveables is done in the ordi-
nary freight service, while here freight went with the
troops (Finding VIII, R. 6). The difference in such serv-
ice would be sufficient to relieve the impedimenta of the
character of ‘‘Emigrant Moveables’’ even if that classifi-
cation might otherwise be imposed upon it by analogy.

The ‘‘Emigrant Moveables’’ classification, the one to
which this appellant was held by the court’s judgment (R.

19

29) being inapplicable, and plaintiff being entitled to re-
eover upon the correct classification basis, it remains to
determine wnat the correct classification is.

THIS APPELLANT IS ENTITLED TO RECOVER FOR THE TRANSPOR-
TATION OF THE MISCELLANEOUS IMPEDIMENTA UPON THE
BASIS OF THE ‘‘Net CasH’’ (THAT IS, BULK) CLASSIFICA-
TION.

It wil be observed that Finding IX (R. 14, 15), finds that
at the time of this transportation plaintiff’s tariff classifi-
cations contained the following classifications :

1. ‘Classifications for the different articles composing
said shipment”;

2. The ‘‘Emigrant’s Moveables’’ classification ;

3. ‘Camp Equipage; minimum weight 30,000 pounds,
Carloads, Class A (Net Cash).”’

The ‘‘Emigrant’s Moveables’’ classification being inap-
plicable for the reasons heretofore stated, and it not being
found that the Government’s shipping officers specified the
contents of their shipments, we submit that the Class A,
Net Cash (i. e., without land-grant deductions) classifica-
tion is the only one applicable, as shown by the findings.

The army officers could have taken advantage of the ordi-
nary classifications by weighing and describing the contents
of their shipments just like any other shipper, so that car-
riers’ charges could be definitely ascertained and stated ac-
cordingly, but it is not found that they did so.

‘In respect to furnishing transportation, a railoard ordi-
narily bears to the Government the same relation that it
does to a private person using its facilities.’ St. Louis,
Brownsville & Mexico Ry. Co. v. United States, No. 310,
October Term, 1924, decided April 27, 1925.

The Court of Claims sustained the application of the
“Net Cash’’ classification in the cases of Maine Central
Railroad Company and Bush, Receiver of the Missouri Pa-
cific Ry. Co., 56 C. C. 490, as is shown by the findings, not
printed. There were no opinions in those cases.

20

It is not apparent in this case that the Court of Claims
intended to recede from its judgments in the above cited
cases. Rather, it appears that, being impressed with the
idea that the claim for the difference between the ‘Emi-
grant’s Moveables’’ classification rates and the ‘Net
Cash’’ rates was subject to the doctrine of the Baltimore
and Ohio and Oregon and Washington decisions, the court
dismissed this second branch of the case on that ground
alone.

THE SECOND BRANCH OF THE CASE IS NOT
WITHIN THE FINAL SETTLEMENT AGREEMENT.

We submit that the services were rendered and the bills
presented before Federal control, and so they are not
within the terms of the Federal control act, or the stand-
ard contracts, or the final settlement agreement, a subject
discussed in a previous part of this brief.

Finally, we submit that the judgment on the second
branch of this case, No. 402, should be reversed and the
court below be instructed to render an additional judgment
in favor of this appellant in the sum of $2,482.37 (foot of
Finding X, R. 17), and for such additional amount on the
items covered by the third assignment of error as the evi-
dence may establish. The amount stated in that assign-
ment, $4,564.06, is our view of the amount due after con-
sidering the evidence before the trial court, over and above
the amount allowed and paid, that was due on the ears
of military impedimenta covered by the bills we have
enumerated.

CONCLUSIONS

Our conclusions are these:

1. The judgment of the court below in the sum of $14,
236.04 should be affirmed.

2. The judgment dismissing the second branch of the
case should be reversed and the court directed to render

i Pa Pa MIN cl SOR ada wb REE. STs ct DR Succi a Calas aca 5 sad, Sate

21

an additional judgment in this appellant’s favor in the
sum of $2,426.86.

3. The judgment dismissing the second branch of the
ease should be reversed and the court directed to render
an additional judgment in this appellant’s favor in the
sum of $4,564.06, or such other amount as the evidence
may justify.

Respectfully submitted,

L. T. Micuener,
Attorney for Reading Company.
Wm. L. Kinter,
F. Carter Pope,
Of Counsel.

“ eee
NOV19 1925
» SIANSBY
IN THE
Supreme Court of the Gnited States

Ocroser Term, 1925.

No. 401

Tue Unrrep Srares, Appellant,
vs.

Reapinc Company.

No. 402

Reaping Company, Appellant,
vs.
Tue Unirep Srares.

APPEALS FROM THE COURT OF CLAIMS

BRIEF FOR READING COMPANY IN ANSWER TO
GOVERNMENT BRIEF.

ss 2 MicHENER,

Attorney for Reading Company.
Wa. L. Krxrer,

F. Carrer Popg,
Of Counsel.

Press or Byron 8. Apams, WASHINGTON, D. 0.

SUBJECT INDEX.
Page
The court below did not err in considering final account

of the final settlement 2

TEXT BOOKS CITED.

2 Parsons on Contracts, 633, note
Garner on Int. Com. Act. 95, 97

STATUTES CITED.

Elkins Act of Feb. 19,1903....................--... 10, 11
Hepburn Act of June 29, 1906 9, 7, 8, 9, 10, 11

IN THE

Supreme Court of the United States

Ocroser Term, 1925.

No. 401

Tue Unrrep States, Appellant,
vs.

Reapinc Company.

No. 402
Reapinc Company, Appellant,

vs.
Tue Unitrep Srares.

APPEALS FROM THE COURT OF CLAIMS

BRIEF FOR READING COMPANY IN ANSWER TO

BRIEF OF THE UNITED STATES.

SUMMARY OF ARGUMENTS.

1. The court below did not err in considering the final
account of the final settlement, that account being the basis

of the final settlement agreement.

2

2. In the absence of a special agreement for the trans-
portation in question, it was the duty of the carrier to claim
and enforce the payment of the tariff charges for the trans-
portation service.

3. The law has placed it beyond the power of the carrier
or the Government to deviate from the tariff charges ap-
plicable to the transportation service, and the final settle-
ment account and agreement are not to be so construed as
to violate the law.

ARGUMENT.
I.

The court below did not err in considering the final ac-
count of the final settlement, that account being the basis
of the final settlement agreement.

On pages 16, 17 and 18 of the brief for the United States
it is contended that the ‘‘so-called account of final settle-
ment (R. 20) bears no date and on its face purports only
to adjust claims to March 31, 1922’’, and that there is no
finding that it had ‘‘any connection with or relation to the
final settlement agreement. There is a period of three
months—March 31 to June 30—which the so-called settle-
ment account on its face does not cover’’. On those state-
ments is based the Government’s contention that the ae-
count should not have been considered in connection with
the final settlement agreement.

We submit that opposing counsel are in error in con-
tending that there is no finding that the account had ‘‘any
connection with or relation to the final settlement’’. These
are the opening words of Finding XV, ‘‘The final account
of the final settlement between the Director General of
Railroads and the plaintiff reads as follows:’’. So it was
in fact the final account of that final settlement—an all
important part of the final settlement—one agreed to by
all the parties.

The account, near the beginning of Finding XV (R. 20),

3

states that it is a ‘‘Comparison of claims submitted by
the Philadelphia and Reading Railway Company (now
Reading Company) with books of the central adminis-
tration adjusted to March 31, 1922.’ Evidently all parties
had been preparing for the day when a final settlement
agreement would be made, and an account was to and did
form the basis of that agreement.

It stands to reason that the account was prepared after
March 3lst and was presented to the earrier before the
final settlement agreement was signed June 30, 1922. It
is to be noted particularly that the account (R. 21) shows
a “‘net balance due from corporation’’ of $8,000,000, and
that the Director General in the final settlement agree-
ment (R. 99) acknowledged the payment of $8,000,000 in
full satisfaction, ete. Thus the account and that agreement
are in complete accord. The amount of $8,000,000 agreed
upon and paid could not have been ascertained except
by consideration of the account. All this means negotia-
tions between the parties and an accord that found ex-
pression in the final settlement agreement. It stands to
reason that the account was bodily present or in mind
when the agreement was reached and siened, and that
the huge payment was not agreed upon in a haphazard
manner. It was not ‘‘taken ont of the sky.’’

We submit that the court below did not err in consider-
ing that account in relation to the final settlement agree-
ment (see last paragraph of Finding XV (R. 21) and the
opinion (R. 29), for the account shows the claims that
were asserted by all sides to the controversy and the
amounts of the existing differences between the parties.
It is apparent, therefore, that only those claims, demands
and differences were canvassed in reaching the amount
of $8,000,000 as the net balance due from the corporation.
By agreeing upon the account and fixing that amount,
the parties made that account a part of the final settle-
ment agreement just as surely as if formal language had
been used in the way of a recital setting forth the ac-

4

count totidem verbis, thus making applicable the familiar
common law rule that where there are recitals of partic-
ular claims or considerations, followed by general words
of release, the general words shall be restrained by the
particular recital. Texas Pac. Ry. Co. v. Dashiel, 198 U.S.
521, 527; 2 Parsons on Contracts, 7th ed. foot p. 633, side p.
501, note, where many English and American cases are
cited.

Il.

In the absence of a special agreement with the Govern-
ment for the transportation in question, it was the duty of
the carrier to claim and enforce the payment of the tariff
charges for the transportgtion service.

That rule of law makes inapplicable the entire argument
presented in the brief for the United States, including
the ‘‘release or receipt’’ cases quoted from on pages 18
to 28 inclusive. The only one of those cases that relates
in any manner or form to transportation charges is St.
Louis, Brownsville & Mexico Ry. Co. v. United States,
268 U. S. 169, and there is no release in that case.

In an action for the recovery of transportation charges
the carrier is sui generis, as we expect to show in the fol-
lowing pages, for it is the legal duty and obligation of
the carrier, in the absence of a special agreement, to claim
and enforee the payment of the tariff charges for the
services rendered. In such matters the carrier does not
have the privilege or right to deviate, refund, remit, re-
lease, or abate the tariff charges, directly or indirectly, in
any manner or form.

The carrier engaged in interstate traffic service is sur-
rounded by statutory barriers that do not exist as to per-
sons or corporations engaged in other business, hence it
follows that many rules of law applicable to the latter do
not apply to the carrier.

It was the duty of the carrier to claim and enforce the

5

payment of the tariff charges, not to deviate, release, re-
fund, remit or rebate them in any manner or form.

Interstate Commerce Commission Conference Ruling
314 is as follows:

‘‘The law requires the carrier to collect and the
party legally responsible to pay the lawful established
rates without deviation therefrom. It follows that it
is the duty of carriers to enforce their legal remedies
in order to collect undercharges from the party or
parties legaliy responsible therefor. It is not for
the Commission, however, to determine in any case
which party, consignor or consignee, is legally liable
for the undercharges, that being a question determin-
able only by a Court, having jurisdiction and upon
the facts of each case.’’ (Superseding Rulings, 3 and
187. See also rulings 16 and 156 and Y. & M. V. R.
Co. vs. Zemurray, 238 Fed. 789.)

That ruling is printed in 45 I. C. C. Rep. on p. 96 of the
appendix. It is dated May 1, 1911, and is declarative of
the duty of carriers to collect the established tariff rate
by the enforcement of their legal remedies against the
parties legally responsible, and it is a warning to them not
to indulge in any other course in any manner or form
whatever.

To preserve inflexibility and make rates unalterable was
the effect and purpose of Conference Ruling 314.

April 5, 1915, this court decided the case of Louis. &
Nash. R. R. Co. v. Maxwell, 237 U. 8. 94. The action was to
recover from Maxwell $58.30, as the amount of an alleged
undercharge on the sale of railroad tickets to Maxwell.
“The agent fixed the routing in the tickets and named the
fare, and Maxwell paid without further question’’ (top of
p. 97). The agent made a mistake in naming the amount
of the fare, and the company sued for the undercharge. On
p. 97 this court said:

Under the Interstate Commerce Act, the rate of the
carrier duly filed is the only lawful charge. Deviation

6

from it is not permitted upon any pretext. Shippers
and travelers are charged with notice of it, and they
as well as the carrier must abide by it, unless it is
found by the Commission to be unreasonable. Igno-
rance or misquotation of rates is not an excuse for
paying or charging either less or more than the rate
filed. This rule is undeniably strict and it obviously
may work hardship in some eases, but it embodies the
policy which has been adopted by Congress in the reg-
ulation of interstate commerce in order to prevent un-
just discrimination. The Act (See. 6) provides:

‘‘Nor shall any carrier charge or demand or collect
or receive a greater or less or different compensation
for such transportation of passengers or property, or
for any service in connection therewith, between the
points named in such tariffs than the rates, fares, and
charges which are specified in the tariff filed and in
effect at the time; nor shall any carrier refund or remit
in any manner or by any device any portion of the
rates, fares, and charges so specified, nor extend to
any shipper or person any privileges or facilities in
the transportation of passengers or property, except
such as are specified in such. tariffs.’’

That section is a part of Section 6 of the Hepburn Act of
June 29, 1906, p. 587, ch. 3591, and it is still in force.

Gartner on the Interstate Commerce Act, 95, 97.

It is unlawful for a carrier to accept less than the tariff
rate as compensation for the interstate transportation of
property, and the shipper or consignee is liable for the full
tariff rate.

Pitts. C. C. & St. L. Ry. Co. vs. Fink, 250 U. S. 577;
N.Y. C. & H. River R. R. Co. vs. York and Whit-
ney Co., 156 U. S. 406.

In the Fink case the opinion was written by Mr. Justice
Day, who said on page 580:
The facts are that the railroad company on Septem-

ber 13, 1910, delivered to Fink, the consignee, two
boxes of Indian relics shipped to him at Dayton, Ohio,

7

from Los Angeles, California, the waybill specifying
charges in the sum of fifteen dollars, which sum Fink
paid upon receipt of the goods. The tariff rates filed
with the Interstate Commerce Commission so classified
this merchandise that the transportation charges
should have been thirty dollars instead of fifteen. It is
for the difference that this action is prosecuted.

On page 581 it was held that the purpose of the Act to
Regulate Interstate Commerce was to provide one rate for
all shipments of like character, and to make the only legal
charge for the transportation of goods in interstate com-
merce the rate duly filed with the Commission, thus avoid-
ing discrimination and giving all like treatment, which is
the main purpose of the Act to secure. Then Section 6 of
the Act to Regulate Commerce was quoted, and it was said
(p. 581) :

It was, therefore, unlawful for the carrier upon de-
livering the merchandise consigned to Fink to depart
from the tariff rates filed. The statute made it unlaw-
ful for the carrier to receive compensation less than
the sum fixed by the tariff rates duly filed. Fink, as
well as the carrier, must be presumed to know the law,
and to have understood that the rate charged could
lawfully be only the one fixed by the tariff.

In the course of the opinion the Maxwell case was cited
and applied. The Fink case was followed in the York &
Whitney Company case and it was held that the consignee
of the freight could not escape the liability imposed by
law through any contract with the carrier. Tn the case at
bar, the consignor and consignee was the United States.

Applying the decisions and the statute quoted, we sub-
mit that the carrier did not lose the right to recover here
because it exeeuted the release, and failed to object or pro-

test when stating or restating its freight bills or their pay-
ment.

8
III.

The law has placed it beyond the power of the carrier or
the Government to deviate from the tariff charges appli-
cable to the transportation service, and the final settlement
account and agreement are not to be so construed as to vio-
late the law.

We submit that the final settlement agreement is not to
be so construed as to embrace either branch of this case,
for the laws of the land entered into and became parts of
that agreement.

In Van Hoffman vs. City of Quincy, 4 Wall., 535, 550, it
was said:

It is also settled that the laws which subsist at the
time and place of the making of a contract, and where
it is to be performed, enter into and form a part of it,
as if they were expressly referred to or incorporated
in its terms. This principle embraces alike those which
affect its validity, construction, discharge, and enforce-
ment.

That language was quoted with approval in Hendrickson
vs. Apperson, 245 U.S. 105, 112, and the rule has been ap-
plied in many cases. Among them are:

Walker vs. Whitehead, 16 Wall., 314, 317;
Brine vs. Insurance Co., 96 U. 8S. 627, 637;
Barnitz vs. Beverly, 163 U.S. 118, 127.

We now submit that to construe the final settlement
agreement to mean that the Railway Company released
its claim for charges on freight carried for the United
States would make that agreement do what the statutes of
the United States forbid.

The Hepburn Act of June 29, 1906 (34 Stat. 584, 587,
ch. 5391, see. 6) contains this language:

No earrier unless otherwise provided by this Act,
shall engage or participate in the transportation of

9

passengers or property, as defined in this Act, unless
the rates, fares, and charges upon which the same are
transported by said carrier have been filed and pub-
lished in accordance with the provisions of this Act;
nor shall any carrier charge or demand or collect or re-
ceive a greater or less or different compensation for
such transportation of passengers or property, or for
any service in connection therewith, between the points
named in such tariffs than the rates, fares, and
charges which are specified in the tariff filed and in
effect at the time; nor shall any carrier refund or re-
mit in any manner or by any device any portion of the
rates, fares, and charges so specified, nor extend to any
shipper or person any privileges or facilities in the
transportation of passengers or property, except such
as are specified in such tariffs; Provided, That wher-
ever the word ‘‘carrier’’ occurs in this Act it shall be
held to mean ‘‘common carrier.”’

The clauses we have italicized erect a legislative barrier
against the construction put on the final settlement agree-
ment by the Government in this case, and against the re-
mitting or refunding in any manner or form any part of
the rates and charges specified for carrying the freight.
Language cannot be clearer or more positive.

The Congress did not stop with the legislation quoted,
but at the foot of page 587 it enacted:

The willful failure upon the part of any carrier sub-
ject to said Acts to file and publish the tariffs or rates
and charges as required by said Acts, or strictly to ob-
serve such tariffs until changed according to law, shall
be a misdemeanor, and upon conviction thereof the cor-
poration offending shall be subject to a fine of not less
than one thousand dollars nor more than twenty thous-
and dollars for each offense; and it shall be unlawful
for any person, persons, or corporation to offer, grant,
or give, or to solicit, accept or receive any rebate, con-
cession, or discrimination in respect to the transpor-
tation of any property in interstate or foreign com-
merce by any common carrier subject to said Act to
regulate commerce and the Acts amendatory thereof

a

10

whereby any such property shall by any device what-
ever be transported at a less rate than that named,
in the tariffs published and filed by such carrier, as is
required by said Act to regulate commerce and the
Acts amendatory thereof, or whereby any other advan-
tage is given or discrimination is practiced. Every
person or corporation, whether carrier or shipper, who
shall knowingly offer, grant, or give, or solicit, accept,
or receive any such rebates, concession, or discrimina-
tion shall be deemed guilty of a misdemeanor, and on
conviction thereof shall be punished by a fine of not less
than one thousand dollars nor more than twenty thou-
sand dollars: Provided, That any person, or any officer
or director of any corporation subject to the provi-
sions of this Act, or the Act to regulate commerce and
the Acts amendatory thereof, or any receiver, trustee,
lessee, agent, or person acting for or employed by any
such corporation, who shall be convicted as aforesaid,
shall, in addition to the fine herein provided for, be
liable to imprisonment in the penitentiary for a term
of not exceeding two years, or both such fine and im-
prisonment, in the discretion of the court. (Italics not
in original.)

That enactment not only makes it a misdemeanor for the
corporation to willfully fail to strictly observe its published
tariff, but also makes it a misdemeanor for any person or
corporation to offer, grant, or give, or to solicit, accept
or receive any rebate, concession or discrimination in re-
spect of the transportation of property whereby it shall by
any devices whatever, be transported at a less rate thaw
that named in the published tariffs, or whereby any other
advantage is given or discrimination is practiced.

That which is commanded, as well as that which is for-
bidden, is set forth in plain, broad and comprehensive lan-
guage, leaving no loop-hole for escape, and clearly cover-
ing the transaction here involved if the Government col
struction of the final settlement agreement be correct.

The enactment last quoted is a part of an amendment of
section 1 of the Act of February 19, 1903 (32 Stat. $47 See.

11

708) known as the Elkins Act. That acta not prescribe
imprisonment as a punishment, an omission which was cor-
rected in the Hepburn Act, as we have shown; otherwise
this part of the Hepburn Act is a re-enactment of section
1 of the Elkins Act.

We submit the construction of the agreement that we
are contending for makes it harmonize with the law of the
land, ‘‘For it is a rule of interpretation that where a con-
tract is fairly open to two constructions, by one of which it
would be lawful and the other unlawful, the former must
be adopted.’’

Hobbs vs. McLean, 117 U. S. 567, and cases there cited.

Respectfully submitted,

L. T. Micuener,
Attorney for Reading Company.
Wm. L. Krxter,

F. Carter Pope,

Of Counsel.

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386006_0408%3A5. Public record. Not legal advice.