#### THE ATLANTIC CITY RAILROAD COMPANY v. THE UNITED STATES.

[No. 291-A.

Decided April 2, 1923.]

*On the-. Proofs.*

*Use and maintenance of spur track to cantonment; implied*contract.— Where an agent of the Government and the president of a railroad company agree upon the construction of a spur from a railroad line to a Government cantonment for instruction of naval reserves, and the agent agrees to secure the right of way *216and to furnish enlisted men to do part of this work, and compensation is not mentioned hy either party, and the railroad company builds the siding and carries on a large business over it, charging its tariff rates over said spur, there is no liability on the part of the Government to pay the cost of said siding.

*The Reporter's*statement of the case:

*Mr. Louis T. Michener*for the plaintiff. *Dudley <& Miche-ner*were on the briefs.

*Messrs. Barrett F. Brown*and *G. H.*Foster, with whom was *Mr. Assistant Attorney General Robert H.*Lovett, for the defendant.

The following are the facts of the case as found by the court:

I. The plaintiff, The Atlantic City Railroad Co., is a corporation duly incorporated under the laws of the State of New Jersey, and at the time of the transactions hereinafter set out in these findings of fact operated, and still operates, a line of railway between Camden and Cape May in said State, which was at that time and still is part of the Philadelphia *&*Reading system of railroads, doing a business as a carrier of passengers and freight for hire and reward under tariffs duly filed with the Interstate Commerce Commission and published as provided by law.

The Atlantic City Railroad Co. at the times named in these findings was closely related to the Philadelphia & Reading Railway Co., a common carrier of freight and passengers in New Jersey, Pennsylvania, and other States, the plaintiff company being generally known as a part of the “ Reading system,” and the president of each company named was Agnew T. Dice, with offices in the Reading Terminal, Philadelphia, Pa.

II. In the naval appropriations act of August 29, 1916, 39 Stat. 589, there is a provision by which *“*the Secretary of the Navy is authorized to establish schools or camps of instruction at such times and in such localities as he may deem advisable for the purposes of instructing members and applicants for membership in the Naval Reserve Force,” and which appropriates therefor the sum of $30,000 “ to be expended .as the Secretary of the Navy may direct in the necessary equipment and maintenance of such schools and camps.” *217By the act of March 4,1917, 39 Stat. 1174, an appropriation of $30,000 was made for the “ equipment and maintenance of schools and camps established for the purpose of instructing members and applicants for membership ” in said force. By the act of April 17, 1917, 40 Stat. 28, $100,000,000 was appropriated to be expended for every purpose connected with the national security and defense “ at the discretion of the President ” until December 31, 1917. On May 28, 1918, Captain Cooper, commandant of the fourth naval district, was notified by the Navy Department that $300,000 had been apportioned for the erection of the buildings for the-camp of instruction for the Naval Eeserve Force at Cape May, but it does not appear from what fund the apportionment was made. By the naval appropriation act of July 1, 191-8, 40 Stat. 713, an appropriation of $2,655,360 was made under the heading “ Schools or camps of instruction for recruits and Naval Eeserve Forces.”

III. Some time in May, 1917, Mr. Thomas Newhall, a Pennsylvania banker, who was at the time, and had been for many years, president of the Philadelphia & Western Bail-road Co., was authorized and employed by Capt. George F. Cooper, United States Navy, commandant of the fourth naval district, to select and secure a site for a camp of instruction for the Naval Eeserve Forces. This service was intended to be and was performed by Mr. Newhall without compensation.

Beginning the latter part of May, 1917, Mr. Newhall visited and examined several places accompanied by different naval officers, and on one occasion by Captain Cooper, and finally fixed upon a tract of land near Cape May, N. J., owned by Messrs. Henry Ford and James Couzens, of Detroit, Mich., and leased by them to one William Bailey until February 1, 1918, as the most suitable site for the camp.

On June 6,1917, the said Bailey subleased 26 acres of said tract to the Government for the unexpired term of his lease, the consideration named being $1 and his employment as overseer of said property at $50 per month until the expiration of his lease.

*218Thereafter and before the camp was established, Mr. Newhall saw Mr. Agnew T. Dice, president of the Philadelphia & Reading Railroad Co. and the plaintiff company, about running a spur from the Atlantic City Railroad to the proposed camp on the Ford tract, which was afterwards known as the Wissahickon Barracks. Mr. Dice readily agreed to put in the siding and Mr. Newhall agreed to secure the right of way to the camp and to furnish enlisted men to do part of the work. The arrangement was entirely verbal and the subject of payment was not mentioned by either party, nor had Mr. Newhall any authority to promise payment by the Government.

Mr. Newhall then visited Detroit and secured a lease from Henry Ford and James Couzens, dated June 14, 1917, for said tract for a term of two years, renewable from year to year and to terminate six months after the conclusion of the war with Germany, possession to begin under said lease at the termination of the said lease to Bailey, and the consideration named was $1 per year. The lease also authorized the construction of railroad tracks and sidings on said land. On the same day Messrs. Ford and Couzens executed a supplementary lease allowing the Government to use the buildings and any other part of said tract, known as the Physick farm, adjoining the lands theretofore leased, provided the consent of the tenant should be secured. On June 19,1917, an agreement was obtained from Bailey, the tenant, concurring in the lease from his landlords on payment to him of $1,000 and the expending by the Government of $1,000 in repairs on a tenant house to which he agreed to move, thereby giving the Government the use of the farmhouse from which he moved and a barn, buildings worth $7,000, and 80 acres of land instead of 26 acres for use during the war. .

At a meeting of the board of freeholders of Cape May County held on June 11, 1917, upon the application of the United States and the Atlantic City branch of the Reading Railroad and the Pennsylvania Railroad (the West Jersey & Seashore branch running into Cape May), there was granted to them permission to lay a single track across Schellinger’s *219Landing Bridge and thence northward on the sidewalk line of the east side of the Ford Hoad; to deliver freight to the Ford property. On June 12,1917, the same parties requested permission of the Public Utilities Commission of the State of New Jersey to lay a railroad track on the Schellinger’s Landing or Ford Road to what is known as the Ford farm, where, as stated in the application, the Government was about to erect barracks to be used as a station for the training of its men, and the said track to be used for transferring of its materials and supplies from the lines of the railroads to the station. The board of public utilities commissioners, on June 18,1917, granted permission to connect the Atlantic City Railroad tracks near Schellinger’s Landing with the Ford farm. The right of way, 40 feet wide, to Qonnect the Atlantic City Railroad with the Schellinger Road by a curve running in a northeasterly direction 301 feet to the west side of said road was obtained from one J. Clifford Wilson, through whose truck patch it ran, by a lease dated June 19, 1917, to terminate six months after the conclusion of peace, for a nominal consideration.

On the same day that the permit was granted by the public utilities commission, June 18, 1917, Mr. Newhall wrote Mr. Dice, the president of the plaintiff road, stating that he was authorized to say that the Navy Department had definitely decided to construct the training camp at the Physick farm and that “ the commandant of the district will be greatly obliged if you will have the siding to the farm completed at the earliest possible moment.” And Mr. Dice at once replied to Mr. Newhall’s letter as follows:

“ I have your letter of June 18th, and note that the Navy Department has definitely decided to construct a camp for the training of the Naval Coast Defense Reserves at the Physick farm, near Cape May, N. J.

“ I have accordingly instructed our people to see that the siding to the farm is constructed as promptly as possible.”

On June 18, 1917, Capt. George F. Cooper, commandant of the fourth naval district, wrote President Dice:

“ The work on the camp at Cape May will be started in a few days, and I, therefore, request that you will proceed with the building of the spur from the Reading to the Ford farm, as indicated to you by Mr. Thomas Newhall.”

*220To which. President Dice replied by letter without date as follows:

“In reply to your letter of June 18th, I beg to.say that material has already arrived at Cape May for the building of the track to the new camp. We will push the work with all possible speed. There is, however, a very grave situation just now at all points, and particularly in southern New Jersey, on account of the shortage of labor. If you could give us some assistance in the matter, it would facilitate the building of the track.”

On June 20 work was begun on the spur to the Ford farm by the plaintiff, and completed July 9, 1917, with materials and labor furnished by plaintiff and with the assistance of labor furnished by enlisted men from the Government station at Sewells Point.

Nothing was said by the plaintiff’s officials or by the Government officials when the letters were written or during the rendition of the services or making the disbursements in these findings described on the subject of compensation and reimbursement.

IV. At a point 2 miles from the station of the Atlantic City Railroad in Cape May City the Atlantic City Railroad and the West Jersey & Seashore Railroad run parallel a short distance apart in a southwesterly direction toward Cape May City, the Atlantic City Railroad being on the east side of the West Jersey & Seashore Railroad. From this point there is a branch line of the Atlantic City Railroad to a landing on Cold Spring Inlet called Harbor, 5,742 feet in length, running in a southeasterly direction. The spur to the Ford farm started on this branch at a point 4,121 feet from the main line and thence by a curve to the west line of the Schellinger’s Landing road at a point 240 feet in a northerly direction from the center line of said railroad right of way where it intersects with the west line of said public road, then crossing said road with said curve to the east side thereof, thence along the east side thereof in a northerly direction to the Wissahickon Barracks cantonment line, 4,392 feet, and thence, leaving said public road, 1,350 feet within the limits of said cantonment.

*221The reasonable value of the materials used in the construction of the spur from the harbor branch to the limits of the barrack grounds, 4,392 feet, was $7,573.50, and the interest on same from July 10, 1917, to September 28, 1921, would amount to $1,916.07. The cost of the labor in laying the track, 4,392 feet, exclusive of labor furnished by the Government, was $2,680.93. The cost of maintenance of the spur from July 10, 1917, to January 1, 1918, when the United States Railroad Administration took over control of plaintiff’s railroad, was $86.99. The 4,392 feet of track was removed by plaintiff by September 28, 1921, in accordance with the privilege reserved when the right of way was granted for the construction of the track. The cost of removing the 4,392 feet of track was $1,089.4-2.

V. There were carried from August 1, 1917, to May 31, 1921, by plaintiff’s cars and engines over the harbor branch and the extension track to and from the said camp and barracks 40,169 passengers and 20,982.02 tons of freight, and the regular tariff rates of the road were applied to traffic over the extension to the camp.

The net operating income, after the payment of all expenses, accruing to the Director General during the period of Federal control of plaintiff’s road from December 28, 1917, to March 1, 1920, was $1,695,660.13. Prior to the taking over of the railroad by the Government it was what is known as a deficit road, and the deficit was generally about $200,000 per annum. The Government paid the plaintiff for the use of its road and equipment at the rate of $208,158.43 per annum. Said sum was paid in pursuance of the acts of March 21, 1918, 40 Stat. 451, 452, and February 28, 1920, 41 Stat. 460.

VI. On October 23, 1917, several months after the spur had been completed, the superintendent of the plaintiff company, J. E. Turk, visited the commandant of the Wissa-hickon Barracks and stated that he had information .to the effect that “ the Government was contemplating reimbursing the railroad companies who constructed sidings into military reservations and cantonments for that portion of the sidings constructed inside Government reservations,” and *222requested the commandant to forwai’d to the Navy Department through proper channels a letter addressed to the commandant by said superintendent, with an accompanying bill for the cost of construction and materials and a blue-print drawing of the siding and vicinity. The letter, dated October 28,1917, read:

“ I am inclosing sketch plan of the track provided at the request of the officers of the United States Government leading out of harbor branch of the Atlantic City Railroad, near Schellingers Landing, into the Wissahickon Barracks at Cape May, a distance approximately miles, and am attaching bill for the cost of material and such labor as was furnished by the railroad company only for that portion of the track located within the limits of the cantonment or property owned or controlled by the Government, between points marked ‘A’ and 'R,’ in amount $2,928.08.”

At that time no claim was made or suggested for that portion of the track outside the limits of the cantonment.

The track within the cantonment lines for which the bill was rendered was 1,350 feet in length. The Government settled this bill on July 16, 1918, by paying for the materials $1,860.27 and refusing to pay the item for labor, $1,062.47, and said sum was received without objection by plaintiff.

VII. On June 80, 1919, the Philadelphia & Reading Railway Co. filed a claim for $10,713.43 with the War Department under the provisions of the act of March 2, 1919, 40 Stat. 1272, commonly known as the Dent Act, for that part of the siding which was located outside of the camp lines, in which the value of the materials was charged against the Government and stated at $7,838.52 and the labor at $2,355.77. The claim was referred by the War Department to the Navy Department and was disallowed by the Paymaster General of the Navy and the plaintiff notified on July 21, 1920.,

MEMORANDUM

BT THE COURT.

The spur track or siding for the use and maintenance of-which suit is brought was built by and remained the property of the plaintiff, and was used in its business. A reasonable *223inference to be drawn from the facts is that its construction was undertaken by plaintiff as a part of the general plan to have the training camp located at the Physick farm. The plaintiff’s president wrote Mr. Newhall on June 18 to the effect that he noted that the Navy Department had “ definitely decided ” to locate the training camp at the place mentioned, and accordingly he had “instructed our people” to see that the siding was promptly constructed to the farm. The facts show that another railroad had sought permission to connect its line with the camp. Mr. Newhall did not have or claim to have any authority to create a liability upon the Government for the building or maintenance of the track, and the plaintiff’s agents well knew this fact. It was not at any time suggested that plaintiff expected to be compensated for the work. Several months after the work was completed and the siding was being used by plaintiff in delivering passengers and property at the camp site the plaintiff’s superintendent visited the commandant and stated that he was informed that the Government contemplated reimbursing the railroad companies which had constructed sidings into military cantonments for so much of the sidings as were constructed inside the Government-controlled property, and he accordingly requested the officer to transmit a letter he had addressed to the Navy Department on that subject. In this letter he asked compensation for materials used and labor employed in constructing the tracks within the boundaries of the cantonment. The Government, declining to pay for the labor employed, did pay for the cost of the materials, and this amount was received by plaintiff without any objection. No claim was then or before that time made for the portion of the track outside the cantonment. The plaintiff says there was no express contract, and the facts fall very short of creating an implied contract. “A promise to pay for services can only be implied when the court can see that they were rendered in such circumstances as authorized the party performing to entertain a reasonable expectation of their payment by the party benefited.” *Coleman*case, 152 U. S. 96, 99. In the *Russell*case, 13 Wall. 623, 631, relied upon by plaintiff, it definitely appeared that the Government took control of the steamers in question; that *224its officers intended “ to compel the masters and crews with the steamers to perform the services needed, and that the United States should pay a reasonable compensation for such services, and that such was the understanding of the owner.’'" No such facts appear in the instant case. The plaintiJf was greatly benefited by the location of the camp. It carried thousands of passengers as well as large tonnage, and exercised a like control over the spur track and its main line. The Government did not undertake to pay for the spur track or its maintenance, and the petition should be dismissed. And it is so ordered.