Case Name: LEHIGH VALLEY RAILROAD COMPANY ET AL., APPELLANTS, v. MAAS & WALDSTEIN COMPANY, RESPONDENT
Court: New Jersey Court of Errors and Appeals
Jurisdiction: New Jersey
Decision Date: 1924-03-03
Citations: 99 N.J.L. 194
Docket Number: 
Parties: LEHIGH VALLEY RAILROAD COMPANY ET AL., APPELLANTS, v. MAAS & WALDSTEIN COMPANY, RESPONDENT.
Judges: 
Reporter: New Jersey Law Reports
Volume: 99
Pages: 194–197

Head Matter:
LEHIGH VALLEY RAILROAD COMPANY ET AL., APPELLANTS, v. MAAS & WALDSTEIN COMPANY, RESPONDENT.
Argued July 2, 1923
Decided March 3, 1924.
1. The federal legislation under which the president was empowered •by congress to take over the railroads of the country and operate them as governmental instrumentalities for war purposes invested the president with the power to fi,x rates for transportation, and, such rates when filed with the interstate commerce commjission fixed the terms of transportation for both state and interstate commerce.
2. An agent of a railroad which had been taken over ,and was 'being-operated by the federal government in time of war had no authority to accept or to propose to a shipper ,any other rate for the transportation of goods than that fixed by the tariff filed with the interstate commerce commission in pursuance of the act of congress, which authorized the federal operation of such railroads.
On appeal from the Supreme Court.
Bo-r the appellants, McCarter <& English.
Bor the respondent, Lindabury, Depue & Faulks.

Opinion:
The opinion of the court was delivered by
Minturn, J.
During the months of July and August, 1919, the Lehigh Valley railroad was taken over by the president of the United States, and was operated as a common carrier in government possession by the director general of railroads, pursuant to the provisions of the war-time legislation of congress enacted for that purpose.
During that period the former director general of railroads caused to be carried over the road eighteen carloads of wet nitro-cellulose, from the city of Newark to Nixon, in this state. The published tariff rate for such material between these points was twenty-five cents per hundred weight, upon which the defendant paid but nine cents per hundred weight, and refuses to pay the balance due thereon, amounting to $1,203.27, to recover which this suit was instituted. The defense interposed was substantially that the defendant obtained from an agent of the railroad the rate of nine cents, and made its shipment upon that quotation, which it would not have done had the published rate been exacted. The plaintiff replied that the agent had no authority to accept or to propose any other rate than that specified in the published tariff, or to agree to carry the goods for a less rate.
The case was tried before the Circuit Court without a jury, upon a stipulation of these facts, and resulted in a judgment for the defendant from which the plaintiff appeals. The question presented for decision, it will be observed, is essentially one of law, viz., whether an agreement of the governmental agent, under the circumstances, can bar the government from collecting from the defendant the freight due to the government at the regular published rate. Upon reasons of public policy it was comparatively at an early period in this state, declared to be unlawful, for a common carrier to create a preference in favor of a shipper. Messenger v. Pennsylvania Railroad Co., 37 N. J. L. 531; affirming, 36 Id. 407.
This public policy was emphasized by the federal legislation under which the president was empowered by congress to take over the railroads and operate them as government instrumentalities for war purposes. 419 Comp. Stat. 1916; 25 Comp. Stat. 1918.
These acts invested the president with the power to initiate rates by filing the same with the interstate commerce commission. This power was exercised by the director general of railroads in pursuance of the power conferred upon the president, and the rates thus fixed became final and con trolling. The rates so filed fixed the terms of transportation both for state and interstate commerce, and conld not be altered either by state action or a fortiori by the action of an}' subordinate of the director general, who was, in this instance, erroneously assumed the right and power to alter rates to the disadvantage and loss of the government. Northern Pacific Railroad Co. v. North Dakota, 250 U. S. 135.
In Massachusetts the rule has been declared, in a substantially similar situation, to be that "the railroad and the shipper are bound inexorably to follow the rate published. No excuse which operates as an invasion of that rate has any standing as a matter of law in defense of a proved violation of such rate. Mistake, inadvertence, honest agreement and good faith are alike unavailing." New York, New Haven, &c., Railroad Co. v. York & Whitney Co., 102 N. E. Rep. 366.
The same rule was applied by our Supreme Court in Delaware, Lackawanna and Western Railroad Co. v. Nuhs Co., 93 N. J. L. 309, where the language of the federal court in Illinois Central Railroad Co. v. Hoopes et al., 233 Fed. Rep. 135, is cited, viz.: "So important was it that the collection of freight charges should be uniform as to all shippers, so important is it that it be above suspicion of favoritism, that it is against public policy to permit a counter-claim of this kind to be pleaded" against the governmental claim for unpaid rates.
This doctrine was enforced as the controlling rule under the interstate commerce acts, where the federal government undertook to exercise its constitutional prerogative relative to transportation between the states; and the same principle 'of public policy must be held to supervene in the situation sub judice, where the federal government under legislation of the congress assumes to operate the highways of transportation for all purposes, both interstate and intrastate. The test under this legislation is governmental operation and control, and once that aspect is given to the situation, state lines disappear, and the constitutional prerogative of the federal government, not only to regulate commerce between the states, but as well as to establish post-roads, and, above all, to preserve the integrity of the nation in a period of public danger, requires that the uniform and universal control of these vast arteries of travel and trade be maintained as a co-ordinate integral unit within as well as without the boundaries of each state; for, as was declared in Northern Pacific Railway Co. v. North Dakota, supra, "to the extent that any conflict arises, the state power is limited, since in case of conflict that which is paramount necessarily controls that which is subordinate."
In rhis instance the war power exercised by the president under the provisions of the acts of congress was paramount to existing state legislation, and superseded during the continuance of the national agency all state power inconsistent with the full and complete exercise of the federal law, as well within as without the states, and furnished the only controlling legal regulation for transportation wherever throughout the Union the power was exercised.
Eor these reasons the judgment appealed from will be reversed, and a venire de novo awarded.
For affirmance — None.
For reversal — The Chancellor, Chibe JUstice, Trencharb. Parker, Mintitrn, Kaltsoh, Black, Katzenbaoh, Van Bltskirk — 9.