
    NEW YORK, NEW HAVEN & HARTFORD RAILROAD COMPANY v. THE UNITED STATES
    
    [No. B-44.
    Decided January 5, 1925
    
      On the Proofs
    
    
      Ruilroud rates; free bayyaye; military impedimenta; trustee account; final settlement. — A railroad company prior to Federal control of railroads transports military impedimenta belonging to tlie Government and tlie disbursing officer pays the bills for such services prior to January 1,- 1018, to said company and .subsequent thereto to tlie Railroad Administration. Thereafter the auditor in auditing the accounts of said disbursing officer disallowed as overpayments certain amounts paid as aforesaid upon tlie alleged grounds that certain military impedimenta should have been moved free of charge, and deducted such amounts from bills of the Railroad Administration. The Railroad Administration thereupon charged such deductions against said company, which subsequently paid the same into the trustee account to the credit of the Railroad Administration and charged them against the War Department. Held. that the railroad company may recover these deductions from the United States.
    
      Same; direct settlements; subsequent to Federal control. — Where a railroad company prior to Federal control of railroads transports military impedimenta belonging to the Government, and the bills for such service are presented to Auditor for the War Department and are disallowed by him after the termination of Federal control on tlie ground that such impedimenta should have been moved free of charge, the railroad company may recover compensation from the United States.
    
      The Reporters statement of tlie case:
    
      Mr. Benjamin 1). Winner for the plaintiff. Messrs. Edward G. Buclcland and W. W. Meyer were on the briefs.
    
      
      Mr. Lisle A. Smith, with whom was Mr. Assistant Attorney General Robert II. Lovett, for the defendant. Mr. A. A. McLaughlin, was on the brief.
    The following are the facts as found by the court:
    I. Plaintiff is a corporation organized and existing under and by virtue of a special charter granted by the General Assembly of the State of Connecticut, located and having its office and principal place of business in the city of New Haven in said State. For many years prior and up to the first day of January, 1918, petitioner operated, and since the first day of March, 1920, has operated a system of railways from, in, to, and through the States of New York, Connecticut, Rhode Island, and Massachusetts, doing business as a common carrier of passengers and freight for hire and reward under tariffs duly published and filed with the Interstate Commerce Commission by it and its connections, with the plaintiff’s concurrence.
    II. When the troops and Army impedimenta hereinafter described were transported there were in force upon all lines which furnished such transportation special baggage-car tariffs, which governed the use of special baggage cars and the charges therefor. The plaintiff’s tariffs provided that for a party of fifty or more traveling together one baggage car would be transported free of charge, providing the revenue from the party was not less than fifty dollars locally and twenty-five dollars on interline movements. The tariffs of the other lines which participated in said transportation provided for one free baggage car for a party of not less than twenty-five, provided the revenue from the party was not less than twenty-five dollars.
    III. With respect to the articles pertaining to and accompanying bodies of troops and composed of tents, ambulances, wagons, caissons, ammunition, tools, and other articles and things peculiar to' military impedimenta, and sometimes called company or battalion or regimental “ property ” or “ camp equipment,” it has always been claimed by carriers and conceded by the Quartermaster General of the United States Army that such shipments were essentially freight and were so to be treated in settlements with the carriers for their transportation.
    
      For many years the Quartermaster General has issued periodically a publication entitled “Manual for Quartermaster Corps,” and the edition thereof published and made effective in December, 1916, and still in force and effect, contains paragraphs 3441, 3443, 3445, 3454, 3494, 3498, and 3500, which, amongst others, recognize the clear distinction between company property and equipage or Army impedimenta on the one hand and the baggage entitled to free transportation or transportation in the baggage service on the other hand. A decision of the comptroller of June 18, 1918 (24 Comp. Dec. 774), to the effect that under the provisions of carriers’ baggage tariffs the Government was entitled to one car free for every twenty-five passengers in the accompanying passenger movement was the first notification that the Government claimed one special baggage car or its equivalent for every twenty-five soldiers traveling with Army impedimenta.
    IV. Since the decision of the comptroller of June 18,1918, all disbursing and accounting officers of the Government have made settlements with all carriers '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 (generally) twenty-five officers and enlisted men traveling.
    Y. At the time of the movement hereinafter described there were in effect certain military agreements between authorized representatives of the carriers and the War and Navy Departments. One of said agreements became effective July 1, 1916, and was superseded by the agreement known as the Interterritorial Military Arrangement, which became effective January 1, 1917. All the carriers participating in the transportation hereinafter described were parties to both of said agreements, except the plaintiff and other New England carriers, which were parties to the agreement of January 1, 1917, only, the material and relevant parts of which are as follows:
    “iii
    
      “Traffic covered by this arrangement. — The net fares, allowances, and routes in connection therewith authorized hereunder are applicable exclusively for the transportation of officers, enlisted men, and others connected with the United States Army, the 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 the United States Government, expense only.
    
      "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 V), less lawful land-grant deductions properly established, less five per cent (5%), the five per cent allowance not to exceed the maxim'um 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 Sect-ion XI).
    “(b) Proportions will not be used in any case in the construction of fares.
    # % # ❖
    “When special cars or special trains are furnished hereunder, not less than the minimum number of fares for such special cars or special trains will be required.
    * * * * $ “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 baggage 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 the transportation request for the transportation of excess baggage, collection will be made from the traveler at the regular 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 tic,kefs 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.
    ******* “ XX
    “ Termmation of arrangement. — It is understood that this arrangement may be terminated at the pleasure of the United States Army, United States Navy, and United States Marine Corps, independently of each other, and the withdrawal from the arrangement of one of these branches of the Government will in no way affect the operation of the arrangement as to the other branches of the Government electing to continue it, the reservation being made, however, that the carriers may withdraw from the arrangement at their option.”
    VI. The said interterritorial military arrangement was in full force and effect as late as May 20, 1920, and its provisions have been observed by the carriers generally. Under the terms of said arrangement the Government has paid for transportation at rates substantially 5 per cent less than it otherwise would have paid.
    VII. At different times during the years 1916 and 1917 the plaintiff and its connecting carriers, at the request of the proper officers of the United States Army, transported as freight on Government bills of lading furnished by the War Department, except bill 7369, certain Government property known as military impedimenta in connection with movements of United" States troops.
    VIII. The plaintiff as the last carrier rendered its bills to the disbursing quartermaster for the transportation of the military impedimenta described in Finding VII, based upon rates contained in tariffs in force on plaintiff’s lines and those of its connecting carriers during said movements. Bills 7379A, 7380, 7571, 7580A, 7799A, 8375A, 8521A, 8523, 8529A, 8664B, 8926A, and 9830A were paid by the disbursing quartermaster to plaintiff prior to January 1, 1918, and after that date were paid by tlie said disbursing officer to the United States Railroad Administration as agent of the plaintiff. Subsequently the Auditor for the War Department in auditing the accounts of the said disbursing officer disallowed payments that had been made on said bills in the ami) of $9,160.89 upon the ground that the Government was entitled to have had its military impedimenta carried free at the rate of one baggage ear for every group of 25 men in the troop movement under existing tariffs, and to that extent the payments were erroneous. The plaintiff having refused to refund to the disbursing officer the amount so disallowed, the auditor deducted the amount disallowed, $9,160.89, from bills of the Railroad Administration presented to said disbursing officer for payment. Of these deductions of $9,-160.89 the sum of $7,295.54 was deducted during the Federal control and $1,865.35 after Federal control had ceased. This amount, $9,160.89, was charged on the books of the Railroad Administration against the plaintiff company. The plaintiff thereupon, in January, 1921, paid the amount of said deduction into the trustee account to the credit of the Railroad Administration and charged the amount in a suspense account against the War Department to await action by the auditor or the Court of Claims.
    IX. The trustee account was created by general order No. 68, issued February 24, 1920, to take effect at the termination of Federal control, at 12.00 o’clock, midnight, February 29, 1920. By this order different railroads that had been under Federal control were made trustees of the United States Railroad Administration to collect all of its unpaid bills and to pay all of its outstanding liabilities, and generally to wind up all of its unfinished transportation business. All Federal cash pertaining to the transportation business was turned over to the railroads to be carried in this account. Any moneys erroneously paid into the trustee account by deposit in the bank where such account was kept could be withdrawn by a railroad company making such deposit with the consent of the Director General of Railroads. General order No. 68 is attached to these findings as Appendix “A” and is made part of this finding by reference thereto.
    
      X. Plaintiff’s bills No. 7369 for $118.20, No. 7500 for $3,458.52, and No. 20856A for $337.21, were presented to the Auditor for the War Department, and No. 7369 was disallowed by him on March 30, 1920; No. 7500 was disallowed by him on February 10, 1921, and No. 20856A was disallowed by him on June 15, 1920, all after the period of Federal control, on the ground that the Government was entitled to have had its military impedimenta, for the transportation of which said bills were rendered, moved free under the ruling of the comptroller. As to bill No. 7369, the property moved was not military impedimenta, but baggage for which no charge can be made against the Government under the agreements between it and the railroad companies. The amount of bill No. 7500, correctly computed under tariffs in force, should have been $2,677.90. If the plaintiff is entitled to recover under this finding the amount should be $3,015.11.
    XI. There was a final settlement between the plaintiff and the Director General of Railroads dated October 26, 1923, consisting of a final account and an agreement. By the second exception to this agreement the items contained in the trustee account were excepted as follows: “This settlement does not include or affect any moneys or assets of the director general turned over to the company pursuant to general order No. 68, the account created by this order to be adjusted as though this agreement had not been made.”
    The final account and final settlement agreement, respectively attached to these findings as Appendix “ B ” and Appendix “ C,” are made part of this finding by reference thereto.
    XII. In pursuance of the authority contained in section 1 of the act of March 21, 1918 (40 Stat. 451-453), 1mown as the “Federal Railroad Control Act,” the Director General of Railroads on April 36, 1919, entered into an agreement with the New York, New Haven & Hartford R. R. Co., the material parts of which read:
    “ SECTION 2. PROPERTY TAKEN OVER
    “ Sec. 2. The company’s railroad and system of transportation of which the President has taken over possession, use, control, and operation shall be considered as including:
    
      “ (a) The following roads and properties:
    * * * ❖ *
    “(b) All materials and supplies on hand at midnight December 31, 1917.
    “(c) All balances in the account or accounts representing the total of ' net balance receivable from agents and conductors : as of midnight December 31, 1917.
    * *
    “ SECTION 4. OPERATION AND ACCOUNTING DURING RED ERAD CONTROL
    Sec. 4. (a) All amounts received by the director general under paragraph (c) of section 2 hereof and all other amounts, whether received from the company in cash or collected or realized upon by him from current operating assets belonging to the company or arising from railway operations prior to midnight of December 31, 1917, shall -be credited by him to the company; and the director general shall, to the extent of the cash so received or realized, pay and charge to the company all expenses arising out of railway operations prior to January 1, 1918, including reparation claims, and unless objected to by the company, may pay and charge to the company any of such expenses, including reparation claims, in excess of the cash so received or realized. Balances of the above accounts shall be struck quarterly on the last days of March, June, September, and December of each year, and the cash balance found on such adjustments to be due either party shall be then payable, and if not paid shall bear interest at the rate of 6 per cent per annum, 'unless the parties shall agree upon a different rate; except that the rate of interest on any portion of a balance found due to the company which is derived from cash in bank to the credit of such company on interest shall be adjusted in each case independently of this contract as the parties may agree.
    “(b) Railway operating expenses, reparation and other claims, hire of equipment, and joint facility rents shall be allocated with reference to the time when incurred as between the period prior and subsequent to midnight of December 31, 1917, and as between the period of Federal control and the period subsequent thereto. Railway operating revenues shall be allocated as between the period prior and subsequent to midnight of December 31, 1917, in accordance with the established accrual practices of the company; except that w'here prior to midnight of December 31, 1917, the company’s part of a service on through business had been completed or carload lots on its own line had reached destination, the revenue of the company for such service shall be allocated to it, but as to classes of traffic where in the opinion of the director general such allocation will involve undue delay or undue absorption of accounting labor, such revenues shall be allocated in accordance with the established accrual practices of the company. Like methods of accruing and allocating such revenues shall be used at the end of Federal control.
    “(c) * * *
    “(d) Cash receipts or disbursements and other items arising out of transactions which do not enter into or form a part of those used in determining the company’s standard return shall not be received or paid by the director general unless such transactions are negotiated or conducted by his order for account of the company and with its consent. When moneys are so received or paid by the director general in connection with such corporate transactions they shall be credited or charged to the company. There shall be an accounting of the amounts due by one party or the other under this paragraph at the end of each quarter year of Federal control, and the amount so found due shall be then payable, and if not paid shall bear interest as provided in paragraph (a) of this section.
    j|{ # ❖ & # - # #
    “SECTION 9. FINAI, ACCOUNTING
    “ Sec. 9. (a) * * *
    “(b) At the end of Federal control the director general shall return to the company all 'uncollected accounts received by him from the company and also materials and supplies equal in quantity, quality, and relative usefulness to that of the materials and supplies which he received, and to the extent that the director general does not return such, materials and supplies he shall account for the same at prices prevailing at the end of Federal control. To the extent that, the company receives materials and supplies in excess of those delivered by it to the director general it shall account for the same at the prices prevailing at the end of Federal control, and the balance shall be adjusted in cash.”
    Copies of the agreement between the. Director General of Railroads and the New York, New Hayen & Hartford R. R. Co., dated April 26, 1919, are made part of this finding by reference thereto.
    The court decided that plaintiff was entitled to recover.
    
      
       Appealed.
    
   MEMOIiANDUM. BY THE COUKT

This is one of a class of cases in which arises for determination the effect of the settlement between plaintiff and the Director General of Railroads. It was referred to a special commissioner whose report is confirmed. We refer to Beading Company and Southern Railway Company oases, decided this day, ante, pp. 131 and 156.

Some of the items involved in this suit went into the ‘"trastee account” provided for by the director general’s order No. 68 set forth in the findings. • This account is expressly excepted from the effect of the settlement agreement in section 2 of the exceptions. Manifestly the plaintiff, in whose corporate right the cause of action arose , and who is made trustee by the settlement agreement, is the proper party to sue. The deductions from plaintiff’s bills for services prior to Federal control were erroneous. See Missouri Pacific Ry. Co., 56 C. Cls. 341; Alabama amd Vicksburg Ry. Co., 56 C. Cls. 496. Certain other of the items were for charges disallowed by the accounting officers after the termination of Federal control.

Judgment is rendered for both classes of the items mentioned.  