
    SOUTHERN RAILWAY COMPANY v. THE UNITED STATES
    
    [No. B-118.
    Decided January 5, 1925]
    
      On tfbe Proofs
    
    
      Railroad, rates; free baggage; military impedimenta; final settlement. — A railroad company, prior to Federal control of railroads, transports military impedimenta belonging to the Government and the disbursing officer pays part of the compensation to the railroad company and part to the Railroad Administration. The auditor in auditing the account of said disbursing officer disallows as overpayments certain compensation paid by him to the company for the transportation of military impedimenta upon the alleged ground that it should have been moved free of charge, and thereafter the auditor deducts the alleged overpayments from Railroad Administration bills. The Railroad Administration charges the deductions to the railroad company, which credits the same to the Administration, and the company then charges the deductions to the War Department. Held, that the railroad company may recover such deductions from the United States.
    
      
      The Reporters statement of the case:
    
      Mr. Spencer Gordon for the plaintiff. Mr. Newell W. Ellison and Covington, Burling & Rublee were on the brief.
    
      Mr. Lisle A. Smith, with whom was Mr. Assistant Attorney General Robert II. Lovett, for the defendant. Mr. A. A. McLaughlin was on the briefs.
    The following are the facts as found by the court:
    I. The plaintiff is a corporation duly incorporated under the laws of the State of Virginia. At the times of the different transactions hereinafter set forth the plaintiff operated, and still continues to operate, a system of railways in the State of Virginia and other States, doing business as a carrier of passengers and freight for hire and reward under tariffs duly published and filed with the Interstate Commerce Commission, as required by law.
    II. When the troops and military impedimenta hereinafter described were transported there were in force on all the lines which furnished such transportation special baggage tariffs which provided the terms and conditions under which associated travelers traveling on one ticket might become entitled to a baggage car free for the transportation of certain of their effects at the rate of one baggage car free to each group of (generally) 25 passengers paying full fares.
    III. At various times during the years 1916 and 1917 plaintiff transported in connection with movements of United States troops as freight OArer its lines of railroad, upon Government bills of lading, at the request of the proper officers of the War Department, certain shipments of livestock, wagons, tents, cots, and other camp equipment and company property, all of which are generally described as military impedimenta, for which transportation plaintiff, under the terms of said bills of lading, rendered its bills to the disbursing quartermaster, United States Army, at Washington, D. C., at the rates applicable to such transportation according to the lawful published freight tariffs on file with the Interstate Commerce Commission, less lawful land-grant deductions. Such bills were duly paid as rendered by the disbursing quartermaster as stated in Finding VIII.
    IV. The property in question was carried in freight cars. The bills of lading were prepared by the shipping officers of the Government under the direction of the War Department. Government bills of lading are never used in connection with the transportation of personal baggage.
    V. The Manual for Quartermaster Corps, United States Army, issued in the year 1916, which was in effect in 1917 and 1918, with certain amendments dated April 30, 1917, contained paragraphs 3494, 3497, 3498, 3509, which recognized that impedimenta, camp equipment, and company property was considered as freight rather than as baggage. Said paragraphs are made a part of this finding by reference thereto.
    VI. By the tariffs on file with the Interstate Commerce Commission publishing rates, rules, and regulations applicable to the movements of special baggage cars, special passenger trains, and special trains during the period in question, it was provided that arrangements for the movements of special baggage cars must be made in advance and that tickets were to be issued for the transportation of the baggage cars. When the shipments involved in this suit were made no arrangements were made in advance for special baggage cars or any requests made by the Government that special baggage cars be furnished, and no tickets were issued for special baggage cars. In connection with the handling of freight a ticket was never required.
    VII. By an interterritorial military arrangement or contract, entered into between the United States Army, Navy, and Marine Corps and certain carriers, including the plaintiff, effective January 1, 1917, and in effect in the years 1917 and 1918, it was provided in part as follows:
    “ill. TRAFFIC COVERED BY THIS ARRANGEMENT
    “ The net fares, allowances, and routes in connection therewith, authorized hereunder, are applicable exclusively for the transportation of officers and enlisted men and others connected with the United States Army, United States Navy, and United States Marine Corps, for whom the United States Government is lawfully entitled thereto and when traveling on transportation requests of the issues of the United States Army, United States Navy, and United States Marine Corps and at United States Government ex-' pense only.”
    “rv. NET FARES AND ALLOWANCES
    “(1) (a) The fares applicable under this arrangement will be the .lawful commercial fares as on file with the Interstate Commerce Commission from starting point to destination at time of movement (see exceptions, Section Y), less lawful land-grant deductions, properly established, less five per cent (5%), the five per cent (5%) allowance not to exceed the maxima allowances or exceptions as specified in Section VI. Government fares so established will apply to all military traffic as described in Section III, including special train and special car movements as well as individual and party movements. (See Section XI.)
    “(5) Proportions will not be used in any case in the construction of fares.”
    ❖ ******
    “xv. BAGGAGE
    “(1) One hundred and fifty (150) pounds of personal effects properly, checkable as baggage, under the tariff of the initial carrier, will be transported without charge for each person. Personal baggage- in excess of the free allowance stated when provision for the transportation of the excess is specially made in United States Army, Navy, or Marine Corps transportation requests and is paid for by the United States Government, will be charged for at the regular excess-baggage rate, based upon the net individual fare. When provision is not made in transportation request for transportation of excess baggage, collection will be made from the traveler at the regular individual commercial rate for weight in excess of the free allowance stated. Excess-baggage charges will not be subject to allowances applicable in connection with the fares for tickets under this arrangement. Baggage regulations in other respects than above will be in accordance with the tariff of the initial carrier checking the baggage in each case.
    “(2) Company, battalion, regimental, or Government property is not included in the above.”
    VIII. Thereafter the Auditor for the War Department in auditing the accounts of the disbursing quartermaster held that he had overpaid the plaintiff’s bills in the sum of $48,439.68 for transportation prior to Federal control, upon the ground that the Government was entitled to have had its military impedimenta transported free in that amount under a decision of the comptroller of June 18, 1918 (24 Comp. Dec. 774), holding that under a tariff in force on said railroad the Government was entitled to one baggage car free for every 25 men in the troop movement. On account of said alleged overpayments of part of these bills which were paid by the disbursing officer at different times from January to December, 1917, inclusive, to the plaintiff, and credited on its books to “ freight and revenue,” there was deducted from Railroad Administration bills the sum of $19,004.62, and on account of alleged overpayments of the balance of said bills of plaintiff, which were paid by the disbursing officer to the Director General of Railroads from January 24, 1918, to May 20, 1918, inclusive, and were credited by him on the Railroad Administration’s books to plaintiff through, the account “ Southern Railway Co. revenue prior to January 1, 1918,” there was deducted from Railroad Administration bills the sum of $30,782.33. These bills were paid to the director general in pursuance of General Order No. 17, a copy of which appears as Appendix A to these findings, and the payments were credited as received by him from time to time. Of the total deductions of $49,786.95 the sum of $1,347.27 was not charged back to plaintiff, and its claim is for $48,439.68.
    The Auditor for the War Department on November 21, 1918, made two1 deductions aggregating $300 from a Railroad Administration bill presented for payment in May, 1918.
    IX. The act of February 28, 1920, 41 Stat. 456, 457, provided for the termination of Federal control, as follows:
    “Sec. 200. (a) Federal control shall terminate at 12.01 a. m. March 1, 1920; and the President shall then relinquish possession and control of all railroads and systems of transportation then under Federal control and cease the use and operation thereof.”
    On February 24, 1920, General Order No. 66, effective February 29, 1920, was issued by the United States Railroad Administration for the purpose of outlining the method to be followed in the separation of the accounts of the Railroad Administration and the different railroads under its control when the railroads should be returned to their owners, which provided, among other things, that—
    “ Sec. 5. (a) * . * * If during the period of Federal ■operations amounts representing overcharge freight claims paid out of Federal funds, affecting traffic, the revenues from which were included in corporation revenue or credited to it as lay-over revenue on the Federal books, or amounts representing loss and damage claims paid out of Federal funds, chargeable to the period prior to Federal control, were carried on the Federal books in suspense accounts pending adjustment thereof with other carrier corporations, or pending receipt of additional information wherewith to dispose of the amounts carried, and such amounts are carried in suspense account as of February 29, 1920, they shall be charged to the corporation. Such amounts shall on the Federal books be charged to the account ‘(Name of corporation) — Corporate transactions,’ and on the corporate books should be charged to an appropriate suspense account and credited to the account ‘ U. S. Government — Corporate transactions.’ ”
    General order No. 66 is attached to these findings as Appendix B and is made part hereof by reference.
    X. In the months of March, April, May, June, and July, beginning March 24, 1920, and ending July 16, 1920, the auditor for the War Department made deductions from Eailroad Administration bills presented for payment at different times in 1919, amounts aggregating $48,139.68 on account of alleged overpayments made to plaintiff for transportation furnished prior to Federal control, under the ruling of the comptroller that the Government was entitled to have its military impedimenta transported free at the rate of one baggage car for every 25 men in a troop movement. These deductions were charged by the Eailroad Administration to the plaintiff railroad company in an account designated “ Corporate transactions.” On Eailroad Administration journal entry No. 18, April, 1920, charging back to the plaintiff company a deduction of $16,966.31 in the accqunt “ Corporate transactions,” is the following explanatory note:
    “ For- entry to charge back to Southern Eailway Co. the amount of various bills rendered against the IJ. S. Government during the year 1918 for the transportation of impedimenta moving with troops during the year 1917, credit for which was allowed the corporation through corporate transactions when the bills were prepared, or through agents and conductors’ balances transferred December 31, 1917. The Comptroller of the Treasury has declined settlement of these bills and the total thereof is being transferred to U. S. Government transportation account on the corporate books to be held pending appeal to the Court of Claims for a reversal of the comptroller’s ruling or final disposition.”
    On Railroad Administration journal entry No. 32, August, 1920, charging back to the plaintiff company $13,641.27 in the account “ Corporate transactions,” is the following explanatory note:
    “For entry to charge back to Southern Railway Co. the amount of various P. & F. bills rendered against the TJ. S. Government during the year 1918 for the transportation of military impedimenta, moving with troops during the year 1917, credit for which was allowed the corporation through corporate transactions when the bills were prepared, or through agents and conductors’ balances transferred December 31, 1917.
    “ The Comptroller of the Treasury has declined settlement of these bills, and the total thereof is being transferred to account of ‘Government suspense for handling through the Auditor for War or Court of Claims’ — prior on the corporate books, to be held pending appeal to the Court of Claims, for a reversal of the comptroller’s ruling or final disposition.”
    On Railroad Administration journal entry No. 47, charging back to plaintiff company a deduction of $17,657.35 in the account “ Corporate transactions,” is the following explanatory note:
    “ For entry to adjust between the various accounts named herein, amounts which have been deducted from various bills by the TJ. S. Government in the settlement thereof on account of overpayment on previous bills.
    “Also to adjust between the accounts named herein various amounts which have erroneously been debited or credited by previous months’ entries.”
    On Railroad Administration journal entry No. 27, charging back to plaintiff company deductions of $234.75 in the account “ Corporate transactions,” is the following explanatory note:
    
      “ For entry to charge back to Southern Eailway Co. the amount of various P. & F. bills rendered against the U. S. Government during the year 1918 for the transportation of bed sacks, military impedimenta, autotrucks and autotruck: bodies during the year 1917, credit for which was allowed: the corporation through corporate transactions when the bills were prepared, or through agents and conductors’ balances transferred December 31, 1917.
    “ The Comptroller of the Treasury has declined settlement of those bills, and the total thereof is being transferred to account of ‘ Government suspension for handling through the auditor for war or Court of Claims ’ — prior on the corporate books, to be held pending appeal to the Court of Claims, for a reversal of the comptroller’s ruling or final disposition.”
    These deductions by the auditor for free transportation of military impedimenta, amounting to $48,439.68 ($300 in. Finding VIII, plus $48,139.68), were all credited to Eail-road Administration by the plaintiff company in the account “ Corporate transactions,” and were charged on the. books of the plaintiff company to “ Government suspension for handling through auditor for war or Court of .Claims.”’ This account “to suspension” was separate and distinct from the account “ Corporate transactions ” and still remains unpaid on the plaintiff company’s books.
    XI. The plaintiff filed with the Auditor for the War Department a written protest to deductions amounting to $31,658.86. There were no written protests filed by the plaintiff on deductions amounting to $16,780.86. The head rate clerk of the plaintiff company had theretofore made a general verbal protest to the requests of the disbursing officer for refund to certain officers of the zone finance office, the office of the Auditor for the War Department, and the Comptroller General’s office, and had endeavored to obtain a reconsideration of the whole question.
    XII. On August 25,1920, a complete settlement was made between the War Department and the Director General of Eailroads of all unsettled accounts for transportation furnished by the railroad administration to the War Department between January 1, 1918, and March 1,1920, the period of Federal control of railroads, and the amount paid by the War Department to the railroad administration in such settlement was $38,169,294.39.
    On August 26, 1920, the comptroller of the railroad administration issued, with the approval of the Director General of Railroads, accounting circular 152, which reads :
    “ To Each Carrier the Properties of Which Were wider Federal Control at the Termination Thereof at Midnight February 29,1920:
    
    “A settlement has been made between the War Department and the director general for all unpaid charges for passenger and freight transportation service, including Pullman fares and demurrage charges, rendered by the director general.
    “Accounting officers are directed to close into an account styled ‘War Department transportation charges’ all unpaid accounts against the War Department carried in the Federal books covering such transportation service and to discontinue rendering Federal bills against the War Department for services of this nature.
    “The account ‘War Department transportation charges’ shall be closed into the administration ledger control account and reported as a special.item on Form AC-512-A in the same manner as prescribed in accounting circular 82 for reporting other items transferred to the administration ledger control account. Record of the balance so transferred shall be kept in the Federal accounts in such detail that it may be readily audited by representatives of the Railroad Administration. ”
    Special attention is directed to the fact that the settlement above referred to involves the War Department only, that it does not include amounts due for the construction of tracks, service at cantonments, etc., and does not include bills rendered in the Federal accounts for transportation service performed prior to Federal control.
    “Unpaid bills carried in the Federal accounts against the War Department for transportation service performed prior to Federal control shall not be closed into the account ‘War Department transportation charges,’ but instead shall be charged to the corporation through the account ‘(Name of corporation) —Corporate transactions.’ Such charges against the corporation, when reported on settlement statement Form AC-510, shall be allocated to the quarter in which the corporation was originally credited with the amount or bill was stated in the accounts.”
    
      XIII. The final account of the final settlement between the director general and the plaintiff reads as follows:
    [United States Railroad Administration — Director General of Railroads]
    
      Claim submitted by Southern Rwihoay Go. and settlement thereof as made by the director general
    
    
      
    
    
      
      XJlaim submitted by Southern Railway Co. and settlement thereof as made by the director general — Continued
    
      
    
    “ I hereby certify that this is a correct copy.
    “L. J. Tracy,
    Comptroller, U. S. R. A.”
    
    The amo’unt admitted as due by the plaintiff company to the Railroad Administration on the open account, corporate transactions, was $9,965,984.15; the amount claimed by the Railroad Administration at the date of settlement was $1.0,071,885.96, a difference of $105,901.81. Prior to that time both agreed upon the smaller amo'unt, the difference growing out of some money advanced by the Railroad Administration to plaintiff to pay interest on certain bonds of the New Orleans Terminal Co., and there arose a disputé as to who should pay the amount. There was no compromise of the amount charged against plaintiff in corporate transactions, and the full amount charged by the Railroad Administration was paid by the plaintiff company. Included in the amount paid by the company to the Railroad Administration per the account corporate transactions was the sum of $48,439.68, deducted from Railroad Administration bills on account of alleged overpayments of corporate bills. The only items of the account of the final settlement that were compromised in reaching the lump-sum settlement were those that arose out of depreciation and retirement of equipment and the maintenance of both roadway and equipment.
    XIV. When the final settlement was effected, an agreement was entered into on June 22, 1921, between James C. Davis, Director General of Eailroads and agent of the President, acting on behalf of the United States and the President, and the Southern Eailway Co., through its president, the material parts of which read as follows:
    “The Southern Eailway Co. hereby acknowledges payment of the sum of six million dollars ($6,000,000) by the said director general, the receipt whereof is hereby acknowledged, and the surrender to it of certain obligations given by the company and held by the Eailroad Administration, described as follows: Two million ■ four hundred twelve thousand dollars ($2,412,000), principal amount, Southern Eailway Co. three-year 6 per cent gold notes, Nos. 15433 to 17844, inclusive, dated March 1, 1919, maturing March 1, 1922, in full satisfaction and discharge of all claims, rights, and demands, of every kind and character, which the said company now has or hereafter may have or claim against the director general, or anyone representing or claiming to represent the director general, the United States, or the President, growing out of or connected with the possession, use, and operation of the company’s property by the United States during the period of Federal control; and the said company hereby acknowledges the return to and receipt by it of all its property and rights which it is entitled to, and further acknowledges 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 Eailroad Administration, growing out of Federal control.
    “ The purpose and effect of this instrument is to evidence 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. * * * ”
    The settlement agreement of June 22, 1921, is attached to these findings as Exhibit C, and is made part hereof by reference.
    The court decided that plaintiff was entitled to recover.
    
      
       Appealed.
    
   Campbell, Chief Justice,

delivered the opinion of the court:

This is one of a class of cases in which recoveries are sought for transportation services rendered prior to the taking over and operation of railroads by the Government where payments were made of the bills either to the railroad company or to the director general, or partly to both, and deductions were subsequently made from bills due to the director general for transportation during Federal control on account of supposed overpayments on the corporate bills. It was referred to a special commissioner for a finding and report of the facts, as were the other similar cases, and the parties were given a stated time within which to file exceptions to his findings or conclusions upon the coming in of the commissioner’s report. Some exceptions were filed by the defendant and the case has been heard upon the report, the evidence filed, and the defendant’s exceptions. The report is confirmed. The court has made findings of fact based upon this report and the record in the case. The case is largely controlled by what is said in Reading Company case, No. 34747, decided this day, but some differences between the two cases arising from the methods of paying plaintiff’s bills, the absence in this case of a contract such as was authorized by the act of March 21, 1918, 40 Stat. 451, and the manner of settling the accounts between the Director General of Eailroads and the plaintiff, present a question not found in the Reading Company case.

The railroad systems were taken into possession and control by the Government on the 28th day of December, 1917, under the provisions of the act of August 29, 1916, 39 Stat. 645, and the President’s proclamation dated December 26, 1917, 40 Stat. 1733. For the purpose of accounting the possession and control were to date from midnight of December 31, 1917. From this date until Federal control ended on March 1, 1920, 41 Stat. 457, the plaintiff’s lines were operated by the Director General of Eailroads. Prior to Federal control the plaintiff had rendered transportation services for the Government in the movements of troops of the United States and property of the Government incident to such movements, referred to as camp equipment or company property, and in due course had presented its bills to the Army disbursing quartermaster for payment. Some of these had been paid to the plaintiff, and others of them not having been paid prior to Federal' control were paid by the disbursing quartermaster to the director general, the amounts so paid him passing to the plaintiff’s credit on the books of the Eailroad Administration. These payments to the director general were made between tbe dates January 24 and May 20, 1918. Subsequent to all of tbe payments tbe Auditor for tbe War Department in auditing the disbursing officer’s accounts held that plaintiff’s bills had been overpaid in tbe aggregate sum of $48,439.68, of Avhich the sum of $19,-004.62 had been paid the plaintiff before Federal control and tbe sum of $30,782.33 to the director general, as above stated. Tbe auditor’s action was based upon a decision of the Comptrollery of the Treasury June 18, 1918, 24 Comp. Dec: 774, to the effect that under the tariff in force the Government was entitled to one baggage car free for every 25 men in the troop movements referred to, and applying this riding to plaintiff’s bills for transportation the auditor found that the overpayments were as stated. Carriers that had been affected by this ruling of the comptroller after-wards brought suits in the Court of Claims to recover amounts deducted from their bills under the ruling, and this court held that the bills were not subject to the deductions and gave judgments to the carriers. See Missouri Pacific R. R. Co. case, 56 C. Cls. 341; Alabama and Vicksburg Ry. Co., 56 C. Cls. 496; Texas and Paeific Ry. Co., 57 C. Cls. 284. Other cases have been similarly decided.

We therefore regard it as settled that the plaintiff should recover, unless the right in that regard is defeated or released by the settlement made between the plaintiff and the Director General of Railroads after the termination of Federal control, as evidenced by the agreement between them dated June 22, 1921. This agreement was made in pursuance of section 202 of the transportation act of February 28, 1920, 41 Stat. 456, directing the President “ as soon as practicable after the termination of Federal control ” to “ adjust, settle, liquidate, and wind up all matters, including compensation and all questions and disputes of whatsoever nature arising out of or incident to Federal control.” It is contended by the Government that the agreement includes a settlement of the items here sued upon even though the plaintiff be otherwise entitled to recover. This contention calls for some examination as to the situation of parties giving rise , to the settlement agreement.

The railroad systems, having been taken over by the Government, were operated through the agency of the Director General of Railroads. Moneys and oilier property derived from their operation during Federal control were the property of the United States. See Federal control act, 40 Stat. 451, sec. 12; Dupont v. Davis, 264 U. S. 456-462. But, as to moneys accruing to the railroad company out of corporate transactions prior to Federal control a different condition arose. There was no expropriation of these moneys by the United States, and when received by the director general his relation to the company in ivhose right they were collected was that of trustee or agent. For items of this kind received by the director general lie gave proper credits to the plaintiff company. It does not definitely appear that such credits were immediately entered on the director general’s books, and it may be they were held in abeyance in this case as in some others of its class awaiting decision as to the contract provided for in the act of March 21, 1918. At any rate, it appears from the facts that the director general received considerable amounts paid by the disbursing officers on account of services rendered by plaintiff to the Government prior to Federal control. No question is made as to the amounts of these receipts or the proper crediting of them to plaintiff on the books of the railroad administration. After these moneys had been paid to the director general and while plaintiff’s lines were under Federal control transportation services were rendered by the director general to the Government over these lines, and in due course his bills therefor were rendered to the proper disbursing or accounting officers of the Government. In the meantime the comptroller’s decision above mentioned (24 Comp. Dec. 774) had been made, and the accounting officers claimed that under that decision plaintiff’s bills for services prior to Federal control had been overpaid. They accordingly adopted the course of withholding payment on the director general’s bills, and by what are called “ deductions ” from his bills they from time to time withheld or deducted amounts sufficient to reimburse the Government for the alleged overpayments to the total amount of $48,439.68, which sum includes, as above stated, not only the overpayment of $30,782.32 which had been made on corporate bills to the director general but also that, of S19.004.02 made to plaintiff before Federal control. These deductions from bills of the director general were made at divers times between March 24, 1920, and July 16, 1920. Federal control of railroads terminated March 1, 1920. Sec. 200. transportation act of February 28, 1920, 41 Stat. 457. The final settlement between plaintiff and the director general did not occur until June 22, 1921. The railroad ad.ministration books showed credit to the plaintiff of the sums ( ollected by the director general on plaintiff’s corporate bills for services prior to Federal control and as and when the deductions mentioned were made from the. director general’s bills there were journal entries on the railroad administration books charging back to the plaintiff the amounts of the several deductions. These entries were made, as stated in the findings, in pursuance of General Order No. 66 of the director general, dated February 29. 1920. So long as the director general had in possession funds arising from corporate transactions prior to Federal control he could charge the same with the allowed overpayments and accounts for the balance. During all the period involved in these transactions the decision of the comptroller was controlling upon the accounting officers. The decision by this court as to Government's right to free transportation was made June 13. 1921. Minsouri Pacific R. R. Co., 50 C. Cls. 341. So it would seem the director general could also regard the comptroller's decision as controlling at the time of the transactions. At any rate, he was not required as trustee or agent-holding funds of plaintiff under the circumstances stated to take issue with the accounting officers as to the correctness of the comptroller’s 1‘uling. By crediting the plaintiff with his receipts and charging it with the deductions from ’his own bills and accounting for the difference he left the plaintiff free to settle the controversy with the Government. See Story's Agency (9th ed.), sec. 300. Certainly the Government can not complain of such course, and the plaintiff assented to it. As already stated, funds derived from Federal operation of the road were property of the United States. Likewise, funds disbursed by the quartermaster or accounting officer' belonged to the United States. If the latter overpaid bills to the director general and then required a return of such overpayment, the effect of the transaction when the director general charged to plaintiff’s account the amounts of alleged overpayments was to reimburse the Government at plaintiff’s expense. If then the deductions were erroneously made, it is manifest that the plaintiff and not the Government or the director general or the disbursing officer is the real loser. There was, however, a settlement between the director general and plaintiff, accompanied by a written agreement which declared its purpose and effect was “to evidence 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,” with some stated exceptions not material here. For the large consideration mentioned in it the agreement contained an acknowledgment by the plaintiff that the director general had fully complied with and satisfied all obligations on his part or on the part of the United States or the railroad administration “ growing out of Federal control,”

At the inception the question arises as to whether the matters involved in this suit grew out of or were an incident to Federal control of railroads because the agreement purports to settle all such demands. Plaintiff’s services in transporting troops and property of the United States prior to the taking possession and control of railroads by the Government did not grow, out of and was not an incident to Federal control, nor were the deductions that were made from these bills as rendered incidents to or matters growing out of Federal control. The point at which Federal control may be said to enter into the transactions is the collection by the director general of plaintiff’s bills. He became liable to account for these collections, because his right to collect, or his receipt of payment, may be said to grow out of Federal control. If the case stopped here without any further facts, we would be compelled to say that the agreement was conclusive upon the question of settlement for the amounts collected. But that is not the case. Before the agreement was actually made the parties engaged in an elaborate statement of accounts. As finally stated, a copy of the final account appears in the findings. Orders were made by the Railroad Administration as to the disposition to be made of a number of accounts, among these the accounts of corporate transactions before Federal control, some referred to as “ lap-overs.” Deductions from the receipts by the director general growing out of plaintiff’s “ corporate transactions ” were made in the exact amount of the deductions which the accounting officers had made from his accounts. This left a balance in his hands due the plaintiff, and for this balance he accounted. Appropriate book entries were made both on the Railroad Administration books and on the corporate books, in accordance with General Order 66 and Accounting Circular 152. These appear more in detail in the findings. By these entries plaintiff has accepted the payments to, or collections of its bills by, the director general, diminished by the deductions from his bills that the accounting officers made. The effect of the whole transaction is that by the deductions made from the director general’s bills the accounting officers have been enabled to balance the plaintiff’s account according to their claim as to overpayments by the disbursing officer. By deducting similar amounts from funds in his hands, collected from plaintiff’s corporate transactions, the director general has taken credit for the money which the accounting officers thus deducted from his bills. And by reason of all these deductions plaintiff’s bills against the Government have been decreased in the amount of the deductions. The account between the director general and plaintiff is thus settled; but plaintiff has not been paid for what may be due on account of erroneous deductions from its bills for services before Federal control. We repeat, the deductions from the director general’s bills were all made by the accounting officers in 1920 after the termination of Federal control and not during Federal control.

It is not necessary to deal at length with the item of the claim that appears to have been paid directly to the plaintiff before Federal control because the deduction made of the amount of that item was included in the total of the deductions from the director general’s bills. It was repaid to him by plaintiff in the transactions above described. Our conclusion is that the plaintiff’s bills were not overpaid and that the settlement with the director general does not preclude a right to recover.

The plaintiff is entitled to recover the amount of the deductions. And it is so ordered.

GRAHAM, -Judge; Hay, Judge; DowNey, Judge. and Booth, Judge, concur.  