#### THE LOUISVILLE AND NASHVILLE RAILROAD COMPANY v. THE UNITED STATES 1

[No. A-33]

*On the Proofs*

*Railroad, rates; equalization agreement; usually traveled*route:— A route, excessive in its roundabout character and increased mileage, is not, in view of the special facts in evidence, such a route as is contemplated in an agreement to meet “the net cash rates established via the longest land-grant mileage from point of origin to destination over usually traveled routes.”

*The Reporter's*statement of the case:

*Mr. Benjamin Garter*for the plaintiff.

*Mr. Louis R.*Mehlinger, w.ith whom was *Mr. Assistant Attorney General William J.*Donovan, for the defendant. *Messrs. Perry W. Howard*and *A. A. MeLaughlim,*were on the brief.

Decided April 6, 1925.

Motion for new trial overruled

October 26,1925.

The following are the facts as found by the court:

I. Plaintiff is a corporation organized under the laws of the State of Kentucky owning and operating a system of railroads in the States of Kentucky, Indiana, Illinois, Tennessee, Georgia, Alabama, Florida, Mississippi, and Louisiana.

II. In the years 1916 and 1917 there were in effect on plaintiff’s said lines up to the 1st day of July, 1917, “ Joint Passenger Tariff No. 6570,” issued by Joseph Richardson, agent of the Southeastern Passenger Association, and for the remainder of said period a “ Southeastern Joint Baggage Tariff No. 6,” issued by D. C. Wayne, acting agent of said association, both relating to the transportation of baggage, *2except where they specified other conditions, in passenger-trains. Both of said tariffs contained the following provisions :

*“Baggage defined.*

“(a) Baggage may be either personal or sample, defined: as follows:

“ (b) Personal baggage consists of wearing apparel, toilet articles, and similar effects in actual use, and necessary and appropriate for the wear, use, comfort, and convenience of' the passenger for the purpose of the journey, and not intended for other persons nor for sale.

“(c) Sample baggage consists of baggage for the commercial as distinguished from the personal use of the passenger and is restricted to catalogues, models, and samples, of goods, wares, or merchandise in trunks or other suitable-containers, tendered by the passenger for checking as baggage to be transported on a passenger train, for use by him. in making sales or other disposition of the goods, wares, or merchandise represented thereby.

“(d) Money, jewelry, negotiable papers, and like valuables should not be inclosed in baggage to be checked. The-carriers issuing and concurring in this tariff will not be-responsible for such articles in baggage.

“ (e) All baggage must be inclosed in receptacles provided with handles, securely locked or otherwise fastened, and made-of material of a quality which will withstand the rapid-handling and piling necessary and incident to its transportation, such as trunks, valises, telescopes, suitcases, leather hat boxes, and satchels.

❖ ❖ Hi * * # ***

“Articles oilier than baggage which may be handled in regular baggage service. * * *

“ Camp equipage. For private hunting, fishing, or camping parties, consisting of tent poles not exceeding fifteen (15) feet in length, tents, small bundles of bedding, and folding cots, when securely wrapped, roped or strapped; also cooking utensils, when in boxes or crates provided with handles.

“ Charges at excess-baggage rates for gross weighty minimum charge same as for 50 pounds excess-weight baggage,

“ Bedsteads, mattresses, bed springs, or stoves will not be checked.

*3“ *Public-entertainment 'paraphernalia.*

* * * * * * ❖

*uBates for baggage ears.*

“ Eates (parties less than 25) : 1. For movements by regular train of a private or extra baggage car with party of less than twenty-five (25) passengers desiring the exclusive use thereof the charge will be the regular authorized fare for each member of the party and in addition ten times the one-way first-class adult passenger fare for route traveled by car. *******

“ Eates (parties of 25 or more) : 3. For movement by regular train of a private or extra baggage car with party of not less than twenty-five (25) adults or their equivalent desiring the exclusive use thereof the charge will be the regular authorized fare for each member of the party for distance traveled by car.

*******

“ Minimum collection for each movement: 5. For each additional ■ twenty-five (25) fares an additional baggage car may be moved without charge, providing the revenue from the party requiring two baggage cars shall not be less than forty dollars ($40.00) per movement; for party requiring three baggage cars, fifty-five dollars ($55.00) per movement.”

*******

Said baggage tariffs did not have and did not purport to have any pertinence to transportation done under bills of lading, nor to any freight transportation whatever.

III. In said years 1916 and 1911, 81-shipments of freight, shown by an amended bill of particulars filed in the case, were made by authorized officers of the United States to points on plaintiff’s said lines, such freights being the property of' the United States and being required for the use of certain United States troops. Such shipments were made entirely upon bills of lading in a form prescribed by the War-Department for transportation of Government freights,, except that two were on commercial bills of lading and three: on certificates. Said freights all fell under one or another head of the classification of or pertaining to the freight tariffs. In most instances two or more shipments were included in each bill rendered, and all such shipments were covered by 37 bills, each designated on said bill of particulars by plaintiff’s bill number.

*4IY. On March 18, 1911, the plaintiff company, together with the railroad companies generally of the United States, at differing dates, entered into a land-grant equalization agreement with the Quartermaster General of the Army, still in force at the time of the transportation herein involved, in which, under the heading “ Freight Traffic Agreement,” it was provided as follows:

*“*1. The carriers shown herein agree, subject to the exception specifically stated below and subject also to the exceptions filed by each individual line forming part of a through route, to accept for the transportation of property moved by the Quartermaster Corps, United States Army, and for which the United States Government is lawfully entitled to reduced rates over land-grant roads, the lowest net rates lawfully available, as derived through deductions account land-grant distance from a lawful rate filed with the Interstate Commerce Commission applying from point of origin to destination at time of movement.”

The carriers in southeastern territory, including the plaintiff and other lines concerned in the freight transactions involved in this claim, were parties to the land-grant equalization agreement, but did not file any exceptions to the same against equalizing with any lawful rates via Chicago and Cairo, Ill. The eastern lines with which New York and New Jersey shipments here concerned originated had filed exceptions against equalizing, on traffic for southeastern points, with the land grant between Chicago and Cairo.

Paragraph 3 of Section I of the agreement, under the heading General Instructions, was as follows:

“ 3. Carriers in trunk line and New England territories (i. e., east of Buffalo, N. Y., Pittsburgh, Pa., Wheeling and Charleston, W. Va., and north of the Yirgina State line) tdo not participate in land-grant deductions on freight traffic, but such deductions are absorbed by their southern or western connections. Freight traffic can, therefore, be routed over any of the lines in trunk line and New England territories provided routing south or west thereof is in connection with carriers shown as agreement lines herein.”

The Seaboard Air Line Railway, which was the initial and contracting carrier in the movements here in question, is shown by the Manual of the Quartermaster Corps, volume 2, Appendix, to have joined in the equalization agree*5ment above referred to on January 18, 1911, but it is shown by the testimony, and so found, that on January 18,1911, the Seaboard Air Line Railway transmitted to the Quartermaster General an agreement to equalize, as follows:

The QUARTERMASTER Geheral, U. S. Army,

"Washington, *D. G.*

Sir : The Seaboard Air Line Ry., by its authorized representatives, hereby agree to accept for the transportation of U. S. Government passengers and freight, moved by the Quartermaster’s Department, U. S. Army, the net cash rates established via the longest land-grant mileage from point of origin to destination over usually traveled routes in connection with published tariff rates legally filed with the Interstate Commerce Commission.

This agreement to remain effective during the calender year ending December 31, 1911, and thereafter from year to year unless the carrier files notice of withdrawal with the Quartermaster General of the Army at least sixty (60) days prior to the beginning of any calendar year.

Seaboard Air LiNE Ry.,

By L. E. ChaleNor,

*G. F. Agt., Representative Freight Deportment.*

(To be signed in duplicate.)

War Department, Q. M. G. O. No. 280513.

It does not appear that the Seaboard Air Line Railway had given any notice of withdrawal from this agreement before the dates of the several shipments in question.

Y. Plaintiff being charged with the collection of compensation for the shipments in question, its proper officers prepared its bills upon forms prescribed for that purpose and presented the same for payment to proper- disbursing officers. The bills were stated by plaintiff in accordance with freight tariffs and classifications filed herein and contended by it to be applicable thereto. As hereinafter shown a part of the said bills were paid by the disbursing officer as billed and the others as unpaid claims were forwarded to the Auditor for the War Department for his direct settlement.

YI. From plaintiff’s original bill of particulars, aggregating $57,268.49, two items of $2,903.15 and $1.04 were eliminated when an amended bill was filed, aggregating; $54,364.30.

*6Bills 5850-1, 5850-2, 5850-3, 5850-4, 5850-5, 5850-7, and 5850-8, aggregating $22,998.10, are withdrawn by plaintiff.

VII. Bills Nos. 5815-10 for $657.68, 5815-11 for $1,845.07, 5815-12 for $4,488.59, 5850-26% for $64.07, 5995-100 for $5,369.40, and 6127-14 for $2,487.94, aggregating $14,912.70, were paid by a disbursing officer as billed by plaintiff. The remaining bills as unpaid claims were forwarded by the disbursing officer to the Auditor for the War Department for direct settlement. The total of $5,433.47 claimed on bills Nos. 5850-26% and 5995-100 was paid directly to plaintiff prior to Januai’y 1, 1918, when the Government took control of the railroads, and the total of $9,479.23 claimed on the remaining bills was paid directly to the Director General of Railroads as plaintiff’s agent during the period of such Federal control.

The Auditor for the War Department took exceptions to the payments which had been made by the disbursing officer on the above bills for the reason that military impedimenta, camp equipage, etc., should have been transported free of charge on basis of one carload free for each 25 men in the movement. The disbursing officer called upon plaintiff to refund $14,848.63 on account of said sums so held to have been improperly paid, which plaintiff refused to do; and thereafter, and after plaintiff’s railroad had been taken and was being operated by the United States, the auditor deducted said amount from certain several bills of the United States Railroad Administration not otherwise involved herein.

Of said sums so deducted the plaintiff was entitled to be paid $13,173.71.

VIII. Defendant admits that upon bills Nos. 5612-27, 5815-9a, 581.5-10, 5815-11, 5850-23, 5850-24, 5850-26, 5850-26%, 5850-27, 5850-33,' 5884-43, 5951-18, 5995-11, 5995-51, 6033-2, and 6209-58 there was due plaintiff a total of $3,759.50.

Of the above bills, 5815-10, $657.63, and 5815-11, $1,845.07, are included in those paid by the disbursing officer and going to make up the sum of $14,848.63 referred to in Finding VII, and bill 5850-23, for $156.82, was paid by an appropria*7tion by Congress of $129.31, which was paid to and accepted by the plaintiff, the sum of which bills deducted from the •above aggregate leaves of the total the sum of $1,099.98 as nnpaid.

IX. Upon all other bills exceptions are taken by the defendant to the amounts claimed, predicated on difference as to applicable rates and to some extent on contention by the plaintiff that equalizing land-grant rates applied by the defendant are not applicable because not constructed over a usually traveled route between the points of origin and destination. Said bills are set out by number in the table following, and each numbered bill is followed in separate columns by the “ amount claimed,” the “ amount conceded by defendant,” the “ difference,” and in the last column an “ x ” when the difference is conceded by the plaintiff, the “ x ” being followed by the amount conceded by the plaintiff if a part only of the difference is conceded. For convenience ■of reference the items are numbered serially.

Items 1, 6, and 12, deducted above, are three of the items included in the deduction made from bills of the Eailroad Administration and are included in Finding VII.

X. The total amount of land grant in dispute is $3,937.74, arising on shipments from New York and New Jersey points to Anniston, Ala., as to which an equalizing rate via Chicago and Cairo was applied.

*8XI. Upon the institution of Federal control of railroads the Director General, under authority vested in him by the act of Congress approved March 21,1918 (40 Stat. 451), and in pursuance of instructions and notices issued by the War and Treasury Departments and by himself and by agreement with plaintiff in a form prescribed by him, took into possession, beside plaintiff’s physical properties, cash in hands of its station agents, and its uncollected bills for services which it had rendered to the date of the commencement of said control; and thereafter said Director General, to the extent herein narrated, collected such bills as plaintiff had against the United States for transportation performed and paid such charges as were due from plaintiff to the United States.

XII. During the Federal control of railroads the Director General, in the operation of plaintiff’s lines, performed much service over said lines for the War Department, for which his bills were duly rendered. Before settlement for such services the Auditor for the War Department deducted from the bills of the Director General various sums to the aggregate amount of $14,912.70, being the amounts set out in Finding VII, held to have been wrongfully paid under the free baggage car rule. The department was given credit at the time payments were made on the Director General’s books for the amount paid on his bills, and the amounts unpaid by reason of said deductions remained a charge on his books against the department.

In August, 1920, a settlement for services rendered was had as between the Auditor for the War Department and the Director General of Railroads and a large sum was paid the Director General, but the disallowance of said amounts paid on plaintiff’s bills as aforesaid still stood and that amount was not included in said settlement.

XIII. In June, 1920, the plaintiff, in keeping the Director General’s books of account, charged itself in the amount of $7,857.34 in an account styled “ L. & N. Railroad Company— Federal assets collected,” on account of deductions described which had been made from bills of the Director General.

In December, 1920, the plaintiff, in an account styled “L. & N. Railroad Company — Corporate Transactions,” charged *9itself in the amount of $6,991.21 on account of said deductions made from bills of the Director General as recited, and in a settlement subsequently had between the plaintiff and the Director General, the Director General received the benefit of said charge.

In a settlement had as of December 31, 1921, between the plaintiff and the Director General, relating to plaintiff’s trustee account, it was found that there was due the Director General the sum of $41,910.42, which the plaintiff, on March 22, 1922, paid into said trustee account. Said sum so paid included said sum of $7,857.34.

XIV. On March 7, 1922, plaintiff and the Director General entered into a final settlement agreement in writing, pursuant to which the Director General paid the plaintiff a lump sum of $7,000,000 — “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, or out of the contract between the parties dated the 14th day of March, 1919.”

Such final settlement agreement also provided:

“ 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, save and except that the following matters are not included in this adjustment and are not affected thereby:

“ EXCEPTIONS

“ 1. The obligation on the part of the company, as expressed in the standard form of contract between the Director General and the company, as to the conduct of litigation arising out of Federal control (except as to claims and suits of carriers against the Director General of the United States), as is stated in paragraph (f) of section 9 of said contract, is to continue and is not affected by this settlement.

“ 2. This settlement does not include nor affect any moneys or assets of the Director General turned over to the *10company pursuant to General Order No. 68, the account created by this order to be adjusted as though this agreement had not been made.

“ 3. This settlement does not include the obligations of the Director General, assumed in paragraphs (i) and (j) of section 4 of said contract, to save the company harmless as to. claims, if any, of third persons, or the obligations of the Director General in respect to the payment of taxes under section 6 of the contract.

_ “ 4. This settlement does not affect nor alter any obligation executed by the company for amounts loaned, advanced, or funded by the Director General, or amounts due by reason of any equipment trust agreements, all such obligations on the part of the company to remain in full force, the same as if this agreement had not been entered into.”

The court decided that plaintiff was entitled to recover.

1

 Petition for writ of certiorari dismissed.

MEMORANDUM BY THE COURT

The right of the plaintiff to recover the first three items set out in the conclusion of law is not now contested. The fourth item, which is contested, involves the use of the Chicago-Cairo route as a proper basis for equalizing land grant.

On this point the record is unsatisfactory and leaves room for a possibility that the question may not in fact be correctly determined.

If the agreement of the Seaboard Air Line Eailway as set out in Finding IY is controlling, equalization with the Chicago-Cairo route was unauthorized because not a “ usually traveled route ” between points of origin and destination.

The equalizing agreement participated in generally by the railroads, quoted from in Finding IV and found in full in the Manual of the Quartermaster Corps, volume 2, page 223, makes different provisions as to passenger and freight transportation and, as to the latter, does not contain the words “ usually traveled route.” It is for construction if uncertain in its application and, in the absence of a specific showing as to its applicability, a reasonable construction must prevail.

There is no showing that the deductions made on the basis of the Chicago-Cairo route were from a lawful rate *11filed with the Interstate Commerce Commission applying from point of origin to destination, and applicable as against either the L. & N. or the Seaboard. Recognition of this route for land-grant purposes by and its use as against another carrier is not necessarily of force.

The use of this route for equalization purposes in the absence of a showing does not appeal. It is excessive in its roundabout character and increased mileage. The defendant, upon this question and to sustain its contention, furnishes the testimony of a witness whose theory is that when a railroad company signs an equalization agreement, it agrees to equalize “ with any kind of a route you can imagine or construct.” Such a view can not be accepted. It is unreasonable.

It is not intended hereby to hold anything with reference to the use of the route in question as an equalizing route to the extent of establishing a controlling precedent. We determine only this case.