Case: THE ILLINOIS CENTRAL RAILROAD COMPANY v. THE UNITED STATES
Abbreviation: Illinois Central Railroad v. United States
Decision Date: 1883-02-12
Docket Number: No. 12084
Citation: 18 Ct. Cl. 118
Volume: 18
Reporter: United States Court of Claims Reports
Court: United States Court of Claims
Jurisdiction: United States
Parties: THE ILLINOIS CENTRAL RAILROAD COMPANY v. THE UNITED STATES.
Judges: Duaiie, O. J., was absent when tbis cause was beard, and took no part in tbe decision.
Pages: 118–137

Head Matter:
THE ILLINOIS CENTRAL RAILROAD COMPANY v. THE UNITED STATES.
No. 12084
February 12, 1883.
The claimant corporation is a land-grant railroad company bound by statute to carry the mail “at such price as Congress hy law direct,” with power given to the Postmaster-General to determine the price until the same is fixed hy law. He made a contract with the claimants for carrying the mails for four years. During that period Congress established the rates for land-grant roads below the contract price in this case. The company was paid the reduced rates, and now sues for the difference between that and the contract price.
The case involves the same question decided hy the court against the claimants in several railroad cases reported in 14 C. Cls. R., 125, and 15 C. Cls. R., 232. The Supreme Court on appeal reversed the decisions of this court. (104 U. S. R., 680, 687.)
The Postmaster-General takes exception to the decision of the Supreme Court in those cases, and doubts whether certain considerations stated by him were presented to that court.
Held :
I.In deciding the railroad eases reportod in 104 U. S. R., 680 and 687, it appears that the Supreme Court fully considered the statutes giving to Congress the power to fix the compensation of land-grant roads, and the statutes reducing the compensation of land-grant roads, and their effect upon existing contracts made by the Postmaster-General for a term of years before the x>assage of the latter act, and held that such contracts were not modified thereby.
II.The effect of the decision of the Supreme Court in those oases upon the construction of several sections of the Revised Statutes relating to to contracts for carrying the mail considered.
III.This court is bound to apply to this and all other cases involving the same questions the construction given to the statutes by the Suéneme ^ourt.
The following are the facts found by the court:
I. The contracts annexed to and forming part of the petition were executed by the parties for the transportation of the United States mails as set forth in the petition.
[Each contract was for carrying the mails for the term of four years from July 1, 1875, to and including June 30, 1879; and each contained the following article, which is the material part involved in the present controversy:
9th. That the Postmaster-General may discontinue or curtail the service, in whole or in part, whenever the public interests, in his judgment, shall require such discontinuance or curtailment for any cause; he allowing, as a full indemnity to the contractor, one month’s extra pay on the amount of service dispensed with, and stpro rata compensation for the the amount of service retained and continued. ]
II. Claimant carried the mails upon each of the routes prescribed by the contracts during the term of four years, as required by the terms of said contracts.
III. The following circulars were sent on the days of their respective dates by the Second Assistant Postmaster-General -to claimants:
[Ciroular.]
Reduction of pay for mail service on land-grant railroads under act of Congress
of July 12, 1876.
Post-Office Department,
Office of the Second Assistant Postmaster-General,
Washington, D. C., October 13, 1876.
Sir : The act of Congress entitled “An act mating appropriations for the service of the Post-Office Department for the fiscal year ending June thirtieth, eighteen hundred and seventy-seven, and for other purposes,” approved July 12, 1876, section 1, contains the following proviso, namely:
“ Provided, That the Postmaster-General be, and he is hereby, authorized and directed to readjust the compensation to be paid from and after the first day of July, eighteen hundred and seventy-six, for transportation of mails on railroad routes, by reducing the-compensation to all railroad companies for the transportation of mails ten per centum per annum from the rates fixed and allowed by the first section of an act entitled ‘An act making appropriations for the service of the Post-OfSce Department for the fiscal year ending June thirtieth, eighteen hundred and seventy-four, and for other purposes,’ approved MarchJMrd, eighteen hundred and seventy-three, for the transportation of mails on the basis of the average weight.”
The same act also contains the following section:
“Sec. 13. That railroad companies whose railroad was constructed, in whole or in part, by a land grant made by Congress on the condition that the mails should be transported over their road at such price as Congress should by law direct, shall receive only eighty per centum of the compensation authorized by this act.”
Consequently, for mail service performed on and after July 1, 1876, on your road, route 27021, between Dubuque and Sioux City, the compensation will be reduced from $40,890 per annum (the amoun fc warranted by the latest returns under the Act of March 3, 1873) to $32,712 per annum, the reduction amounting to $8,178 per annum, of which the sum of $ is
due to the proviso in the first section, and the sum of $8,178 to the thirteenth section of the Act of July 12, 1876, above quoted.
Yery respectfully, your obedient servant,
J. L. FRENCH,
Acting Second Assistant Postmaster-General.
To John M. Douglas, Esq.,
Pres’d’t Illinois Central R. R. Co., Chicago, III.
[Circular.]
Redaction of pay for mail service on land-grant railroads under act of Congress
of July 12, 1876.
Post-Office Department,
Office of the Second Assistant Postmaster-General,
Washington, D. C., Oct. 13, 1876.
Sir: The act of Congress entitled “An act making appropriations for the service of the Post-Office Department for the fiscal year ending June thirtieth, eighteen hundred and seventy-seven, and for other purposes,” approved July 12, 1876, section 1, contains the following proviso, namely:
“Provided, That the Postmaster-General be, and he is hereby, authorized and directed to readjust the compensation to be paid from and after the first day of July, eighteen hundred and seventy-six, for transportation of mails on railroad routes, by reducing the compensation to all railroad companies for the transportation of mails ten per centum per annum from the rates fixed and allowed by the first section of an act entitled ‘An act making appropriations for the service of the Post-Office Department for the fiscal year ending June thirtieth, eighteen hundred and seventy-four, and for other purposes,’ approved March third, eighteen hundred and seventy-three, for the transportation of mails on the basis of the average weight.”
The same act also contains the following section:
“Sec. 13. That railroad companies whose railroad was constructed, in whole or in part, by a land grant made by Congress on the condition that the mails should be transported over their road at such price as Congress should by law direct, shall receive only eighty per centum of the compensation authorized by'this act.”
Consequently, for mail service performed on and after July 1,1876, on your road, route 23020, between Chicago and Cairo, the compensation will be reduced from $74,375 per annum (the amount warranted by the latest returns under the act of March 3,1873) to $59,500 per annum, the reduction amounting to $14,875 per annum, of which the sum of $ is due to the proviso in the first section, and the sum of $14,875 to the thirteenth section of the act of July 12, 1876, above quoted.
Vary respectfully, your obedient servant,
J. L. French,
Act’g'Second Assistant Postmaster-General.
To John M. Doug-las, Esq.,
Pres’d’t III. Central It. P. Go., Chicago, III.
[Circular.]
Seduction of pay for mail sendee on land-grant railroads under act of Congress
of July 12, 1876.
Post-Office Department,
Office of the Second Assistant Postmaster-General,
Washington, D. C., Oct. 13, 1876.
Sir: The act of Congress entitled “An act mating appropriations for the service of the Post-Office Department for the fiscal year ending June thirtieth, eighteen hundred and seventy-seven, and for other purposes,” approved July 12, 1876, section 1, contains the following proviso, namely:
“Provided, That the Postmaster-General be, and he is hereby, authorized and directed to readjust the compensation to be paid from and after the first day of July, eighteen hundred and seventy-six, for transportation of mails on railroad routes, by reducing the compensation to all railroad companies for the transportation of mails ten per centum per annum from the rates fixed and allowed by the first section of an act entitled ‘An act making appropriations for the service of the Post-Office Department for the fiscal year ending June thirtieth, eighteen hundred and seventy-four, and for other purposes,’ approved March third, eighteen hundred and seventy-three, for the transportation of mails on the basis of the average weight.”
The same act also contains the following section:
“ Sec. 13. That railroad companies whose railroad was constructed, in whole or in part, by a land grant made by Congress on the condition that the mails should be transported over their road at such price as Congress should by law'direct, shall receive only eighty per centum of the compensation authorized by this act.”
Consequently, for mail service performed on and after July 1, 1876, on your road, route 23021, between Dubuque and Centralia, the compensation will be reduced from $59,856 per annum (the amount warranted by the latest returns under the act of March 3, 1873) to $47,884.80 per annum, the reduction amounting to $11,971.20 per annum, of which the sum of $ is due to the proviso in the first section, and the sum of $11,971.20 to the thirteenth section of the act of July 12, 1876, above quoted.
Very respectfully, your obedient servant,
J. L. French,
Act’g Second Assistant Postmaster-General.
To John M. Douglas, Esq.,
Pres’t HI. Central P. It. Co., Chicago, III.
Post-Office Depabtment,
Office of the Second Assistant Postmastee-Geneeal,
Washington, D. C., M’ch 3rd, 1877.
Sie : In reply to your favor of tlie 23rd ultimo, I beg leave to say that in applying tlie act of July 12, 1876, to routes 23020, 23021, and 27021 no reduction of pay was made under tlie first section of tlie act, but 80 per centum of tlie rates fixed under tlie act of March 3, 1873, was allowed for the service. The law officer of the Department has since advised that land-grant roads under contract are subject to the provisions of the first as well as the 13th section of the act referred to. This decision renders it necessary to fix the pay from July 1, 1876, as follows, viz:
Route 23020, from Chicago to Cairo, at the rate of $54,390 per annum, being $166 per mile for 55 miles, and $146 the residue, 310 miles, being a reduction of ten per cent, on such portion of the pay as is fixed for weight of mails, viz, $175 per mile under the 1st section of the act of Jnly 12, 1876, and the allowance of 80 per centum of the residue after such reduction under the 13th section of the same act.
On route 23021, between Dubuque and Centralia, the rate is fixed from Julyl, 1876, at $43,564.16 per annum, being $126.64 per mile, being areduction of ten per cent, on such portion of the pay as is fixed for weight of mails, viz, $157 per mile, and the allowance of 80 per cent, of the amount remaining after such reduction. Prom November 1,1876, the railway post-office cars were withdrawn between Freeport and Centralia, 276.33 miles, reducing the pay $3,758.08 per annum, making the annual compensation from that date $39,806.08.
On route 27021, between Dubuque and Sioux City, the rate is fixed from July 1, 1876, at the rate of $29,440.80 per annum, $90 per mile, being a reduction of ten per cent, under the first section of the act of July 12, 1876, and the allowance of 80 per centum of the residue after such reduction.
On route 27022, between Waterloo and Mono, being under contract, and not endowed by a land grant, no reduction has been made, so that the pay stands at the rate of $5,840 yer annum.
Very respectfully,
Tecos. J. Beady,
Second Ass’t P. M. G-meral.
J. C. Wedding, Esq.,
Auditor Illinois Central B. B. Co., Chicago.
Post-Office Depaetment,
Office of the Second Assistant Postmastee-Genbead,
Washington, JD. C., March 0th, 1877.
Sie : The Postmaster-General has this day rescinded the order on route 23020, from Chicago to Cairo, bearing date Oct. 13, 1876, and fixed pay for service from July 1, 1876, at the rate of $54,390 per annum, being $166 per mile for 55 miles and $146 per mile the residue, 310 miles, being a reduction of 10 per cent, on such portion of the pay as is fixed for weight of mails, viz, |175 per mile under the first section of tlie act of July 12,1876, and the allowance of 80 per centum of the amount remaining after such reduction.
Yery respectfully,
Thos. J. Beady,
Second Ass’t 11 M. G-eneral.
JOHN M. Douglas, Esq.,
JPres’t Illinois Central R. JR., Chicago, III.
Post-Office Depaetment,
Office of the Second Assistant Postmastee-Geneeal,
Washington, D. C., March 6th, 1877.
Sie : The Postmaster-General has this day modified the order on route No. 23021, from Dubuque to Centralia, bearing date Oct. 13th, 1876, so as to fix pay for service- from July 1, 1876, at the rate of ¡§43,564.16 per annum, being 8126.64 per mile, being a reduction of 10 per cent, upon such portion of the pay as is fixed for weight of mails, §157 per mile, under the first section of the act of July 12, 1876, and the allowance of 80 per centum of the residue after such reduction, under the 13th section of the same act.
Yery respectfully,
Thos. J. Beady,
Second Ass’t JP. M. General.
John M. Douglas, Esq.,
JPres’t Illinois Central R. R., Chicago, III.
Post-Office Depaetment,
Office of the Second Assistant Postmastee-Geneeal,
Washington, JD. C., M’ch 7, 1877.
Sie: The Postmaster-General has this day rescinded the order on route No. 27021, from Dubuque to Sioux City, bearing date Oct. 13,1876, and fixed pay for service from July 1, 1876, at the rate of $29,440.80 per annum, being $90 per mile, a reduction of ten per cent., under the first section of the act of July 12, 1876, and the allowance of 80 per centum of the amount remaining after such reduction.
Yery respectfully,
Tiros. J. Beady,
Second Ass’t JP. M. General.
Mr. John M. Douglas,
JPres’t Illinois Central Ii. R., .Chicago, III.
Post-Office Depaetment,
Office of tiie Second Assistant Postmastee-Geneeal,
Washington, JD. C., M’ch 2ith, 1877.
Sie: Since writing to you under date of the 3rd instant, the law officer of the Department has decided that the allowances for railway post-office cars are exempt from any reduction under the act of July 12, 1876. The order fixing pay from July 1, 1876, on route 23020, between Chicago and Cairo, has, therefore, been amended so as to fix the pay from that date at (he rate of $56,490 per annum, being $176 per mile to Kankakee and $15L per mile the residue.
On route 23021, between Dubuque and Centraba, the pay is fixed from July 1 to October 31, 1876, at $44,733.76 per annum, being $130.04 per mile, and from Nov. 1, 1870, at thorate of $50,036.15, being a reduction of $17per mile, for discontinuance of railway post-office service between Freeport and Centraba, 276.33 miles.
Very respectfully,
Tiios. J. Brady,
Second Ass’t P. M. General.
J. C. Welling, Esq.,
Auditor Illinois Central B. B. Co., Chicago.
[Circular.]
No. 2570. .
Beqdjustment of pay for mail service on railroad routes under act of Congress
of JnneYl, 1878.
Post-Oeeice Department,
Oeeice oe the Second Assistant Postmaster-General,
Washington, D. C., July 27, 1878.
Sir : The act of Congress making appropriations for the service of the Post-Office Department for the fiscal year ending J une thirtieth, eighteen hundred and seventy-nine, and for other purposes, approved June 17,1878, contains the following proviso, namely :
“ That the Postmaster-General be, and he is hereby, authorized and directed to readjust the compensation to be paid from and after the first day of July, eighteen hundred and seventy-eight, for transportation of mails on railroad routes, by reducing the compensation to all railroad compianies for transportation of mails five per centum per annum from the rates for the transportation of mails, on the basis of the average weight fixed and allowed by the first section of an act entitled ‘ An act making appropriations for the service of the Post-Office Department for the fiscal year ending June thirtieth, eighteen hundred and seventy-seven, and for other purposes,’ approved July twelfth, eighteen hundred and seventy-six.”
Therefore please take notice that the Auditor of the Treasury for this Department has been directed to decrease the pay of your company for the conveyance of the mails on route 23020, between Chicago and Cairo, from July 1, 1878, to June 30, 1879, $2,294.40 per annum, leaving the pay from the first-named date $55,407.79 per annum, being a reduction of five per centum from the rates fixed for weight of mails, in accordance with the provision of the act of June 17, 1878, above quoted.
Very respiectfully, your obedient servant,
Thos. J. Brady,
Second Assistant Postmaster-General.
To W. K. Ackerman, Esq.,
PresH III. Central B. B. Co., Chicago, III.
[Circular.]
2510.
Beadjustment of pay for mail service on railroad routes under aet of Congress of June 17, 1878.
Post-Office Department,
Office the Second Assistant Postmaster-General,
Washington, D. C., July 29, 1878.
Sib : The act of. Congress making- appropriations for the service of the Post-Office Department for the fiscal year ending June thirtieth, eighteen hundred and seventy-nine, and for other purposes, approved June 17, 1878, contains the following proviso, namely:
“ That the Postmaster-General be, and he is hereby, authorized and directed to readjust the compensation to be paid from and after the first day of July, eighteen hundred and seventy-eight, for transportation of mails on railroad routes by reducing the compensation to all railroad companies for the transportation of mails five per centum per annum from the rates for the transportation of mails, on the basis of the average weight fixed and allowed by the first section of an act entitled ‘An act making appropriations for the service of the Post-Office Department for the fiscal year ending June thirtieth, eighteen hundred and seventy-seven, and for other purposes,’ approved July twelfth, eighteen hundred and seventy-six.”
Therefore please take notice that the Auditor of the Treasury for this Department has been directed to decrease the pay of your company for the conveyance of the mails on route 27021, between Dubuque and Sioux City, from July 1, 1878, to June 30, 1879, $1,472.04 per annum, leaving the pay from the first-named date §27,968.76 per annum, being a reduction of five per centum from the rates fixed for weight of mails, in accordance with the provision of the act of June 17, 1878, above quoted.
Yery respectfully, your obedient servant,
Thos. J. Brady,
Second Assistant Postmaster-General.
To W. K. Ackerman, Esq.,
Pres’d’t 111. CentralB. B. Co., Chicago, III.
[Circular.]
2510.
Beadjustment of pay for mail service on railroad routes under act of Congress. of June 17, 1878.
Post-Office Department,
Office of the Second Assistant Postmaster-General,
Washington, D. C., July 29, 1878.
Sir: The act of Congress making appropriations for the service of the Post-Office Department for the fiscal year ending June thirty, eighteen hundred and seventy-nine, and for other purposes, approved June 17, 1878, contains the following proviso, namely :
“That the Postmaster-General he, and he is hereby, authorized and directed to readjust the compensation to be paid from and after the first day of ¡July, eighteen hundred and seventy-eight, for transportation of mails on railroad routes by reducing the compensation to all railroad companies for the transportation of mails five per centum per annum from the rates for the transportation of mails, on the basis of the average weight fixed and allowed by the first section of an act entitled ‘An act making appropriations for the service of the Post-Office Department for the fiscal year ending June thirtieth, eighteen hundred and seventy-seven, and for other purposes,’ approved July twelfth, eighteen hundred and seventy-six.”
Therefore please take notice that the Auditor of the Treasury for this Department has been directed to decrease the pay of your company for the conveyance of the mails on route 23021, between Dubuque and Centralia, from July 1, 1878, to June 30, 1879, $1,944.29 per annum, leaving the pay from the first-named date $39,890.36 per annum, being a reduction of five per centum from the rates fixed for weight of mails, in accordance with the provision of the act of June 17, 1878, above quoted.
Very respectfully, your obedient servant,
Thos. J. Brady,
Second Assistant Postmaster-General.
To W. K. Ackerman, Esq.,
Pres’cl’t III. Central B. B. Co., Chicago, III.
IV. The deductions so made were as follows:
On route 23020, Chicago to Cairo, under the 1st and 13th*sec-tions of the Act of July 12, 1876, the pay was reduced at the rate of $17,885 per annum, and under the Act of June 17,1878, at the rate of $2,294.40 per annum, making in all for the period from July 1,1876, to June 30, 1879, the sum of $56,949.40.
On route 23021, Dubuque to Centralia, under the 1st and 13th sections of the Act of July 12,1876, the pay was reduced at the rate of $15,122.24 per annum, and under the Act of June 17, 1878, at the rate of $1,944.29 per annum, making in all for the period from July 1,1876, to June 30,1879, the sum of $47,311.01.
On route 27021, Dubuque to Sioux City, under the 1st and 13th sections of the Act of July 12,1876, the pay was reduced at the rate of $11,449.20 per annum, and under the Act of June 17, 1878, at the rate of $1,472.04 per annum, making in all for the period from July 1, 1876, to June 30, 1879, the sum of $35,819.64.
Mr. J. F. Farnsworth for tbe claimant corporation:
1. Tbe point made by tbe Postmaster- General in bis letter bas been distinctly overruled, botb by tbis court and by tbe Supreme Court, in tbe cases of tbe Chicago and Northwestern Bail-way Company, and the Chicago, Milwaukee and Saint Paul Bailway Company. (14 C. 01s. B., 125; and 104 TJ. S. B., 687 ; 15 O. Cls. B., 232, and 104 TJ. S. B., 680.)
In tbe former case, which was precisely like tbis, tbis court said:
It is therefore, we think, apparent ttíat so far as their contracts in this suit are involved the parties stand in precisely the same plight that they would he in if the roads were not land-grant roads and Congress had prescribed this reduction of the contract rate for all railroads.
The Supreme Court in that case, in the very able opinion delivered by Mr. Justice Matthews, which covers the whole ground, held that tbe contracts were legal and binding upon botb parties for tbe whole term, and that tbe Acts of 1876 and 1878, directing a reduction of pay, were not intended to and could not affect existing contracts like these Tbe Postmaster-General had no authority to overrule the decision of tbe Supreme Court.
2. This court held, in the Chicago and Northwestern Bailway Company’s Case, that tbe Postmaster-General was authorized to make tbe contracts, and that they were legal and binding upon the parties, but that tbe passage by Congress of tbe Act of July 12,1876, directing a reduction of the pay for railway transportation generally, “operated as a renunciation of the contract or of a discontinuance of tbe service, unless the railway company should assent to tbe reduction,” &e.; and in tbis respect it made no difference whether the railway was “land grant” or not, because the contracts contain a clause authorizing the Postmaster-General to—
discontinue or curtail the service in whole or in part whenever the public interests, in His judgment * * * required it; he allowing as a full indemnity to the contractor one month’s extra pay on the amount of service dispensed with, and a pro rata compensation for the amount of service retained and continued.
3.' Under tbis state of the law and the facts, this court said that “tbe only right which the railway company bad was to accept tbe one ®onth’s extra pay * * * as liquidated damages for the discontinuance of the service,” &c.
This point was not argued by counsel either for the claimant or the Government before this court. If it had ever been discovered before, it certainly had not been insisted upon either by the Postmaster-General, the Attorney-General, or the Assistant Attorney-General who tried that cause in this court. On the contrary, the Postmaster-General submitted one of the contracts in that suit to the Attorney-General, and asked his opinion whether the Act of July 12,1876, applied to those corporations with which contracts were still subsisting. His reply was: “ In my opinion, Congress did not intend to have this effect.” He further said: “The contracts * * * were authorized by the law in force at the dates of their execution. They bound both parties. A breach of them by either would subject the delinquent to a claim for damages,” &c. (15 Opin., 182.)
The Postmaster-General, on the 18th of August, 1876, by circular, notified the plaintiff that the Assistant Attorney-General for the Post-Office Department had advised to the same tenor. (3d finding in the C. & N. W. R. R. Case, 15 C. 01s. R., 234.)
“The Postal Laws and Regulations of the United States of America” (pp. 150, 151), which were printed agreeably to an Act of Congress approved March 3,1876, after quoting the provisions of the Act of July 12,1876, directing a reduction of ten per centum, &c., say: “ This act was not intended to affect existing contracts.”
4. Congress did not direct the Postmaster-General to “readjust” the service, but the ‘ ‘ compensati on ” for the service. And the ninth clause of the contract itself requires payment at the contract rates ufor the amount of service retained and continued^
All the service provided in the contracts was “ retained and continued,.” Why'S Because, in the “opinion” of the Postmaster-General, “ the public interests required” such continuance. The plaintiff did not request its continuance — had no voice in the master.
■ Mr. John 8. Blair (with whom was Mr. Thomas Simons, Assistant Attorney-General) for the defendants:
The letter of the Postmaster-General (printed in the opinion, p. — ) reopens the questions which the claim^pt’s counsel urges were settled by the Supreme Court in former cases (104 U. S. R., 680, 687), and the court here is requested to review them.

Opinion:
OPINION.
Davis, J.,
delivered tbe opinion of tbe court:
It is admitted that tbis case differs in no material respect from tbe cases of tbe Chicago, Milwaukee and Saint Paul Eail-way Company, decided by tbis court at tbe December term, 1878 (14 O. Cls. E., 125), as supplemented by tbe Obicago and Northwestern Eailway Company's Case, decided at tbe December term, 1879 (15 0. Cls. E., 232); both reversed by tbe Supreme Court for errors of law (104 U.S. E., 680 and 687).
Tbe counsel for tbe Government, in explanation of tbe request for a rebearing on tbe points settled in those cases, presents with bis brief tbe following letter from tbe Postmaster-General:
Post-Office Department,
Office of the Postmaster-General,
Washington, D. C., March 30, 1882.
Hon. S. F. Phillips,
Acting Attorney-General, Washington, D. C. :
Sir: I have read the opinion of that court, as delivered by Mr. Justice Matthews (Chicago and Northwestern Railway Company). The briefs in the ease I have not seen; hut I ventare to submit for your consideration one comment upon the opinion of the court.
That opinion assumes that the Postmaster-General was authorized by the Act of 1872 to contract with any railroad company, whether a land-grant road or another, for carrying the mails; that being so authorized he did contract with the Chicago and Northwestern Company in 1875, and that having so contracted, Congress could not by act change the terms of the contract,'in 1876.
Unless the point was considered by the court, I venture to doubt whether the Postmaster-General had any authority whatever to contract with any land-grant road. The same act, the same breath, which authorized the Postmaster-General to make contracts with railway companies affirmed also the duty of land-grant roads to carry mails at prices fixed by Congress. (See sections 214 and 265, chap. 335, of the laws of 1872.)
It does not seem to me quite reasonable to hold that Congress, at the same time it affirms the duty of that class of roads to carry mails, upon prices fixed by Congress, should authorize the Postmaster-General to annul or abrogate that power by a contract of his own.
I am, very respectfully, your obedient servant,
T. 0 Howe,
Postmaster- General.
Eacb of tbe cases referred to received tbe assent of all tbe members of tbis court after careful examination and consultation; and eacb was reversed in tbe court above with equal una nimity. As tbe Postmaster-General seems to question tbe result reached, a proper respect for that officer calls upon us to re-examine our own action in order to determine whether the points he now raises were not considered by us, and were not before the higher court.
In the Bevised Statutes it is enacted as follows (omitting such parts of the sections as are not necessary to the proper consideration of this case):
SECTION 3942. The Postmaster-General may enter into contracts for carrying the mail with, railway conqianies without advertising for bids therefor.
Section 3956. No contract for carrying- the mail shall be made for a longer term than four years.
Section 3997. The Postmaster-General shall arrange the railway routes on which the mail is carried so that each railway company shall receive, as far as practicable, a proportionate and just rate of compensation, according- to the service performed.
Section 3998. The pay for carrying the mail on any railway of the first class shall not exceed three hundred dollars per mile per annum; on any railway of the second class it shall not exceed one hundred dollars per mile per annum, and on any railway of the third class it shall not exceed fifty dollars per mile per annum; hut if one-half the service on any railway is required to be performed in the night time, the Postmaster-General may pay twenty-five per centum in addition to the above maximum rates.
Section 4000. Every railway company carrying the mail shall carry on any train which may run over its road, and without extra charge therefor, all mailable matter directed to be carried thereon, with the person in charge of the same.
Section 4001. All railway companies to which the United States have furnished aid by grant of lands, right of way, or otherwise, shall carry the mail at such prices as Congress may by law provide, and until such price is fixed by law the Postmaster-General may fix the rate of compensation.
Section 4002. The Postmaster-General is authorized and directed to readjust the compensation hereafter to be paid for the transportation of mails on railroad routes upon the conditions and at the rates hereinafter mentioned.
First. That the mails shall be conveyed with due frequency and sj>eed, and that sufficient and suitable room, fixtures, and furniture in a car or apartment properly lighted and warmed shall be provided for route agents to accompany and distribute the mail.
Second. That the pay per mile per annum shall not exceed the following rates.
Under these jiro visions of law the United States, on the 1st day of July, 1875, contracted with the Chicago, Milwaukee and Saint Paul Bailway Company for transportation of mails over its road for a term of four years at a rate of compensation graded according to tbe provisions of Eevised Statutes § 4002. Tbe contract further contained tbe following provision:
9th. That the Postmaster-General may discontinue or curtail the service in. whole or in part whenever the public interests, in his judgment, shall require such discontinuance or curtailment for any cause; he allowing, as a full indemnity to the contractor, one month's extra pay on the amount of service dispensed with, and a pro rata compensation for the amount of service retained and continued.
By the first section of tbe Act of July 12, 1876, chap. 179, it was enacted—
That the Postmaster-General he, and he is hereby, authorized and directed to readjust the compensation to be paid from and after the first day of July, 1876, for transportation of mails on railroad routes by reducing the compensation to all railroad companies ten per centum per annum from the rates fixed and allowed by the first section of an act entitled "An act making appropriations for the service of the Post-Office Department for the fiscal year ending June 30,1874, and for other purposes," approved March 3, 1873, for the transportation of mails on the basis of the average weight. (Richardson's Supplement to Revised Statutes, 224.)
The provision in tbe Act of March 3,1873, therein referred to, is tbe one incorporated into tbe Eevised Statutes as section 4002.
By tbe thirteenth section of tbe Act of July 12, 1876, it was further enacted—
That railroad companies whose railroad was constructed in wholo or in part by a land grant made by Congress on the condition that the mails should be transported over their road at such price as Congress should by law direct shall receive only eighty i>er centum of the compensation authorized by this act. (Richardson's Supplement to Revised Statutes, 226.)
The Postmaster-General applied tbe provisions of tbe Act of 1876 to tbe contract with tbe Chicago, Milwaukee and Saint Paul Eailroad Company. There was a controversy whether tbe road was subject, as a land-grant road, to tbe provisions of tbe thirteenth section of that act. This court decided that it was not a land-grant road (14 C. Cls. R., 125), and its decision was substantially sustained above. (104 U. S. R., 687.) There was also a contention whether it was subject to tbe provisions of tbe first section of tbe act, reducing all rates 10 per centum. On this point our judgment was adverse to tbe company, and was reversed above. In tbe opinion which accompanied our judgment, we laid down some propositions of law, resting upon others, which, although not stated, were necessarily implied by the course of argument.
1. Contracts made by tbe Executive for tbe payment of money from tbe Treasury derived tbeir validity from legislative authority.
Section 3732 of tbe Eevised Statutes codifies this proposition as to some kinds of contracts:
No contract or purchase on behalf of the United States shall be made unless the same is authorized by law or is under an appropriation adequate to its fulfillment, except in the War and Navy Departments, for clothing, subsistence, forage, fuel, quarters, or transportation, which, however, shall not exceed the necessities of the current year.
Tbis principle, wbicb we assumed as tbe basis of tbe reasoning by wbicb we reached our conclusion, has not been, and probably will not be, questioned. Tbe Constitution says that " no money shall be drawn from tbe Treasury but in consequence of appropriations made by law." It provides for tbe distribution of tbe work of carrying on tbe Government in different executive Departments. Congress has organized Departments under tbe Constitution; and has charged them with tbe conduct of executive business; and makes appropriations for carrying on that business; and provides accounting machinery in tbe Treasury for determining bow much shall be paid for it; and delegates a portion of its power to tbis court, authorizing it to render judgments wbicb shall be respected and paid at tbe Treasury out of a general appropriation for that purpose. But no one will probably contend that if Congress fails to confer upon the Executive power to expend tbe public money for a given purpose it is within tbe constitutional power of tbe Executive to bind tbe United States, either directly or by implication, to pay it for such a purpose; or that tbe courts should recognize such a contract, and give a judgment upon it to be satisfied under a general appropriation act. Such a case is not to be confounded with one in which it becomes tbe duty of a court to render judgment against tbe United States because Congress has failed to make an appropriation to meet payments due under a valid contract; or with one in wbicb tbe United States has received tbe benefit of labor or material without a contract, under general provisions of law. Confining tbe expression of opinion to tbe exercise of tbe constitutional power by Congress to determine bow much money shall be appropriated from tbe Treasury and for what purposes, we then bad and still have no doubt that tbe absolute control of tbe money of tbe United States is in Con gress, and that it is the duty of the executive and judicial Departments of the Government to observe its will in that respect; and we do not understand that this principle is questioned by the Supreme Court.
2. The contract sued on in that suit was authorized by statute. It was contended on the part of the United States that the Postmaster-General had no authority to contract for four years. We decided that the statute gave him that power, and the Supreme Court held that we were right. That officer might have made an absolute contract for that term. Had he done so, the decision in the claimants' favor on that point would have terminated the case. He did not do so, however. He made a contract for four years, terminable at any time on notice by the Government of discontinuance of the service, with extra payment for one month. It was the attempt by the Postmaster-General to execute this reserved power which raised the issues settled by that suit.
3. While the terms of a valid contract with the United States could not be varied (whether by the Legislature or the Executive) without the assent of both parties, a discontinuance of the service effected under the ninth clause of the contract was not a variation. We do not suppose th at this holding was erroneous. There is certainly nothing in the opinions of the Supreme Court looking that way.
4. That the notice required by the ninth provision of the contract could be given as effectually by the Legislature as by the Postmaster-General as the agent of the Legislature.
This proposition rests in part upon the first proposition and in part upon the settled principle that all persons being within the limits of a sovereignty are presumed to know the provisions of public law. Assuming that the legislative will was to govern the disposition of the public moneys so far as it could lawfully do so without affecting the validity of contracts, we thought that rules of public policy, as well as settled principles, required us to hold that the expression of that will reached the parties directly through the statute without waiting to percolate through the bureau of an executive Department. A careful examination of the opinions of the Supreme Court in these cases fails to reveal that the judges of that court did not agree with us. On the other hand it appears to have been recognized as a sound principle in Bradley v. The United, States (98 U. S. R., 104).
5. As a conclusion from the previous propositions we held that the act terminated all contracts which were terminable at the will of Congress, and which Congress intended by the act to terminate. Down to this point there is no appearance that the Supreme Court found this court in error.
6. That Congress intended by the Act of July 12,187C, to induce by 10 per cent, the mail transportation pay of all railroad companies whose contracts it could lawfully change.
The act directed the Postmaster-General to readjust the compensation for transportation of mails on railroad routes by reducing the compensation to all railroad companies. This court was of opinion that Congress by using the word 11 all" intended to reach all railroads and all railroad contracts for mail transportation which the Executive could lawfully terminate, leaving the companies to decide whether they would make the new - agreement prescribed by Congress, or would cease to carry the mails. It necessarily followed from this course of reasoning that the contract of the Chicago, Milwaukee and Saint Paul Eailway Company Avas terminable; that it was the intent of Congress to terminate it; and that it was abrogated by the act.
The Supreme Court finds us in error in this construction of the statute. In the case of the Chicago and Northwestern Railway Company (104 U. S. R., 680), to which we shall soon refer more in detail, and which appears to have been considered with the Chicago and Milwaukee Case, it says of this and a similar statute:
Their language may he well satisfied Toy confining them to oases where no time contracts for service were then in existence, and to contracts thereafter to he entered into. They do not legitimately apply to contracts then existing.
And in the Chicago, Milwaukee and Saint Paul Case, the Supreme Court says:
This act was not intended to apply to the caso of contracts previously made for a term of years not expired Avheu it took effect.
By the Act of June 17,1878, ch. 259 (Eichardson's Supplement to Eev. Stat., 358), it was further enacted:
That the Postmaster-General be, and he is hereby, authorized and directed to readjust the compensation to be paid from and after the 1st day of July, 1878, for transportation of mails on railroad routes by reducing the compensation to all railroad companies, for the transportation of mails, 5 per centum per annum fromtherates for the transportation of mails on the basis of the average weight fixed and allowed by the first section of an act en titled "An act making ax>propriations for the service of the Post-Office Department for the fiscal year ending June 30, 1877, and for other puposes," approved July 12, 1876.
At the term of court following that in which judgment was entered in the case of the Chicago, Milwaukee and Saint Paul Eailway Company the case of the Chicago and Northwestern Eailway Company was heard and decided. (15 C. Cls. R., 232.)
The contract in that case was for the transportation of the mails for four years from July 1,1875, and contained a clause in every respect identical with provision 9 in the other contract.
The Government claimed to apply to this contract the provisions of the Act of June 17, 1878, as well as those of section 1 of the Act of July 12, 1876. It also appeared that a part of the claimants' road was a land-grant road. The Government further contended that the contract was subject to the provisions of the-thirteenth section of the Act of July 12,1876.
This court reaffirmed the doctrines expressed in the previous case, and applied them to the Act of June 17,1878. Assuming this view to be correct, it necessarily followed that it was immaterial whether the terminable contract was made with a land-grant road or a non-land-grant road. In our opinion it was equally terminable and equally terminated in either case.
It was not necessary to go beyond this; but we did, and we held that the statute, codified in sections 3942 and 3946 of the Eevised Statutes, "which authorizes the Postmaster-General to make mail transportation contracts generally for periods of four years, does not operate to relieve the land-grant roads from the terms and conditions of their antecedent grants."
It seemed to us too clear for argument that when Congress, in 1872, as part of a general statute " to revise, consolidate, and amend the statutes relating to the Post-Office Department" (17 Stat. L., 283), enacted that "no contract for carrying the mail shall be made for a longer term than four years" (17 Stat. L., 315, § 256), and that "the Postmaster-General may enter into contracts for carrying the mail for railway companies without advertising" (17 Stat. L., 316, § 265); and when it consolidated these enactments into the sections of the Eevised Statutes already quoted, it had no pmpose of surrendering the power to fix rates for mail transportation which it had reserved to itself as a condition of the valuable grants which it had made to the land-grant roads. It seemed to us that the true rule of construction to be adopted was tbe one laid down by tbis court in Wilcox's Case (12 C. Cls. R., 495), and textually adopted by tbe Supreme Court in tbe same case (95 U. S. R., 664), that—
no construction should he accepted which would defeat the clearly established policy of Congress, by giving substantial force to language not material to the subject-matter legislated upon, and by establishing an incidental and accidental change of the law beyond the contemplation of the legislators.
We bad no doubt that it was not the purpose of tbe individual legislators who voted for tbe Act of 1872, and therefore could not be taken to be tbe will of tbe aggregate body, that Congress by those sections was surrendering its reserved power. It seemed to us that there was enough for tbe act to operate on without giving it that construction. But tbe Supreme Court thought otherwise. It said—
the contract was an exercise of the reserved power, with an added obligation not to exercise it otherwise for the period agreed on.
This court was further of tbe opinion that there was no inequity in terminating tbis terminable contract; in tbe resumption by Congress of its suspended power; and in calling upon companies which bad voluntarily assumed the duty of transporting tbe mails at prices fixed by Congress to comply with tbe terms upon which they had accepted tbe benefits conferred upon them. Tbe Supreme Court held us in error in tbis respect. It said:
When Congress authorized the Postmaster-General to fix the pvioe by contract within specified maximum rates, and for a period of four years, it was an agreement on the part of the United States that the stipulated compensation should not be withheld during that x>ori.od, which it could not refuse to perform without a breach of the public faith.
Two other questions arose in tbis case which bad not arisen in tbe other case.
In the first place, tbe Chicago and Northwestern Company bad protested against tbe reduction, while tbe other company had made no protest. Tbis court said of tbis that tbe Postmaster-General bad no discretion to bind Congress and that a notice by protest to him in face of tbe statute was not notice that could operate in favor of tbe claimants or bind the Government. Tbe Supreme Court said that tbe Postmaster-General's construction of tbe law was erroneous, and it made no diffierence whether tbe company bad protested against it or not.
In tbe next place tbe contract was not a simple contract for tbe transportation of tlie mails. It was a contract for transporting them in a particular manner — in special cars, lighted and warmed, and fitted so as to accommodate traveling postal agents, according to tbe provisions of section 4002 of tbe Ee-vised Statutes.
Tbis court was of opinion that while a land-grant road bad undertaken as tbe condition of tbe grant to transport mails at prices fixed by Congress, it bad not undertaken to perform tbe other special service. We thought that such companies were as free to make or refuse to make such contracts as tbe non-land-grant railroad companies are. And bolding, as we did, that tbe contract was terminable, and that it was abrogated by tbe statutory notice, we further held, as we bad held in tbe other case, that tbe continuance to perform tbe service after the notice operated as an acceptance of tbe terms for a new contract offered by Congress. But tbe Supreme Court, if we rightly understand its language, says we are wrong in think.ing that land-grant roads are not required to transport mails in tbe manner calléd for by section 4002. It says that tbe company u was bound by its contract to perform tbe service, and its performance was demanded." It is not to be supposed that tbe highest court intends to assert that tbe United States could insist upon tbe performance of tbe contract sued upon at a less rate of compensation than tbe Postmaster-G-eneral bad agreed to pay. It must therefore be taken that tbe contract referred to in tbe opinion of that court was tbe contract in tbe condition attached to tbe land grant; and that tbe service referred to was tbe special service provided for by tbe written contract.
Tbis careful review constrains us to tbe opinion that tbe points suggested by tbe Postmaster-General must have been considered by tbe Supreme Court. It is tbe prerogative of that court to control tbe will of subordinate Federal courts.
Tbe judgment of tbe court is that the claimants have and recover of tbe defendants tbe sum of $139,080.05.
Duaiie, O. J., was absent when tbis cause was beard, and took no part in tbe decision.