Case Name: JOHN A. McGREGOR, as Administrator of the Estate of Christ Hanson, Deceased, Appellant, v. GREAT NORTHERN RAILWAY COMPANY, a Corporation, Respondent
Court: North Dakota Supreme Court
Jurisdiction: North Dakota
Decision Date: 1919-04-30
Citations: 42 N.D. 269
Docket Number: 
Parties: JOHN A. McGREGOR, as Administrator of the Estate of Christ Hanson, Deceased, Appellant, v. GREAT NORTHERN RAILWAY COMPANY, a Corporation, Respondent.
Judges: 
Reporter: North Dakota Reports
Volume: 42
Pages: 269–306

Head Matter:
JOHN A. McGREGOR, as Administrator of the Estate of Christ Hanson, Deceased, Appellant, v. GREAT NORTHERN RAILWAY COMPANY, a Corporation, Respondent.
(4 A.L.R. 1635, 172 N. W. 841.)
In an action by an administrator, brought under the Federal Employers’ Liability Act to recover damages occasioned by the death of the plaintiff’s intestate through alleged negligence of the defendant railway company, where the cause of action arose and the action was begun subsequent to the assumption of Federal control and before the passage of the Rail Control Act of March 21, 1918, it is held:
Railroads — Federal Employers’ Liability Act — when cause of action arises.
1. Under the Act of Congress of August 29, 1916, authorizing the assump-' tion, in time of war, of control by the President of systems of transportation, and under the proclamation of the President issued in pursuance thereof, prima facie a cause of action for the alleged negligence arose and became vested in the plaintiff prior to the passage of the Rail Control Act.
Effect of Federal control.
2. General order No. 50, promulgated by the Director General of Railroads, which requires that suits upon causes of action arising subsequent to December 31, 1917, shall be brought against the Director General of Railroads, and not otherwise, and which authorizes the substitution of the Director General for the carrier company as party defendant and the dismissal' of the action as to the company, is not warranted by the Rail Control Act of March 21, 1918, in so far as it purports to be applicable to causes of action already vested. -
Effect of Federal control.
3. Section 10 of the Rail Control Act is construed and held to authorize the bringing of actions against the carrier corporations during the period of Federal control.
Effect of Federal control.
4. Under the Rail Control Act, the Director General is charged with administering the transportation systems owned by the various carrier corporations, but he is not authorized to appear and defend suits brought against them.
Effect of Federal control.
5. The carrier corporations, during the period of Federal control, remains legal entities, capable of suing and being sued in the courts, and are champions of their own legal rights.
Effect of Federal control.
6. The liability or nonliability of a carrier corporation for acts of alleged negligence occurring during the period of Federal control, is not an administrative question to be decided by the Director General, but is a judicial question to be determined by the courts.
Effect of Federal control.
7. The question as to whether or not a carrier corporation may be liable for the negligence of an employee during the period of Federal control is not decided.
Opinion filed April 30, 1919.
Appeal from District Court of Ward County, Leighton, J.
Order reversed.
B. B. Sinister and M. O. Bide, for appellant.
“Interpleader or intervention will not serve to dismiss tbe original defendant.” Comp. Laws, § 7413.
Order No. 50 by McAdoo is absolutely void. The power to determine what shall be the law cannot be conferred. State v. Young, 29 Minn. 474; State v. It. Co. 38 Minn. 281; Ke Wilson, 32 Minn. 145; United States v. United Verde Copper Co. 196 U. S. 297; Thorton v. Territory, 17 Pae. 896; United States v. Grimaud, 220 U. S. 506.
Murphy é Toner and Bradford & Nash, for respondent.
“Congress had the power to delegate the rights to the President or his representatives to issue order No. 50 (taking over the railroad systems).” United States v. Grimaud, 220 U. S. 506; Shallenberger v. Pennsylvania, 171 U. S. 1.
“McAdoo, as representative of the President, must aid in enforcing the act of Congress taking over the railroads.” Ex parte Young, 209 XT. S. 123; Greene v. Louisville & Interurban R. Co. 244 XT. S. 506; XTnited States v. Lee, 106 XT. S. 196; Tindal v. Wesley, 167 XT. S. 205.

Opinion:
Birdzela, J.
This action is brought by an administrator to recover damages occasioned by the alleged negligence of the defendant in causing the death of one Christ Hanson, an employee. The Federal Employers' Liability Act (chap. 149, 35 Stat. at L. 65, Comp. Stat. § 8657, 8 Fed. Stat. Anno. 2d ed. p. 1208) and amendments are relied upon. The injury resulting in the death of the plaintiff's intestate is alleged to have been inflicted on January 22, 1918. In December, 1918, the district court of Ward county, upon motion of the defendant's attorneys, entered an order substituting Wm. G. McAdoo, Director General of Railroads of the United States, as defendant in the place and stead of the Great Northern Railway Company, and dismissed the action as to the latter. This appeal is from the order of substitution and dismissal:
Accompanying the notice of motion was an affidavit by one of the defendant's attorneys stating* in substance that the railway company was under Federal control and was in every way subject to the jurisdiction, management, and possession of the government of the United States, acting through the Director General of Railroads, which control commenced on the 1st day of January, 1918, prior to the accrual of the alleged cause of action; and that on or about November 1, 1918, Wm. G. McAdoo, as Director General of Railroads, promulgated general order No. 50, ordering that all actions subsequently brought based upon certain claims, including claims for death, should be "brought against Wm. G. McAdoo, Director General of Railroads, and mot otherwise;" and further that, as to actions pending upon causes .arising subsequent to December 31, 1917, based upon the operation •of any railroad, the pleadings "may on application be amended by .substituting the Director General of Railroads for the carrier company ' as party defendant, and dismissing the company therefrom." The order of substitution purports to have been made in conformity with the requirements of general order No. 50, and the only question presented upon this appeal is the legal sufficiency of the order to support the action of the district court.
The President assumed control of the railroads, acting under the authority of an Act of Congress of August 29, 1916, as follows: "The President, in time of war, is empowered, through the Secretary of War, to take possession and assume control of any system or systems of transportation, or any part thereof, and to utilize the same, to the exclusion as far as may be necessary of all other traffic thereon, for the transfer or transportation of troops, war material and equipment, or for such other purposes connected with the emergency as may be needful or desirable." [39 Stat. at L. 645, chap. 418, Comp. Stat. § 1974-a, 9 Fed. Stat. Anno. 2d ed. p. 1095.]
The cause of action in question arose after the government had assumed control, and the summons was served on the railway company on March 22, 1918. On March 21, 1918, the so-called "Rail Control Act" was approved, and the authority for the order relied upon to support the substitution is contained in § 10 thereof. That portion of § 10 which is germane to the present inquiry is: "That carriers while under Federal control shall be subject to all laws and liabilities as common carriers, whether arising under state or Federal laws or at common law, except in so far as may be inconsistent with the provisions of this act or any other act applicable to such Federal control or with any order of the President. Actions at law or suits in equity may be brought by and against such carriers and judgments rendered as now provided by law; and in any action at law or suit in equity against the carrier, no defense shall be made thereto upon the groimd that the carrier is an instrumentality or agency of the Federal government. Nor shall any such carrier be entitled to have transferred to a Federal court any action heretofore or hereafter instituted by or against it, which action was not so transferable prior to the Federal control of such carriers; and any action which has heretofore been so transferred because of such Federal control or of any act of Congress or official order or proclamation relating thereto shall upon motion of either party be transferred to the court in which it was originally instituted. But no process, mesne or final, shall bé levied against any property under such Federal control." [40 Stat. at L. 456, chap. 25, Comp. Stat. § 3115-|j, Fed. Stat. Anno. Supp. 1918, p. 762.]
The preamble to general order No. 50, after referring to the portion of the statute above quoted, recites: "Whereas, since the Director-General assumed control of said systems of transportation, suits are being brought and judgments and decrees rendered against carrier-corporations on matters based on causes of action arising during Federal control for "which the said carrier* corporations are not responsible, and it is right and proper that the actions, suits, and proceedings hereinafter referred to, based on causes of action arising during or out of Federal control, should be brought directly against said Director-General of Railroads, and not against said corporations:
"It is therefore ordered," etc. (as hereinabove indicated).
Other provisions of the Federal Control Act make the operating revenues of the carriers the property of the government, and authorize contracts to be entered into between the government and the companies covering the details of compensation as well as matters relating to additions, extensions, betterments, equipment, etc. The measure of control assumed under the original Act of 1916 and recognized by the later Act of March 21, 1918, is so complete as to suggest that claims for damages might be more properly litigated as claims against the railroad administration than against the carrier corporations. Whether or not Congress has authorized this procedure, however, must be determined by the various statutory expressions concerning Federal control. If we felt at liberty to go beyond the acts of Congress, and to determine the rights of individuals and the public arising out of their relations with the carriers, it might be possible to justify such an order as the one in question as being an exercise of a war power inherent in the Executive as commander in chief of the armies. But Congress has spoken upon this subject, and we are not inclined to go beyond the legislative authority to seek justification for the order in question. It is peculiarly appropriate here to confine our investigation to the acts of Congress, not only for the reason that Congress has dealt so fully with the subject, but for the further reason that a possible liability of the government is involved, and before there could be such a liability Congress must be found to have assented.
At the time of the injury upon which this action is predicated, control had been assumed by the President under an act which did not purport to limit in any degree the rights of the public in their relations with the carriers, except to the extent necessary to permit the full use of the transportation facilities to serve the military needs of the government. The statute was very brief and apparently was designed to authorize control for military purposes and related emergencies. Under the President's proclamation of December 26, 1917, it was expressly provided that "suits may be brought by and against said carriers and judgments rendered as hitherto, until and except so far as said Director may, by general or special orders, otherwise determine."
Such was the status of Federal control at the time the alleged cause of action arose, and it was the same at the time of the passage of the Federal Control Act in March, 1918.
It may be true, as suggested by District Judge Evans, in the case of Muir v. Louisville & N. R. Co. 247 Fed. 888 — 895, that this proclamation of the President has not the force and effect of law, but nevertheless it reflects the measure of control that had been assumed prior to the time of the injury alleged as the basis for the action at bar. There can be little doubt that the defendant railroad company was prima facie liable to respond in damages in causes similar to that alleged at the time the cause of action arose.
Our inquiry, then, resolves to this: Assuming that a right of action had vested in the plaintiff prior to the Act of March 21, 1918, and prior to the issuance of the order in question, does general order No. 50 operate to deprive the plaintiff of the right to maintain his cause of action; and, if so, is the order justified as an exercise of war powers under the Act of March 21, 1918 ?
It can scarcely be doubted that the order is intended to relieve the carrier corporations from responsibility. The preamble to the order shows that it is prompted by the notion that carriers should not be held responsible for- causes arising during Federal control, and the order purports to authorize both the dismissal of the action against the-carrier and the substitution of the Director General. In our opinion it cannot be successfully contended that a judgment against the substituted defendant would be binding upon the carrier corporation. The only theory upon which it could be so held is that the corporations themselves, rather than the transportation facilities owned by them, are under Federal control, and that the Director General acts as their agent. There is clearly no room for such a construction of any act of Congress bearing upon this question. The legislation contemplates that the carrier corporations shall be permitted to continue to transact their business as formerly, except as modified by the Federal control of their transportation facilities. They may sue and be sued as formerly, and judgments obtained give rise to the same remedies for enforcement, except that their transportation facilities are not subject to levy or seizure.
In the case of United States R. Administration v. Burch, 254 Fed. 140, it was held that the railroad administration could not enjoin a sheriff from selling real'property belonging to a railroad company for the satisfaction of a judgment. The property in question was held not to be a part of the system of transportation, and it was said to be a judicial question whether the control of such property could be assumed by the Director General, the court holding that it could not. In Dooley v. Pennsylvania R. Co. 250 Fed. 142, it was held, however, that traffic balances which go to make up the working or liquid capital of a railroad company are not subject to garnishment during Federal control, because "the tying up of such a fund would clearly be detrimental to the successful operation of a railroad system. . . ."
We are fully convinced that, notwithstanding Federal control of the transportation facilities, the carrier corporations are still capable of representing their own interests in litigation, which may result in judgments being obtained against them. And, since they are not under the jurisdiction of the Director General in this matter, we can see no reason why the carrier corporations should be bound by any judgment rendered in a suit in which they are denied the right to appear and defend.
It is possible that as a result of the government control of the transportation facilities the carriers are so far denied the right to direct and manage their own affairs in connection with transportation that they cannot be held liable for the negligence of an employee. If such be the case, however, — and upon this question we express no opinion,— this would merely constitute a defense to an action brought against the carrier, and such an order as the one in question would not be needed to protect the legal rights of the corporations. Whether or not the carrier corporations are responsible for the acts of various employees and agents is a judicial question to be decided in the ordinary course of judicial proceedings, looking toward reparation in actions predicated upon alleged violations of rights, and it is not an administrative question to be decided out of hand by the Director General. It is clear to us that the carrier corporations continue as legal entities, capable of defending any suits brought against them, and that the Director General has not been authorized to assume control of their affairs to the extent of becoming the champion of their legal rights in the courts. It is therefore for them to determine upon what grounds they will contest a liability sought to be fastened upon them.
We are also satisfied that a judgment rendered in a suit in Avhich. the only defendant is the Director General woiúd not bind either the Federal government or the Director General personally. It is clear from the order that the Director General purports to act for the government alone, and from this it follows, of course, that he is substituted as a defendant in a representative capacity. That the judgment would not bind him, therefore, is elementary. Before the judgment could bind the government it must appear that Congress has consented to the maintenance of such suits against the government. It has not so consented; but, to the contrary, it has said that suits may be brought against the carriers. This negatives an intention that they may be maintained against the government. It does not follow, of course, that the railroad administration might not voluntarily pay such judgments, if they may be termed such, as proper claims arising during Federal control.
It is true that Judge Hunger held, in Rutherford v. Union P. R. Co. 251 Fed. 880, that Congress had expressly authorized suits against the Director General; but the reasoning of his opinion does not impress us as being at all conclusive. It seems to be based on the hypothesis that the term "carriers," as used in that portion of the act authorizing suits to be brought, refers to the Director General. In our judgment there can be no question whatever that the term "carriers" as so used means the corporations. The term is used in this sense throughout the act. Section 5 affords a good illustz-ation of such use. There it is provided that "no carrier shall without the approval of the President declare or pay any dividend in excess of its Tegular rate of dividends," etc., with a proviso that "such carriers as have paid no regular dividends . . . may . . . pay dividends at such rate as the President may determine." This and other provisions so clearly contemplate the continued management of the corporations by their own officers and managers, and so clearly indicate the meaning of the term "carriers" as used in expressing the authority to bring suits, as to make .discussion of the question seem superfluous.
In an opinion of the supreme court of New York, just published, in the case of Schumacher v. Pennsylvania R. Co. 106 Misc. 564, 175 N. Y. Supp. 84, it is held that § 10 of the Rail Control Act is unconstitutional for the reason that it attempts to make the railway companies liable for injuries occasioned by the negligence of government employees, thus taking its property without due process of law. It was not even suggested in the case that § 10 was capable of being construed as authorizing suits against the government. So construed, it would not of course be unconstitutional, and were it susceptible of such a construction, it was the clear duty of the court to adopt it, rather than to hold the law invalid as being in violation of the Constitution. So, on the question of statutory construction, this case is a direct authority in support of the conclusion reached in this opinion.
In' the case just referred to, the alleged cause of action arose at a time (May, 1918) when it would be affected by the same considerations that govern liability in this case. But as we are not called upon on this appeal to deal with the question of liability, since it cannot arise on the motion, our reference to the case is not to be considered as an expression of opinion upon this matter. For the benefit of appellant's counsel, however, who is charged with the serious responsibility of protecting the rights of his client, we call attention to the following statement in the opinion at page 577 of 106 Misc.: "The questions here presented are not whether the plaintiff has an adequate remedy for the death of her husband, but whether her judgment should be one against the Pennsylvania Railroad Company or against the Director General of Railroads. Her action was begun before order No. 50 was promulgated. • Still, she might have asked for the substitution of the Director General, as provided in the order. We are not pre pared to say that, even at this date, after the tidal and a verdict, she might not amend by substituting the Director General. Certainly, if that official should consent to such an order, the plaintiff ought not to raise serious objection." This court cannot declare the course proper for appellant's counsel to pursue; it can only determine the legal foundation for the compulsory dismissal of plaintiff's action, and the substitution without his consent of a defendant against whom he is unwilling to pursue whatever remedy he has.
It follows from the above propositions, that to sustain the order of substitution would be in effect to deny the plaintiff the right to obtain a judgment that will be binding upon anyone, and thus altogether to deprive him of the right to maintain a suit upon his alleged cause of action.
But both the President in his original proclamation, and Congress in the Act of March 21, 1918, clearly contemplated that the liability of the carriers should continue. We have previously referred to the President's proclamation and the particular portion of the congressional act which provides that carriers shall be subject to all laws and liabilities whether arising under state or Federal laws or at common law, "except in so far as may be inconsistent with the provisions of this act or any other act applicable to such Federal control or with any order of the President." It is not contended that any other act of Congress or that any other provisions of the Act of March 21, 1918, qualified the liability of carriers, and we are cited to no order of the President which purports to limit their liability. Since the liability continues, it is competent for a suitor to resort to the ordinary legal remedies to establish it, and he cannot be denied this right summarily (Muir v. Louisville & N. R. Co. 247 Fed. 897; Angle v. Chicago, St. P. M. & O. R. Co. 151 U. S. 1-19, 38 L. ed. 55-64, 14 Sup. Ct. Rep. 240) ; though, of course, it would be competent to make reasonable regulations governing the procedure. A regulation which altogether deprives a suitor of obtaining a judicial determination of his right however, is more than a procedural regulation. Other orders of the Director General prescribing procedural regulations, merely, have been held valid, such as the order fixing the venue of actions. See Wainwright v. Pennsylvania R. Co. 253 Fed. 459; Rhodes v. Tatum, — Tex. Civ. App. —, 206 S. W. 114; but see Friesen v. Chicago, R. I.. & P. R. Co. 254 Fed. 875.
If it be argued that the order in question amounts to a limitation of the liability by direct authority of the President within the exception quoted above, the conclusive answer is that the liability, if any, in the instant case, arose before the order was promulgated, and the order could not be made retroactive in its effect upon the liability as distinguished from its effect upon procedure merely. Inasmuch as the order would relieve the carriers from an alleged legal liability previously incurred, we are of the opinion that it is in direct conflict with the second sentence of § 10, which provides that ". . . actions-at law or suits in equity may he brought by and against such carriers, and judgments rendered as now provided by law; and in any action at law or suit in equity against the carrier, no defense shall be made-thereto upon the ground that the carrier is an instrumentality or agency of the Federal government."
Reasoning in harmony with the above has recently been employed by the court of appeals of Alabama in a criminal case (Vaughan v. State, — Ala. App. —, 81 So. 417), in which a judgment of conviction was dependent upon the sufficiency of an indictment which, in turn, according to the view of the court, depended upon the invalidity of general order No. 50. The conviction was affirmed.
There are some minor questions which are so elementary that it would be unnecessary to refer to them were it not for the fact that they are made the basis of considerable discussion in the dissenting-opinion of Mr. Justice Bronson. They relate to procedure. It is strongly intimated that the record does not show that the plaintiff' objected to the entry of the order. Suffice it to say that the order is one which necessarily "affects the judgment," and it is one which appears "upon the record transmitted from the district court." It is-therefore deemed excepted to, and it becomes the duty of this court, upon appeal, to review it. Comp. Laws 1913, § 7842.
It is suggested that the plaintiff did not claim that the Director-General should be interpleaded. The order, which it is contended is-law, does not provide for interpleading the Director General. It provides for substitution and dismissal.
It is also suggested that the plaintiff, by amendment of the com plaint or by affidavit, might have attempted to show, that there was a legal responsibility claimed against the railway company. The complaint needed no amendment in this respect. If it did not state a cause of action against the defendant railway company, it was of course subject to demurrer, and the suggestion that a complaint may be aided in its allegations by an affidavit which is not part of it is so novel as to amount to an invention in pleading. It is not at all surprising, therefore, that counsel would not attempt it.
Since the foregoing opinion was written, a pamphlet has been received containing the statements of Mr. Walker D. Ilines, Director General of Hailroads, before the Interstate Commerce Commission of the United States Senate, concerning the extension of tenure of government control of railroads. At page 21, Mr. Hines refers specifically to general order No. 50, as follows: "At this point I want to refer to general order No. 50. That refers to suits brought against the Dii'ector General. There, again, we had a situation which was developing coxxfusion. Of coxxrse, general order No. 50 is designed to deal with certain classes of causes of action that arise against the government while the government is in control of the railroads, causes of action for which the government is liable and for which the corporation is not liable. Claims were beginning to be made in various parts of the country that the corporation itself was not liable for a cause of action arising against the government while it was in control, and plaintiffs were being embarrassed because they were not certain where they were going to come out if they sued the corporation. It seemed a reasonable rule, and really in the interest of plaintiffs, — and it did not have any relation to anything else or cause any disturbing factors,— to provide that where those causes of actioxx arose against the government, in effect that suits should be brought against the Director General. It still left the plaintiffs free to sue, just as they could sue before, and to make service of pxecess on the local railroad agents, just as they could make it before. It did not, as we see it, impair the rights •of the plaintiffs at all, but it cleared up the situation by making it perfectly clear that they would have a procedure that would be free from attack. Of course, that does not apply to suits brought against the corporation for causes of action arising prior to Federal control. Those would be brought as heretofore; but as to suits arising under Federal control, where it was perfectly clear that the corporation was in no way liable, it was believed that it was in the interest of the plaintiffs themselves to give them a clear-cut procedure; and general order No. 50, so far as I understand it, does not embarrass their opportunity to sue in any locality. Of course, that is affected by general order No. 18, which I have already explained."
The validity of the order, in so far as it is compulsory upon the plaintiffs, does not depend upon the propositions advanced by the Director General. Even assuming the correctness of the two propositions,— (1) that the government is liable; and (2) that the corporation is not liable,— the order cannot be supported, for it does not appear that the Director General has been vested with any authority to control the actions of plaintiffs, who seek to establish the liability of carriers, nor with the right to intercede on behalf of the carrier corporation. The right to intervene, however, to protect the interests of the government, is not here involved and is not considered. A plaintiff who is desirous of testing merely the liability of a carrier corporation cannot be made to test unwillingly the liability of the government.
The nonliability of the carriers is, as elsewhere indicated in the opinion, a judicial, not an administrative, question, and can only be decided by a court when the defense is properly raised. As illustrative of the character of the difficulties involved in the final determination of this question, we call attention to the fact that prior to August 1,. 1918, the Director General exercised possession and control exclusively through the officers, directors, and agents of the railway corporations, thus recognizing their agency to act for the corporations under his directions; while, since August 1st, all administration of transportation has been effected through officers and agents directly appointed by the Director General. These are not recognized as agents of the corporations. The legal effect of these different methods under the-acts of Congress is clearly for courts to determine as the questions properly arise, unless Congress has prescribed a different mode. It-appears to us that it has not done so.
For the foregoing reasons, we hold that the order in question is void as involving an unwarranted deprivation of the plaintiff's alleged cause of action, and as being contrary to the governing acts of Congress. passed to meet the war emergencies. It follows that the order appealed from must be reversed. It is so ordered. ' "