Source: https://supreme.justia.com/cases/federal/us/275/415/
Timestamp: 2019-04-23 10:50:24+00:00

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Justia › US Law › US Case Law › US Supreme Court › Volume 275 › Emergency Fleet Corp. v. Western Union Tel. Co.
1. The Fleet Corporation is a department of the government within the meaning of the Post Roads Act, and therefore entitled to the reduced rates fixed by the Postmaster General for telegraphic messages sent over the lines of companies which accepted its provisions, to officials and agents of government departments or to private parties on government business. Pp. 275 U. S. 417, 275 U. S. 426.
2. The practical construction of the Act in this regard is decisive of its meaning. P. 275 U. S. 418.
3. The facts that the Fleet Corporation is in form a private corporation, that, in sending messages, it contracted on its own behalf and is suable on such contracts by the telegraph company, and that it competes in some of its operations with private shipping, held not inconsistent with its being a department of the government within the Post Roads Act in view of its relations, functional and fiscal, to the United States and considering that, if it paid full commercial rates, the burden would fall upon the government. Pp. 275 U. S. 422-424.
4. The Act of June 18, 1910, in broadening the Interstate Commerce Act so as to include telegraph companies, did not abrogate or modify the scope or effect of the Post Roads Act with respect to the allowance of reduced rates to the government. P. 275 U. S. 425.
of Columbia for the difference between the commercial and government rates on telegrams sent by the corporation.
"That telegraphic communications between the several departments of the government of the United States and their officers and agents shall, in their transmission over the lines of any of said companies, have priority over all other business, and shall be sent at rates to be annually fixed by the Postmaster General."
Each year since the passage of the Act, the government rates have been so fixed. For the fiscal years beginning July 1, 1921 and July 1, 1922, they were fixed for domestic telegrams substantially at 40 percent of the commercial rate, and for cablegrams at 50 percent of the commercial rate.
April 16, 1917. From that date to May, 1922, it was accorded, without question, the government rate on all messages sent by it. Then the Western Union claimed the right to the commercial rates for all its messages. The claim was resisted. Thereafter, messages of the Fleet Corporation continued to be marked by it "Government Rate," but they were received under an agreement that the acceptance of the message and of payment therefor at the government rate should be without prejudice to the right of the Western Union to recover the additional amount claimed. This suit was brought, in the Supreme Court of the District of Columbia, to recover, for the months of June and July, 1922, the difference between the amount paid and the commercial rate. Of this amount, $1,071.16 was for messages sent to some official or agent of the Fleet Corporation or of the Shipping Board or to some other department or official of the government, $336.43 for messages addressed to private persons. A stipulation waiving the jury was filed, the case was heard on an "agreed statement of facts," the court found the facts to be as there stated, and a judgment entered for the full amount was affirmed by the Court of Appeals for the District. 13 F.2d 308. This Court granted a writ of certiorari. 273 U.S. 681.
construction given to the Act by the United States, and acquiesced in by the Western Union, having been both contemporaneous and thereafter consistently and widely applied, is not only persuasive, but, in our opinion, decisive of the case. United States v. Alabama Great Southern R. Co., 142 U. S. 615. Compare District of Columbia v. Gallaher, 124 U. S. 505, 124 U. S. 510.
c. 37, 39 Stat. 14, 15; United States Shipping Board, Act Sept. 7, 1916, c. 451, 39 Stat. 728, 729; United States Employees' Compensation Commission, Act Sept. 7, 1916, c. 458, 39 Stat. 742, 748; United States Tariff Commission, Act Sept. 8, 1916, c. 463, 39 Stat. 756, 795; Federal Board for Vocational Education, Act Feb. 23, 1917, c. 114, 39 Stat. 929, 932; Alien Property Custodian, Act Oct. 6, 1917, c. 106, 40 Stat. 411, 415; United States Railroad Administration, Act March 21, 1918, c. 25, 40 Stat. 451, 455; War Finance Corporation, Act April 5, 1918, c. 45, 40 Stat. 506; United States Interdepartmental Social Hygiene Board, Act July 9, 1918, c. 143, 40 Stat. 845, 886; Railroad Labor Board, Act Feb. 28, 1920, c. 91, 41 Stat. 456, 470; Federal Power Commission, Act June 10, 1920, c. 285, 41 Stat. 1063; General Accounting Office, Act June 10, 1921, c. 18, 42 Stat. 20, 23; Veterans' Bureau, Act June 7, 1924, c. 320, 43 Stat. 607, 608. So far as appears by the record, there has been no denial of the government rate at any time to any department, office, or division of the government as organized, except that to the Fleet Corporation here in question.
it is engaged in a business which involves competition with private shipowners. These arguments do not support the claim, but they make necessary a statement of the facts concerning the organization and activities of the Fleet Corporation.
The Fleet Corporation was organized by the United States Shipping Board pursuant to specific authority conferred by the Act of September 7, 1916, c. 451, § 11, 39 Stat. 728, 731. The legislation concerning it, its relation to the Shipping Board, its character, and the scope of its activities is shown in the Lake Monroe, 250 U. S. 246, United States v. Strang, 254 U. S. 491, Sloan Shipyards Corp. v. United States Shipping Board Emergency Fleet Corporation, 258 U. S. 549, United States v. Walter, 263 U. S. 15, and United States ex rel. Skinner & Eddy Corp. v. McCarl, ante, p. 275 U. S. 1. Besides powers conferred upon the Fleet Corporation by the General Corporation Law of the District of Columbia, it was vested, by delegation from the President, with the powers conferred upon him by Act June 15, 1917, c. 29, 40 Stat. 182, Act April 22, 1918, c. 62, 40 Stat. 535, and Act Nov. 4, 1918, c. 201, 40 Stat. 1020, 1022. Executive Orders No. 2664, July 11, 1917; No. 2888, June 18, 1918; No. 3018, December 3, 1918; No. 3145, August 11, 1919. These specific powers and duties were transferred to the Shipping Board by Merchant Marine Act, 1920, June 5, 1920, c. 250, 41 Stat. 988.
"as a naval or military auxiliary in time of war or national emergency, ultimately to be owned and operated privately by citizens of the United States."
These services of the Fleet Corporation were obviously of a public nature. It has never done any business, or conducted any operation, except on behalf of the United States.
Fleet Corporation of the commercial rate for messages would necessarily increase the charges upon the public treasury to the same extent, and in the same manner, as would the charge of the commercial rate in respect to the business done for the United States directly by the Shipping Board, or that done for it by some other department of the government. An important, if not the chief, reason for employing a corporate agency was to enable the government to employ commercial methods and to conduct the operations with a freedom supposed to be inconsistent with accountability to the Treasury under its established procedure and with its control over the financial operations of the United States. United States ex rel. Skinner & Eddy Corp. v. McCarl, ante, p. 275 U. S. 1. It obviously was not the intention of the government, in employing a corporate agency, to deprive itself of the right of priority of transmission and of the lower rate secured through the Post Roads Act.
business. But it had no actual capital. Long before June 1, 1922, the $50,000,000 which the United States supplied in payment of the capital stock had been sunk in the business. [Footnote 3] By and pursuant to Merchant Marine Act, 1920, the title to most of the property used by the Fleet Corporation was transferred to the Shipping Board or to the United States. All moneys other than amounts needed for current operation are required to be covered into the Treasury of the United States. The Fleet Corporation has had no means of paying either the large outstanding claims against it or of paying the deficits continuously being incurred, other than the moneys supplied by the United States through the annual appropriations. It is, of course, immaterial that the charge upon the public treasury is an indirect one, and the fact that the Fleet Corporation receives some gross income from shipping services is also without legal significance. Many departments receive fees or some other form of compensation for services rendered to private persons. See 14 Ops. Attys.Gen. 278.
with private interests may, of course, be for a public purpose. Standard Oil Co. v. City of Lincoln, post, p. 504. Other departments which compete with private business have long enjoyed the government rate without question. The post office has, since 1872, competed with bankers through money orders; since 1910 with savings banks by receiving deposits on interest; since 1913 with express companies through the parcel post. The War Finance Corporation has, since 1918, competed with the private bankers. The War Department has, by its Mississippi River barge lines, competed since 1920 with the railroads. Equally with all of these, the Fleet Corporation is acting for and on behalf of the United States.
Fourth. It is faintly argued that the Western Union is entitled to the commercial rates because, since Act June 18, 1910, c. 309, § 7, 36 Stat. 539, 544, which broadened the scope of the Act to Regulate Commerce so as to include telegraph companies, telegraph rates are no longer a matter of contract; that they have the force of law, Western Union Telegraph Co. v. Esteve Brothers & Co., 256 U. S. 566, and that any deviation from the lawful rate would involve an undue preference to the government and an unjust discrimination against its competitors, the private shipping concerns. It may be doubted whether the prescribed rule requiring equality of treatment would ever be violated by giving to the government preferential rates. Compare Nashville, Chattanooga & St. Louis Ry. v. Tennessee, 262 U. S. 318. But it is a sufficient answer to say that it clearly was not the intention of Congress, by the Act of 1910, to abrogate or modify the scope or affect the application of the Post Roads Act.
banks, in which there are private interests, are not departments of the government. They are private corporations in which the government has an interest. Compare 22 U. S. Planters' Bank, 9 Wheat. 904, 22 U. S. 907. The Fleet Corporation is entitled to the government rate not because it is an instrumentality of the government, but because it is a department of the United States within the meaning of the Post Roads Act. In respect to messages sent on the government's business, no distinction can properly be made between those of the Shipping Board and those of the Fleet Corporation.
"(10) government telegraph rates, established conformably to law, are intended to apply to official government business exclusively, and no private individual, association, company, or corporation should in any way be benefited thereby. In cases where it becomes necessary to use the telegraph on any business in the special interest of any private person or persons, in which the government has no interest, the party for whom the service is performed will be required to pay for the messages both ways at commercial rates."
For the fiscal year ending June 30, 1921, the Shipping Board reported a total excess of outgo over income (exclusive of appropriations) of $188,291,441.05. Annual Report of United States Shipping Board, 1921, p. 321. For the year ending June 30, 1922, the Board's excess was $56,374,951.22; that of the Fleet Corporation, $81,547,600.86. Annual Report 1922, p. 238. In the year ending June 30, 1923, the excess for the Shipping Board and all its subsidiaries was $15,231,630.30; that for the Fleet Corporation, taken alone, $41,682,514.86. Annual Report, 1923, p. 168.
The total receipts from appropriations and allotments to June 30, 1921, were $3,310,170,576.98. The net assets then on hand (after deducting current and capital liabilities, reserves for depreciation, etc.) were $1,929,847,381.84. Thus, the loss to date, as estimated by the Shipping Board, was $1,380,323,195.14. Annual Report of United States Shipping Board, 1921, pp. 309-321. By June 30, 1923, the total appropriated and allotted had grown to $3,491,912,648.01, while the Shipping Board's estimate of the net worth of the assets belonging to it and its subsidiaries had shrunk to $292,405,200.17, showing a loss of $3,199,507,447.84. Annual Report, 1923, pp. 192-196. The estimates for June 30, 1927, show a net worth of $290,461,593.91, making a net loss of $3,271,021,167.61 on the total appropriations ($3,561,482,761.52) to that date. Annual Report, 1927, pp. 121-124.

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