1. The sixth section of the Act of Congress of July 1, 1862, c.
120, incorporating the Union Pacific Railroad Company, 12 Stat.
489, constitutes a contract between the United States and the
company whereunder the latter, for its service in transporting upon
its road, from Jan. 1, 1876, to Oct. 1, 1877, the mails, and the
agents and clerks employed in connection therewith, is entitled to
compensation at fair and reasonable rates not to exceed those paid
by private parties for the same kind of service.
2. The contract is not affected by the sections of the Revised
Statutes declaring that the Postmaster General may fix the rate for
such service when performed by railroad companies to which Congress
granted aid, and he had no authority to insist that it was not
binding upon the United States.
3. The company, having been required to perform the contract,
lost no rights by a compliance therewith, as it protested against
and rejected all illegal conditions attached to the
requirement.
This was an action brought by the Union Pacific Railroad Company
against the United States to recover compensation alleged to be due
for services rendered from Jan. 1, 1876, to Sept. 30, 1877, in the
transportation of the mails over its road, and of the employees
accompanying them, who were charged with sorting, distributing, and
delivering them.
The United States traversed the petition of the company, and set
up a counterclaim for five percent upon the amount of the net
earnings of the company's road from Nov. 6, 1875, to Nov. 6,
1877.
The Court of Claims was of opinion that the compensation for
that service was not to be determined by reference to the Act of
July 1, 1862, c. 120, but by the general laws regulating the
compensation for similar service by other railway companies. It
therefore adjudged and decreed as follows: that whereas the sum of
$618,910.54 has been found to be due to the claimant from the
defendants for the services alleged in its petition, of which it is
entitled to recover a moiety, to-wit, the sum of $309,455.27,
pursuant to the act of 2d July, 1864, c. 216, and whereas the sum
of $682,032.18 has been found to be due from the claimant to the
defendants on the matters alleged in their plea of counterclaim --
therefore the said moiety of $309,455.27 be set off against and
deducted from the said sum found to be
Page 104 U. S. 663
due the defendants, and the defendants recover from the claimant
the balance remaining, to wit, the sum of $372,576.91.
The company thereupon appealed.
MR. JUSTICE MATTHEWS delivered the opinion of the Court.
The controversy in the Court of Claims related to the amount of
compensation to which the Union Pacific Railroad Company is
entitled for postal services from Jan. 1, 1876, to Oct. 1, 1877.
The claim is based upon the sixth section of the Act of July 1,
1862, c. 120, 12 Stat. 489, which reads as follows:
"SEC. 6. And be it further enacted, that the grants aforesaid
are made upon condition that said company shall pay said bonds at
maturity, and shall keep said railroad and telegraph line in repair
and use, and shall at all times transmit dispatches over said
telegraph line, and transport mails, troops, and munitions of war,
supplies, and public stores upon said railroad, for the government,
whenever required to do so by any department thereof, and that the
government shall at all times have the preference in the use of the
same for all the purposes aforesaid (at fair and reasonable rates
of compensation, not to exceed the amounts paid by private parties
for the same kind of service); and all compensation for services
rendered for the government shall be applied to the payment of said
bonds and interest until the whole amount is fully paid."
The contention on the part of the appellant is, that this
section of the statute is a contract between the government and the
company, whereby the former bound itself to furnish the employment
specified, and the latter to render the corresponding services;
that this contract has not been abrogated or modified by subsequent
legislation, and regulates the rate of compensation for the
services rendered during the period named; that the agreed rates of
compensation are to be equal to those paid by private parties for
the same kind of service; and that the compensation received by the
appellant from private parties for the transportation of matter in
express cars furnishes the true standard of that comparison.
Page 104 U. S. 664
We have no hesitation in conceding that the section quoted
constitutes a contract between the United States and the railroad
company; but we are unable to find in it an absolute obligation on
the part of the government to employ the railroad in the described
services. It reserves the right so to do at its option, but it does
not stipulate that it will do so.
On this point we agree with the opinion of the Court of Claims,
and adopt its language, as follows:
"The section means, we think, that the company shall transport
the government's mails, munitions, troops, &c., whenever
required so to do, and that the government at all times shall have
the preference over private parties; but that the transportation in
all cases shall be done at fair and reasonable rates, which in no
case (of preference or otherwise) shall exceed the rates paid by
any private party for the same kind of service, while in all cases,
even where the ordinary rates are fair and reasonable,
per
se, the government shall have the benefit of those exceptional
reductions of rate which railroads frequently make, sometimes as a
matter of policy and sometimes as a matter of favor."
But it is contended on the part of the government that this
contract does not apply to the services, the compensation for which
is in question, because prior to the time when they were rendered
it had been terminated by subsequent legislation. The legislation
which it is claimed has that effect is embraced in tit. 46, c. 10,
Rev.Stat., secs. 3997-4005, inclusive, regulating the subject of
the railway postal service.
Section 4002, Rev.Stat., fixes a scale of maximum rates, graded
according to the average weight of the mails carried, according to
which the Postmaster General is authorized and directed to readjust
the compensation thereafter to be paid for the transportation of
mails on said railroad routes. And it was in accordance with a
readjustment based on these rates that, in the present case, the
government insisted that the appellant was bound to conform its
claims, and the Court of Claims so adjudged.
Section 4001 provides that
"All railway companies to which the United States have furnished
aid by grant of lands, right or way, or otherwise, shall carry the
mail at such prices as
Page 104 U. S. 665
Congress may provide; and until such price is fixed by law, the
Postmaster General may fix the rate of compensation."
The substance of this provision, as is pointed out by the
counsel for the appellant, first appeared in the Act of Sept. 20,
1850, c. 61, 9 Stat. 466, granting the right of way and public
lands to the State of Illinois, in aid of the construction of the
Central Railroad, said to be the first land grant to aid in the
construction of a railroad. The grant was accompanied by the
condition that the
"United States mail shall at all times be transported on said
railroad, under the direction of the Post Office Department, at
such prices as the Congress may by law direct."
All subsequent similar grants to such corporations were coupled
with the same condition. Prior to 1850, the legislation of Congress
had regard only to the transportation of the mails over railways
established in the various states to which no government grants or
subsidies had been made; and it merely enabled the Postmaster
General to contract for the service, if terms could be made with
the corporations, and, if not, to resort to the previous methods of
transportation. The provision in the sixth section of the act of
1862 -- the Pacific Railroad Act -- is the first of its kind. The
clause in sec. 4001, authorizing the Postmaster General to fix the
rate of compensation to land grant roads, in the absence of a price
fixed by law, was first added to the general postal legislation by
sec. 214 of the Act of June 5, 1872, c. 335, 17 Stat. 309, which
purports to be "An Act to revise, consolidate, and amend the
statutes relating to the Post Office Department," and is
substantially a codification of the provisions of the law then in
force relating to the subject. From that act it was transferred
into the Revised Statutes in the form as quoted.
It is certainly true that these provisions, in their primary
intention, did not apply to the appellant, for it did not then
exist; and when it came afterwards into being, by virtue of the act
of 1862, it did so with the special legislative contract in the
sixth section of its charter, which constituted it a land grant
railroad company,
sui generis, differing at least in that
respect from those previously provided for; and these diverse rules
as to compensation for service rendered for the government
continued thenceforth to coexist without conflict. No change of
Page 104 U. S. 666
a substantial character was made in the provisions enacted prior
to 1862, either by the consolidated act of 1872 or the Revised
Statutes, and there is not, therefore, any ground for the inference
of a change of the legislative intention that might be drawn from a
significant change of language. There is consequently no present
inconsistency between the existing provisions of the Revised
Statutes, as applicable to the land grant roads within their
purview, and the continued existence of the contract contained in
the sixth section of the appellant's charter.
The legislation referred to furnishes, therefore, no evidence of
any intention on the part of Congress to alter the relation between
the appellant and the government, established by the sixth section
of the act of 1862, and we are of the opinion that the company is
entitled, under its provisions, for the services rendered during
the period covered by the present claim, to fair and reasonable
rates of compensation, not to exceed the amounts paid by private
parties for the same kind of services. To what extent and upon what
considerations Congress has the power to make such change, under
the reservations in the act, in a case where it manifests an
intention to do so, is a question which does not arise in this
suit, and has not been considered.
This conclusion cannot be reconciled with the view taken by the
Court of Claims, that the government, having the option under its
contract to employ the appellant or not in its postal service, had
the right to prescribe the terms on which it would do so; that the
sections referred to in the Revised Statutes contain the terms so
prescribed, and that the appellant, having performed the service
with notice of the law, must be taken to have assented to those
terms, notwithstanding its protest, in which it claimed the benefit
of its contract as still in force. For the Revised Statutes, as we
have found, do not apply, and, therefore, did not alter the
contract, and gave to the Postmaster General no authority to insist
that it was not binding; and as the company, by its terms, was
bound to render the service if required, its compliance cannot be
regarded as a waiver of any of its rights. The service cannot be
treated as voluntary, in the sense of submission to exactions
believed to be illegal, so
Page 104 U. S. 667
as to justify an implied agreement to accept the compensation
allowed; for according to the terms of the obligation, which it did
recognize and now seeks to enforce, it had no option to refuse
performance when required. But it might perform, rejecting illegal
conditions attached to the requirement, and save all its rights.
This it did.
In computing the amount of compensation to which it claimed to
be entitled under its contract for the services performed, the
appellant insisted upon the adoption of the rates charged by it to
private parties, for goods carried in express cars, as being the
only service of the same kind, and so furnishing the criterion of
its compensation. In the agreed statement of facts two other modes
of computation were introduced: one, including with express matter,
cars transporting fruit, fish, and perishable articles hauled in
passenger trains; the other, adopting the charges upon the latter,
exclusive of the express matter, as furnishing alternatives for the
judgment of the court in determining the amount due according to
the contract.
Viewed as a question of law, it is impossible to say that either
of these rules of computation is the true one. The question is,
what is a fair and reasonable rate of compensation? and, in
reference to that, we adopt the opinion of the Court of Claims, as
thus expressed:
"Construing the statute as we do, we think the court would not
be limited, in an action where it was compelled to estimate
damages, to the rates charged by the company to private parties for
a single kind of similar service. We think that a court or jury
would be authorized to look over the entire field of service in
determining what was a fair and reasonable charge for a kind which
was similar to, but not identical with, any other. For instance, if
it should appear that the receipts of passenger cars were less than
the receipts of postal cars, and the cost and running expenses no
greater, we are inclined to think that that fact might be a proper
element in the problem of estimating the amount of 'fair and
reasonable rates of compensation.' The reports of the auditor of
railroad accounts show what rates of compensation the claimant has
received for passenger cars, but in the determination of the case
we
Page 104 U. S. 668
do not feel at liberty to go outside of the agreed statement of
facts upon which it was submitted."
The case was not submitted to the Court of Claims in a way to
enable it to determine the question of fact, and upon a retrial, if
the parties do not agree upon the amount or upon the rule of
computation, the compensation, at fair and reasonable rates, must
be determined upon a consideration of all facts material to the
issue, not to exceed the amounts paid by private parties for the
same kind of service.
It will be just and necessary to include in that estimate and
finding an allowance for compensation for the transportation of
mail agents and clerks; not, however, as a separate item of
service, to be paid for, necessarily, at the rates which might
reasonably be charged if that were the whole; but as a part of and
incident to the entire service rendered in the transaction of the
postal business required by the government, for which, as an
entirety, the compensation should be made, at fair and reasonable
rates, according to, and subject only to, the limitation required
by the sixth section of the act of 1862.
To this end, for the reasons assigned, the judgment of the Court
of Claims will be reversed, and the cause remanded with
instructions to proceed therein in conformity with this opinion,
and it is
So ordered.