#### MOBILE & OHIO RAILROAD CO. v. THE UNITED STATES

[No. C-308.

Decided February 15, 1926]

*On the Proofs*

*Railroad rates; land-grant deductions; military arrangement; laborers.*— Laborers working on nitrate plants of the Government in Alabama were not civilian employees of any bureau of the War Department, as defined in Southeastern Military Arrangement No. 2, and were not subject to the land-grant deductions provided for therein.

*605*The Reporter’s*statement of the case:

*Mr. Benjamin Garter*for the plaintiff.

*Mr. Joseph H. Sheppard,*with whom was *Mr. Assistant Attorney General Kerman J.*Galloway, for the defendant.

The court made special findings of fact, as follows:

I. The plaintiff is a corporation and a common carrier bj-railroad of freight and passengers.

II. Effective beginning January 1, 1917, and still in effect at the dates of the transportation hereinafter mentioned, there was in existence and had been published an agreement between certain carriers, including the plaintiff, in the territory south of the Ohio and Potomac and east of the Mississippi Bivers, known as Southeastern Passenger Association territory, and the defendant by the Quartermaster General, United States Army, the Chief of the Bureau of Navigation, Navy Department, and the Quartermaster, United States Marine Corps, known as Southeastern Military Arrangement No. 2, the material and relevant portions of which are as follows:

“ III. TRAFFIC COVERED BT 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, 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.

“iv. 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 (except that on strictly intrastate traffic the intrastate selling fares will apply), less lawful land-grant deduction, properly established, less five per cent (5%), with a maximum deduction of $1 per capita. * * *

* * . # * *

*606“4. Exceptions: The 5% allowance will not be made in any of the following cases:

*****

■ “(c) On travel of soldiers on furlough, or in other cases where the entire cost of transportation is paid by the traveler and not by the United States Government.

$ $ & ‡ $

“ X. TRANSPORTATION REQUESTS

“ Tickets at the fares authorized herein will, only be furnished on United States Army, United States Navy, and United States Marine Corps transportation requests, only one transportation request to be drawn in each case calling for ticket from starting point through to final destination, the through routes to be shown on each transportation request and to include the initials of the lines and gateways or junctions via which ticket is to be issued.”

* * ‡

“ XIV. TERMINATION OF ARRANGEMENT

“ It is understood that this arrangement may be terminated at the pleasure of the United States Army, United States Navy, or United States Marine Corps independently of each other, and that the withdrawal from the arrangement of one of these branches of the Government will affect in nowise the operation of the arrangement as to the other branches electing to continue the arrangement; the reservation being made, however, that the carriers may withdraw from the arrangement at their option.”

III. On May 24, 1917, the carriers parties to the aforesaid Southeastern Military Arrangement No. 2 issued and published Supplement No. 1 thereto, addressed to the Quartermaster General, United States Army, the Chief of the Bureau of Navigation, the Navy Department, the Quartermaster of the United States Marine Corps, and the captain of the Division of Naval Militia Affairs, reading as follows:.

“The southeastern military committee, acting on behalf of the carriers operating in the territory south of the Ohio and Potomac and east of the Mississippi Rivers, parties to Southeastern Military Arrangements No. 2,’ hereby advise you that during the present emergency all U. S. Government traffic moving locally within southeastern territory under *607U. S. Government transportation requests issued by the U. S. Army, U. S. Navy, U. S. Marine Corps, or Division of Naval Militia Affairs, at U. S. Government expense and under orders of the President of the United States, including :

“ *(a)*State militia, mobilized or demobilized, moving from home stations to places of rendezvous and from places of rendezvous to points of concentration, or other points;

“(&) State naval militia;

*“(c)*The following classes which the Court of Claims of the United States decided, on February 19, 1917, in Appeal No. 33056 instituted by the Union Pacific R. R., were exempt from land-grant deductions:

“(1) Accepted applicants,

“(2) Rejected applicants,

“(3) Discharged military prisoners,

“ (4) Discharged soldiers,

“(5) Retired soldiers,

“ (6) Furloughed soldiers

will be considered as coming within the terms of said ‘ Southeastern Military Arrangements No. 2 ’ and settlements accepted accordingly; this notice to be retroactive, so far as concerns unsettled accounts, to the date of the call of the President of the United States — June 18, 1916 — excepting that the 5% allowance will not apply on traffic which moved prior to September 1, 1916 (the effective date of the original arrangements entered into between the U. S. Government and the Southeastern carriers).”

IV. On March 16,1918, the carriers, parties to said Southeastern Military Arrangement No. 2 and Supplement No. 1 thereto, by Mr. E. L. Bevington, chairman of the subcommittee on military passenger traffic, American Railway Association, addressed a communication to the Auditor for the War Department, as follows:

“ Referring to your favors of February 15th, 18th, and 23d, 1918, on above:

“Your attention is respectfully invited to the enclosed copies of Military Committee Circulars l70, 171, Revised, and 187 containing a list of the classes which the carriers understand are entitled to come under the military arrangements between the Government and the carriers, during the present war emergency.

“It will be noted that Circular 171, Revised, includes civilian employees when traveling under U. S. Government transportation requests of the issue of the War Department and at U. S. Government expense.

*608“ Therefore, I should say that the class referred to in your favor of February 15th; viz, civilian employees of the different bureaus of the War Department, who, while not directly connected with the Army, are subject to the control and direction of the War Department, come within the purview of the military arrangements and are entitled to the *5%*allowance as well as land-grant deduction, provided they travel under U. S. Government transportation requests of the issue of the War Department, and further provided that the expense of their transportation is paid by the Government out of appropriations for the War Department.

“ The foregoing applies, without prejudice, to the interests of the carriers during the present war emergency only.”

Y. Supplement No. 1, referred to in Finding III was withdrawn and canceled by the carriers parties thereto, effective November 1,1920, by circular dated October 19, 1920, reading in part:

“ The effect of this notice is that from and after November 1, 1920, the carriers parties to the interterritorial military arrangement and to the several intraterritorial military ar--rangements, will require in settlement for transportation furnished on Government transportation requests of the issue of the War or Navy Departments, the Marine Corps, or of any of the civil departments of the Government, calling for the transportation of any or all of the classes enumerated in the said supplements or other communications, or any analogous classes, full commercial fares without land-grant or other allowances.”

VI. At different times during the year 1920, prior to November 1, and at the request of proper officers of the United States Engineer Corps stationed at Florence, Ala., upon standard forms of Government transportation requests then in use, the plaintiff transported large numbers of ordinary laborers in territory south of the Ohio and Potomac and east of the Mississippi Rivers, known as the territory of the Southeastern Passenger Association. These men were ordinary laborers engaged by the United States Engineer Corps for labor in connection with war work nitrate plants of the Government at or near Florence, Ala., and were transported from different points in Alabama and Mississippi to Sheffield and Florence.

*609VIL The details of the transportation of such persons and settlement of charges therefor are as follows:

Bills 16247-P, 16258-P, 16259-P, 16445-P, 16446-P, 16447-P, 16448-P, and 16536-P covered service furnished in May, June, July, August, September, and October, 1920, and were submitted as claims to the Auditor for the War Department on the basis of net fares — that is, to say, with land-grant deductions — -and the said auditor certified them for settlement on that basis, and they were so paid. On the face of each of bills 16247-P, 16258-P, 16259-P, 16445-P, 16446-P, and 16447-P was the following: “The Mobile & Ohio R. R. contends that this business does not come under land-grant agreements and business moving on these orders was ordinary laborers and the M. & O. is entitled to commercial fares and the M. & O. accepts the land-grant fares named herein under protest.” On the face of bill 16448-P was: “ Settlement on basis of land-grant fares accepted under protest.” On the face of 16536-P was: “Accepted under protest.”

VIII. Bill 16483-P covered service furnished in September, 1920, and claim for compensation was submitted to the Auditor for the War Department at net fares, who settled it accordingly. The settlement so made was not protested. Supplemental claim for compensation on the basis of full commercial fares was filed with the Comptroller General, and settlement by him was refused, and the auditor’s settlement was not disturbed. The amount of the land-grant deduction was $480.31.

IX. Bill 19741 covered service in April, 1920, specific dates not shown. For the said service plaintiff, without protest, rendered its bill at net fares and was paid accordingly by the disbursing officer of the Army March 31, 1922. A supplemental bill was presented to the said disbursing officer for the land-grant deductions, which amounted to $119.34, and the sum of $119.34 was accordingly paid by the disbursing officer August 25, 1922.

X. Plaintiff rendered bills at net fares with land-grant deduction, with protest indorsed thereon, in order to save the time of rendering them at commercial fares, having *610them rejected, and rendering bills at the revised fares later on.

XI.The several amounts of land grant actually deducted under protest by plaintiff are as follows:

Bill 16247-P. $777.15

Bill 16258-P-1, 072.19

Bill 16259-P. 268. 70

Bill 16445-P. 767. 26

Bill 16446-P. 826. 54

Bill 16447-P. 332. 54

' Bill 16448-P. 279. 98

Bill 16536-P-151. 92

4,476.28

XII. On May 2, 1921, the plaintiff submitted to Maj. S. F. Godfrey, Corps of Engineers, chief of supply division, United States engineer office at Florence, Ala., the seven supplemental bills covering the items of land grant, and the plaintiff, having before that time referred bill No. 17426 for $151.92, supplemental No. 16536, to Auditor for the War Department for payment, the auditor disallowed the claims, and on June 1, 1921, returned the claim to plaintiff. Thereupon the chief of the supply division at Florence, Ala., returned the seven claims presented to him as above with the following statement:

“The transportation furnished under -Government requests enumerated on the above bills was for labor in connection with war work nitrate plants and the land grant and 5 per cent is applicable to these accounts, in accordance with decision of the Auditor for War Department. Deduction in force until November 1, 1920.”

XIII. On December 10, 1921, the plaintiff appealed from the auditor’s settlement of June 1, 1921, and his application was denied on the ground that having accepted payment under the auditor’s settlement, he was barred from a revision of his claim by section 8 of the act of July 31, 1894 (28 Stat. 207).

On March 29, 1922, the same supplemental claims which had been presented to the chief of the supply division of the engineer’s office at Florence, Ala., were, with the addition of bill No. 17425-P for $480.31, supplemental to bill No. *61116483-P (set out in Finding YIII), aggregating $4,804.67, presented to the Comptroller General for additional allowance. The claims were disallowed on two grounds: (1) That application for revision was not requested within one year from the date of the settlements by the auditor; and (2) because payments under the settlements of the auditor were accepted.

XIY. The passenger movements in this case are confined to territory south of the Ohio and Potomac and east of the Mississippi Rivers, known as the territory of the Southeastern Passenger Association. The defendant has filed a certified copy of Interterritorial Military Arrangement No. 1 which does not apply to traffic wholly within the territory of the Southeastern Passenger Association.

The court decided that plaintiff was entitled to recovei, in part.

Campbell, *Chief*Justice,

delivered the opinion of the court:

The railroad company having transported a number of persons upon Government transportation requests presented its bills therefor in due time. On account of an arrangement between the transportation companies and the Government known as the southeastern military arrangement and covering the territory in which plaintiff operated, so far as concerns this case, the bills of carriers were sometimes affected by land-grant deductions in a different way from that authorized by the land-grant acts. The reason for this was that the military arrangement mentioned provided for the transportation of certain Government employees at land-grant rates who in strictness would not come under the provisions of the land-grant acts, the Government securing as to these persons the benefits of lower rates. In view of this arrangement the plaintiff’s bills were presented with land-grant, deductions, but in nearly all instances there was indorsed, on the bill as presented a protest or objection to the effect; that the carrier claimed the full amount of the bill without the deduction. These protests were sufficient to save the' right of the plaintiff to now claim the proper amount due-upon its bills. See *Southern Pacific Co.*case, 268 U. S. 263.

*612The persons who were transported and for whose transportation this suit was brought did not belong to the classes of persons included in or covered by the land-grant acts. They were ordinary or common laborers engaged in different portions of Alabama and Mississippi for work at or upon the nitrate plants of the Government in the vicinity of Florence, Ala. The railroad company transported them to their destination from Mobile and other points upon Government transportation requests issued from the office of the United States Engineer Corps stationed at Florence or the place of the work. There is no question of the correctness of the bills, which were stated at the proper rates, and the only question for decision is whether the land-grant deductions were properly made from these bills. That depends upon the effect to be given the southeastern military arrangement. As already stated, this arrangement was intended to extend to the Government during the war emergency the benefits of rates that were not applicable in ordinary times.

It was not intended to embrace every class of persons or every person who would be carried on Government transportation requests, because if that had been the intention there would have been no necessity for the details .into which the military arrangement extends. It mentions “all U. S. Government traffic moving locally within southeastern territory ” under Government transportation requests “ issued by the U. S. Army, U. S. Navy, U. S. Marine Corps, or Division of Naval Militia Affairs ” at Government expense and “ under orders of the President including *(a)*State militia, (5) State naval militia, and (c) certain classes of military persons as being those who could be considered as coming within the terms of the arrangement.” As an interpretation of this arrangement a representative of the carriers addressed a communication to the Auditor for the-War Department in March, 1918, after the arrangement had been in existence about 10 months in which he says that Circular 111 includes civilian employees traveling under Government transportation requests of the issue of the War Department and that this embraced “ civilian employees of *613the different bureaus of the War Department ” who. while not directly connected with the Army, “ are subject to the, control and direction of the War Department ” and are paid out of appropriations for the War Department.

It seems clear, therefore, that to have the benefit of the land-grant deductions it must be shown that the persons transported — that is, the laborers transported to Florence to work in or about the nitrate plants — were within the classes contemplated by the arrangement. It would seem that “ civilian employees ” of the different bureaus or civilian employees of the War Department or the other specified classes are terms applicable to persons in the employ of the Government, and perhaps of some special bureau at and before the time transportation request is issued, but inapplicable to ordinary laborers engaged in one section to go to some place for work such as they might there prove able to do. They were in no sense military persons and they were not civilian employees of any of the bureaus mentioned in the arrangement. It does not appear that they were paid out of appropriations for the War Department.

Whether these laborers were employed under the authority conferred upon the President to procure or produce nitrates by the act of June 3, 1916, 39 Stat. 215, § 124, or amendments thereof, does not appear. The auditor having ruled against plaintiff’s contention, the question was not taken to the Comptroller General until after the lapse of time within which that official could consider an appeal from the auditor. We have not, therefore, any ruling of the comptroller. In our opinion the bills were not subject to land-grant deductions.

Several of the items claimed are not allowable, because payment of the bill as rendered was made and accepted without protest. See *St.*Louis, *Brownsville & Mexico R. R.*case, 268 U. S. 169. The plaintiff is entitled to judgment for $4,416.28, shown in Finding XI. And it is so ordered.

GRAiiam, *Judge;*Hat, *Judge;*Downey, *Judge;*and Booth, Judge, concur.