#### NEW YORK & PENNSYLVANIA RAILWAY COMPANY v. THE UNITED STATES

[No. B-140.

Decided March 29, 1926]

*On the Proofs*

*Dent Aot; amendment of claim filed prior to the act.*— A claim presented to an officer of the War Department prior to the enactment of the Dent Act, can not be amended by a formal claim filed after the date limited by the act so as to give the Secretary of War jurisdiction under the act.

*Eminent domain; Federal Control Act; just compensation; procedure.*— The procedure to he followed in order to secure just compensation for a taking thereunder is prescribed in the Federal Control Act and is a prerequisite to suit in this court.

*The Reporter’s*statement of the case:

*Mr. Riley H. Heath*for the plaintiff.

*Messrs. William F. Norris*and *Ralph C. Williamson,*with whom was *Mr. Assistant Attorney General Herman J. Gallo*way, for the defendant.

*962The court made special findings of fact, as follows:

I. The plaintiff company is a corporation duly incorporated under the laws of the States of New York and Pennsylvania, and was during the different transactions hereinafter set forth in these findings of fact a common carrier of passengers and freight, with its principal office and place of business at Canisteo, Steuben County, State of New York.

II. The railroad, 57 miles in length, ran from Canisteo, New York, where it connected with the Erie' Railroad, through the towns of Bennett, Greenwood, Rexville, and Whiteville, where it connects with the Pennsylvania Railroad, all in Steuben County, New York, and across the Pennsylvania line and the Buffalo & Susquehanna Railroad at Genesee, Pa., about midway of the plaintiff’s line, thence in the State of Pennsylvania through Ellisburg, Andrews Settlement, Oswayo, Conevflle, Millport, and Shinglehouse, thence passing again into the State of New York at Ceres, N. Y., where it connects with the Pittsburgh, Shawmut & Northern Railroad.

III. The railroad, consisting of three separate short lines, was purchased by Howard Cobb and his cousin, Fordyce A. Cobb, at a foreclosure sale in 1904 for $300,000. They then merged and consolidated said lines under the name of the New York & Pennsylvania Railroad Company, on July 14, 1904, and in consideration of their turning the road over to the reorganized company they took a note for $500,000 and $570,000 in stock of said company. Theodore Cobb, father of Howard Cobb, was president; William Cobb, an uncle of Howard Cobb, was vice president; Howard Cobb was treasurer, and Fordyce A. Cobb, a cousin of Howard Cobb, was secretary of said company. There were two chemical plants on this line, one at Oswayo and one at Gen-esee, both in Potter County, Pennsylvania, which were engaged in the manufacture of wood alcohol, acetate of lime, and other hardwood products from timber along the line of the road and the adjacent country, part of which was hauled to the factories by the plaintiff’^ railroad and part by the Buffalo & Susquehanna Railroad and trucks. The operation of these plants was important to the Government in the *963manufacture of aircraft, as the articles produced were necessary in their construction. Some time in the fall of 1917 the officer in charge of the Bureau of Aircraft Production took over the products of the two plants for Government use. There was also a tannery on the line in Pennsylvania engaged in the manufacture of leather for Government shoes.

IY. After the organization of the plaintiff company as stated above, it began operations, serving a number of plants of different kinds and individuals along the line, making a small amount of money over operating expenses and maintenance until 1912, after which it did not pay operating expenses. In September, 1917, a resolution was passed by its board of directors to abandon the operation of the road, and shortly thereafter the company stopped operations in New York State. Thereupon parties along the line complained to the Public Service Commission, which cited the plaintiff company to appear on November 2, 1917, to show cause why it should not continue to operate said railroad; the hearing was held on that date and the affairs of the company were discussed, but no decision resulted therefrom. On November 24, 1917, the plaintiff company entered into an oral agreement with one Gustave Benjamin, manager of the Benjamin Iron & Steel Company, for the sale of all of the property belonging to the plaintiff company for the sum of $325,000, plus one-half of all the proceeds of said property over and above said sum of $325,000 as junk after scrapping said railroad. The fair market value of said railroad and equipment at that time was $355,000. After November, 1918, . there was no market for such material until the spring of 1919, at which time the fair market value of the said property of the plaintiff, scrapped as junk, was $160,000.

V. Operation of the part of the railroad in the State of New York was on December 1, 1917, without authority from the Public Service Commission of the State, again discontinued. In November, 1917, certain companies and individuals located on the line in the State of Pennsylvania filed petitions with the Public Service Commission of Pennsylvania protesting against the discontinuance of service by the plaintiff’s railway. After the plaintiff had answered *964these petitions, the Equipment Division of the U. S. Signal Office sent to the Public Service Commission of Pennsylvania a telegram dated December 3, 1917, as follows:

“ In the matter of application of New York & Pennsylvania Company to discontinue operations. The Oswayo Chemical and the Genesee Chemical Company are producing materials of great importance to Signal Corps, U. S. Army. Trust some way will be found to enable them to continue to operate: Wire Major Horner.”

A hearing was given by the commission December 4, 1917, and on the same day the commission issued an order to the effect that “ the New York & Pennsylvania Railroad Company is hereby ordered and directed to continue the rendering of the public service in which it has been engaged until such time as it shall be lawfully authorized to abandon the same.” On the same day, December 4, 1917, the secretary of the commission wired Major Horner, Signal Equipment Six, Washington, D. C., the said result of the hearing.

YI. On or about December 28, 1917, the plaintiff received notice of the taking over of the railroads by the United States, the notice being in the form of a telegram addressed to the presidents and directors of all railroad companies in the United States coming within the meaning of the President’s proclamation of December 28, 1917, signed by W. G. McAdoo, Director General, and stating:

“ Having assumed the duties imposed upon me by and in pursuance of the proclamation of the President dated December 26, 1917, you will, until otherwise ordered, continue operation of your road in conformity with said proclamation. You are requested to make every effort possible to increase efficiency and to move traffic by the most convenient and expeditious routes.

“ I confidently count on your hearty cooperation. It is only through united effort, unselfish service, and ■ effective work that this war can be won and America’s future be secured.”

VII. On February 21, 1918, John Barton Payne, general counsel of the Railroad Administration, wrote to Theodore Cobb, president of the plaintiff company :

“ The question has been raised here as to whether the New York & Pennsylvania Railroad is under Federal control. *965The matter has been, referred to the Interstate Commerce Commission and a report has been made that the line in New York should be abandoned; but the suggestion is made that the line in Pennsylvania, for certain public reasons, should be operated. I beg to advise you that the Government is not in a position to finance the road or to take possession and operate the same.”

VIII. The Public Service Commission of the second distinct of the State of New York, in March, 1918, after notice and hearing, issued the following order:

“ Ordered, That the New York & Pennsylvania Eailway Company be, and it is hereby authorized to discontinue ail stations established by it within the State of New York for the reception or delivery of passengers or property, or both, and may discontinue its operation within the State of New York without objection from the commission.”

IX. In the last week of April, 1918, John D. Eyan was appointed chairman of the Aircraft Board and Director of Aircraft Production, with William C. Potter assistant director. During his term of office Henry Lockhart, jr., was the head of the raw materials section of the Bureau of Aircraft Production and W. W. Montgomery was counsel for that bureau. In the early part of May, 1918, Mr. Eyan learned through Messrs. Lockhart and Montgomery that the plaintiff company contemplated discontinuing operation of its road and scrapping its equipment and material. He considered it necessary that the road should continue to serve the plants that were furnishing the Government and the Allies with material required for aircraft production, and gave to Messrs. Lockhart and Montgomery general instructions to do whatever was necessary to prevent the abandonment of the line. He directed them to present the matter to the Eailroad Administration and endeavor to get it to take over the operation of the road. None of these officials of the Bureau of Aircraft Production had any authority to take over the plaintiff’s railroad or to bind the Government by contract in relation to it.

X. On May 15, 1918, Mr. John Barton Payne, general counsel, United States Eailroad Administration, sent the following telegram to the Judge of the Court of Common *966Pleas of Potter County, Pennsylvania: “ Am advised hearing looking to abandonment New York & Pennsylvania Railroad is set before your court for hearing to-morrow. Please be good enough to postpone this hearing until the Government can determine whether the war situation demands retention of this road and its operation by the Government.” The hearing mentioned in the telegram was upon the petition of plaintiff company to abandon the operation of its railroad in the Commonwealth of Pennsylvania and to surrender any and all powers in its charter; the hearing upon said application had been fixed by the court for the 16th day of May, 1918, at two o’clock p. m. The treasurer of the plaintiff company was present at the appointed time and Judge Heck, the judge of the court, had the said telegram and announced that he did not see how he could decide the case until the Government took its hands off.

XI. The treasurer, Mr. Howard Cobb, then went to Washington on May 20, 1918, and met Mr. John Barton Payne and asked whether, in view of what he had said before, he intended to prevent the abandonment of the charter and operations. Mr. Payne gave Mr. Cobb a letter to Mr. Henry Lockhart, jr., dated May 20, 1918: “ This will introduce Mr. Howard Cobb, who wants to discuss the operation of the New York & Pennsylvania Railroad, as to which you wrote this department last week. Mr. Cobb and his father own the road. They are losing heavily — they state *$3,500*a month — and are trying to discontinue the operation of the road. Please discuss the matter with the view of agreeing on some basis by which the operation of the road may be discontinued. Unless the road is imperative for the needs of the War Department, we will probably relinquish it. In that case, the owners could sell the rails and junk the road.” Mr. Cobb went to see Mr. Lockhart, who informed him that he would not be allowed to junk the road; that he must cancel his contract with the junking company and keep the road in operation. By agreement Mr. Cobb again went to see Mr. Lockhart on May 28, 1918; there were present at this meeting Messrs. Thomas Conley and John F. Stone, representing the chemical plants, and Mr. Montgomery, legal *967advisor of the director, the Messrs. Cox and Larkin, employees of the Aircraft Bureau. On this occasion Mr. Lock-hart proposed a plan for the purchase of the railroad for $325,000 by its patrons, the Government to advance 75 per cent of the price, the people along the line to contribute 25 per cent, and in five years to pay the Government back its advance and then take over the road and run it. He asked Mr. Cobb to take $50,000 of the bonds, but the latter did not assent to this. Mr. Lockhart said he would send men out along the line and interest the people. On the same day, May 23, 1918, Mr. Howard Cobb wrote to Mr. Henry Lockhart asking with reference to said proposed plan:

“ Will the Govt, advance 75% of $325,000, on deposit of the 25% subscribed and the subscriptions, with our securities, or must we wait for the purchase price, $325,000, until a new company is formed and mortgage and bonds issued? This would delay the deal (if made) and pile up costs to us.”

On May 28, 1918, Mr. Lockhart replied to Mr. Howard Cobb that Mr. Cox had left for Olean and expected to see him there; that “ He will be able to answer any questions you may ask him in connection with your railroad matter.” On June 1, 1918, Mr. Howard Cobb wrote to Mr. Henry Lockhart, jr., proposing to turn over the railroad to the Government on the payment of $325,000 to Fordyce Cobb and himself, $100,000 to be paid on or before June 15th and the balance on or before July 1st, the Cobbs to pay all floating-indebtedness. On June 10, 1918, Mr. Lockhart wired Mr. Cobb: “ Will wire to-morrow regarding New York & Pennsylvania Railroad matter.” On June 17, 1918, Mr. Howard Cobb wrote Mr. Henry Lockhart that he had heard nothing definite from the department relating to taking over the railroad, and urging him to hasten the matter. He stated that the railroad company’s affairs were getting to a point where something should be done at once. Messrs. Cox and Larkin, employees of the Aircraft' Bureau, were sent by Lockhart over plaintiff’s line to interest its patrons in financing the railroad. They did not accomplish anything. Thereafter, Mr. Lockhart appears to have dropped out of the negotiations.

*968XII. On June 29, 1918, Mr. John Barton Payne wrote to Mr. G. M. Beasor, general freight and passenger agent of plaintiff company, as follows:

“ Pursuant to the recommendations of the regional director, the New York *&*Pennsylvania Railway is relinquished from Federal control. It will be the policy of the Railroad Administration to cooperate with relinquished roads as to a fair division of joint rates, car supply, and, as far as may be consistent with the national needs, that there be no undue discrimination as to routing. Means will be provided for carrying out this general policy.”

XIII. On Juty 3, 1918, *W.*W. Montgomery, jr., of the advisory and consulting department of the Bureau of Aircraft Production, wrote to Mr. Howard Cobb:

“After carefully considering all possible arrangements for keeping the New York & Pennsylvania R. R. Co. in operation, there seems no course open to the Government if the present owners propose to discontinue the operation of the road except to take it over under the provisions of the act of August 29, 1916.

“ The Director of Aircraft Production has therefore given instructions that the necessary proceedings be begun to accomplish this result.

$ $ $ ‡ ‡

“ By direction of the Director of Aircraft Production.”

On July 19, 1919, Mr. Montgomery wrote to Mr. Howard Cobb proposing the basis of an agreement if the railroad should be taken over by the Army under the act of August 29,1916, which is set forth in Exhibit A to the petition. On September 25, 1918, the plaintiff company, through Mr. Howard Cobb, treasurer, wrote to Mr. Montgomery proposing a different basis on which the company would turn over its railroad to the Government, which appears in Exhibit A to the petition. On October 5, 1918, Mr. Montgomery sent a telegram to Mr. Cobb stating that no decision had yet been announced and he would be notified “ as soon as we have anything definite.”

After this Mr. Montgomery dropped out of the negotiations.

XIY. After Mr. Lockhart and Mr. Montgomery ceased negotiations with Mr. Cobb, Mr. Cobb exchanged com*969munications with several other officials of the Aircraft Production Bureau, but nothing came out of their correspondence. The proposition of the plaintiff company of September 25, 1918, was never accepted. No agreement between the plaintiff company and Government officials was ever reached and no officials of the Aircraft Production Bureau, parties to the foregoing negotiations, had any authority to bind the Government by contract to take over plaintiff’s railroad.

XV. On November 4, 1918, Mr. W. C. Potter, acting director of aircraft production, wired Mr. Cobb:

“ Referring to New York & Pennsylvania Railroad, after conference with Mr. John D. Ryan, Second Assistant Secretary of War, it may be necessary for this bureau to change its plans to the extent of keeping in operation the Pennsylvania end of the New York & Pennsylvania Railroad. A final decision will necessarily be postponed a few days. For this reason I am wiring judge of Pennsylvania court requesting that hearing in pending proceedings be again postponed for a short period.”

On November 12, 1918, Mr. Potter wired Mr. Cobb: “Have to-day wired court in Coudersport, Potter County, Penna., that this bureau withdraws opposition to surrender of charter of New York & Pennsylvania Railroad.” On December 7, 1918, Mr. Cobb wrote to the director of aircraft production:

“ On the 8th of November last I appeared before the director of Aircraft Production, Hon. John D. Ryan, and Messrs. W. C. Potter and W. W. Montgomery, jr., concerning the withdrawal of Government interference where the court of common pleas in Potter County had been requested to hold up its decision looking toward the cancellation of charter of New York & Pennsylvania Railway Co. On that occasion it was promised that a telegram would be sent to the court withdrawing any opposition, and on the 12th of November, 1918, the following telegram was received by me:

“‘ Have to-day wired court in Coudersport, Potter County, Pa., that this bureau withdraws opposition to surrender of charter of New York & Pennsylvania Railway Co.

“ ‘ W. C. POTTER,

“ *Asst. Director of Aircraft Production.’’*

*970“At said hearing I advised the said persons that the New York & Pennsylvania Railway had suffered a severe loss financially and felt that it had a good claim against the Government. It was there remarked by the director general that if we had a claim, that he would like to have the same presented, and I replied that I would try and do so as soon as I could make it up. Up to this time I have been unable to make up a claim and do not know when it will be possible to do so. It may be impossible to present a claim until the road is finally disposed of and we can tell exactly what the measure of damage has been.”

XYI. After the withdrawal of opposition by the Government to the surrender of its charter by plaintiff, Judge Heck, president judge of the Court of Common Pleas of Potter County, Pennsylvania, issued the following order and decree: “And now, January 10, 1919, after hearing and due consideration, it is ordered and decreed that the prayer of the New York & Pennsylvania Railway Company, as set forth in its petition, is hereby granted and permission is given for it to abandon the operation of its railroad in this Commonwealth and to surrender any and all powers to operate a railroad as contained in its charter.”

XVII. This claim was presented to the Board of Contract Adjustment after June 30, 1919, the time limit fixed by the Dent Act, 40 Stat. 1272, 1273, but not until November 11, 1919. The board held on May 5, 1920, that the presentation of the claim in general terms orally to John D. Ryan, director of aircraft production, on November 8, 1918, and thereafter in writing to the same official by letter dated December 7, 1918 (as set forth in Finding XV), was amendable as actually filed in writing on November 11, 1919, and was a “ timely sufficient presentation of the claim within the meaning of the Dent Act.” The board first concluded that there was an implied agreement between the Government and the plaintiff company from or about May 16, 1918, by which the Government agreed to reimburse plaintiff for its losses sustained in the operation of its road from May 16, 1918, to the date of the armistice, and for the depreciation and fall of prices following the delay in junking the road. Dec. of the War Dept., vol. 5, pp. 191-202. On June 29, 1920, the Board of Contract Adjustment recon*971sidered its ruling of May 5, 1920, and held that there was an implied contract entered into between the Government and the plaintiff to reimburse it, for certain losses sustained, Dec. War Dept., vol. 6, p. 1031. On appeal the Secretary of War refused to approve the board’s action and ordered its action and rulings of May 5 and June 29, 1920, to be vacated; thereupon the appeal section of the War Claims Board entered the order denying plaintiff relief. Dec. War Dept., vol. 8, p. 89.

The court decided that plaintiff was not entitled to recover.

Campbell, *Chief*Justice,

delivered the opinion of the court:

The New York & Pennsylvania Railway Company owned a short line of railroad located partly in each of the States of New York and Pennsylvania, which it was operating at a loss, and in the fall of 1917 it began proceedings looking to a cessation of its business and the surrender of its charter. It was thus proceeding when transportation companies were taken under Federal control on or about December 28, 1917. A notice was issued to it similar to that issued generally to transportation companies by the Director General of Railroads, to the effect that the company to which the notice was addressed should continue the operation of its road until otherwise ordered. The plaintiff’s officers, no doubt because of the road’s financial stress, made inquiries about the Government’s plans and was informed in February, 1918, by the Railroad Administration that upon investigation conducted at its instance by the Interstate Commerce Commission the latter had reported that the part of the road in New York should be abandoned by the administration, but had also suggested that, for certain public reasons, the part of the line in Pennsylvania should be operated. These reasons were that there were located on the line in Pennsylvania some plants engaged in making products used as war material. The Railroad Administration’s communication ended, however, with the statement that the Government was not in position to finance the road or to take pos *972session and operate it. Following this letter it appears that the Public Service Commission in New York authorized the plaintiff to discontinue operation of its road in that State.

The plaintiff’s application for authority to discontinue operations in Pennsylvania was pending when, in May, 1918, the general counsel of the Railroad Administration requested the court having jurisdiction in the premises to postpone the hearing until the Government could determine whether the war situation demanded the retention and operation of the road and the hearing was accordingly postponed. On June 29, 1918, the Railroad Administration notified plaintiff that its road was relinquished from Federal control. This notice did not relieve the plaintiff’s situation because almost immediately after the release by the Railroad Administration of the road one or another officer connected with the Bureau of Aircraft Production took up with plaintiff’s officers the question of continuing operations, suggesting in one instance that it might become necessary to take over the road under the power conferred by the act of August 29, 1916, not realizing perhaps that it was by virtue of that act that the President had taken the railroads under Federal control. Another of these officers proposed a plan for the continued operation of the road and one or more of them interposed objections to the granting of permission to plaintiff to abandon operations. The result of these things was that it was not until some time in January, 1919, that plaintiff secured the right to cease operations. There can be no doubt that plaintiff suffered losses, though the elements of damages are not as clear as might be made. Notwithstanding this condition, we think there can not be a recovery in this court.

The principal contention, as outlined in its voluminous petition and the brief, is that plaintiff is entitled to recover under the provisions of the act of March 2, 1919, the Dent Act, 40 Stat. 1272. The petition states that “ on or about the 5th day of November, 1919,” its claim was filed with the Board of Contract Adjustment, pursuant to the Dent Act. This act required all claims to be presented on or before June 30, 1919, to the Secretary of War. Manifestly a claim presented to the board in November, 1919, came *973too late. The plaintiff’s representatives in November, 1918, before the Dent Act was passed, stated orally to John D. Kyan, Director of Aircraft Production, that the company had a claim against the Government for losses and damages caused by its being required to operate its road, as already stated, and on December 7, 1918, also before the Dent Act came into existence, one of its officers, wrote the director named in substance that plaintiff had such a claim but that it would be impossible to present an itemized statement until the road should be finally disposed of. The formal claim was actually filed on November 11, 1919, and not on November 5, as alleged, but long after the period fixed for presenting claims under the Dent Act. The Board of Contract Adjustment, however, heard and considered the claim, having decided that the presentation of it, in general terms, orally to the Director of Aircraft Production and afterwards in writing, as stated on December 7, 1918, was amendable and was amended by the formal filing on November 11, 1919, and therefore was *“*a timely sufficient presentation of the claim ” within the meaning of the Dent Act. Claims under this act can come to the Court, of Claims only by virtue of section 2 of the act.

We can not assent to the board’s conclusion that a claim presented to an officer in the War Department prior to the enactment of the Dent Act can be amended by a formal claim filed after the date limited by the act itself so as to give the Secretary of War jurisdiction under that act. There must have been a filing after the act was passed and befox-e the date limited, June 30, and this is not to say that a claim so filed might not be properly amended. We do not think the secretary had jurisdiction of the claim or that this court has it under section 2. We deem it proper to say this much on the question of jurisdiction because a large number of Dent Act cases are upon our docket. But the board took jurisdiction and after ruling in favor of the claim finally reached the conclusion that there was no contract, express or implied, between plaintiff and any authorized representative of the Secretary of War. This final conclusion was approved by the Secretary.

*974The court’s findings of fact sustain this conclusion. See *B.*& *O. R. R. Co.*case, 261 U. S. 385, 56 C. Cls. 377.

In addition to the claim asserted under the Dent Act plaintiff asks relief for a taking of its road. If it be conceded that the findings of fact establish a tailing of plaintiff’s road under Federal control from the notice to that effect until in June, 1918, when the Director General released control, it yet appears that the Federal Control Act of March 21, 1918, 40 Stat. 451, in section 3 thereof, prescribes the procedure to secure just compensation for the taking of transportation companies under Federal control and requires the submission of these claims in the first instance to boards of referees appointed by the Interstate Commerce Commission. Nothing appears to have been done in this case in compliance with this act. See *Marion & Rye Valley Railroad case*decided by the Supreme Court March 1, 1926, 270 U. S. 280.

The petition should be dismissed. And it is so ordered.

Graham:, *Judge;*Hat, *Judge;*Downey, *Judge;*and Booth, Judge, concur.