In settling with a railroad company under its current contract
for mail transportation, the Postmaster General may deduct
overpayments made under earlier contracts without waiting for their
amount to be ascertained by suit. P.
252 U. S.
120.
The right of the United States to recover such overpayments is
not barred by time. P.
252 U. S.
121.
The rule that a long continued construction of a statute by a
department of the government should not readily be changed to the
injury of parties who have relied upon it in contracting with the
government does not apply to a long continued practice of making
overpayments due to a mistake of fact.
Id.
The obligation to carry the mail at the rates fixed by Congress
attaches to a land-aided railroad like an easement or charge; a
company purchasing under foreclosure takes the road with notice of
the obligation, and its duty to perform is not affected by the fact
that it received none of the land and obtained no benefit from the
grant.
Id.
Where a railway aid grant is made by act of Congress to a state
with the provision that, over the railway to be aided, the mail
shall be transported at such price as Congress may by law direct, a
company which before completion of its road applies to the state
for the land to aid in such completion receives the state's patent
therefor, reciting that such is the purpose, and expressly assents
to the terms and conditions of the granting act and proceeds to
dispose of the land, is subject to the duty imposed, whether it was
in fact aided by the grant in building its road or not; nor is its
successor in any better position to question this effect of
accepting the grant when it acquires the first company's property
through a foreclosure to which that company's interest in such
lands was made subject as after-acquired property covered by the
mortgage. P.
252 U. S.
122.
Where lands granted as railway aid lands by Congress to a state
are accepted by a railroad company and aid in the construction of
its railroad, the obligation to carry the mails, as stipulated in
the granting
Page 252 U. S. 113
act, attaches to the road so aided, however disproportionate the
aid to the cost of construction, and this notwithstanding the
company, in accepting the land and assuming the burden, may have
relied upon other land applied for at the same time and included in
the same state patent, but which it lost through decision of the
state court holding them inapplicable to its road under the
granting act and the state law passed in pursuance of it. P.
252 U. S.
123.
In such case, the obligation respecting the mails cannot be
escaped upon the ground that the contract between the company and
the state, resting on an entire consideration, in part illegal, was
void where the United States was not a party to the contract and
where it reversionary title was relinquished by Congress to the
state.
Id.
53 Ct.Clms. 473 affirmed.
The case is stated in the opinion.
Page 252 U. S. 116
.
MR. JUSTICE BRANDEIS delivered the opinion of the Court.
The railroad from Port Huron to Flint, in Michigan, sixty miles
in length, was completed on December 12, 1871. It was built by the
Port Huron & Lake Michigan Railroad Company. By foreclosure of
a mortgage executed
Page 252 U. S. 117
by that corporation and several consolidations, it became, on
October 31, 1900, the property of the Grand Trunk Western Railway
Company, and has since been a part of its system. For forty-one
years after the completion of this sixty-mile road, the mails were
carried over it by the successive owners under the usual postal
contracts, and payment was made for the service quarterly at full
rates. In 1912, the Postmaster General, concluding that this was a
land-aided railroad within the provisions of § 13 of the Act of
July 12, 1876, c. 179, 19 Stat. 78, 82, [
Footnote 1] restated the account for the twelve full
years during which the road had been operated by the Grand Trunk
Western. Twenty percent of the mail pay for that period was found
to be $50,359.70, and this amount he deducted from sums accruing to
the company under the current mail contract. He also reduced by
twenty percent the amount otherwise payable under the current
contract for carrying the mail over this part of its system. Thus,
he deducted altogether $52,566.87 from the amount payable on June
30, 1913. The road had in fact been built without any aid through
grant of public lands. None had passed to the Grand Trunk Western
when it acquired the road and, so far as appears, that company had
no actual knowledge that any of its predecessors in title had
acquired any public land because of its construction. The company
insisted that the $52,566.87 thus deducted from its mail pay was
withheld without warrant in law, and brought this suit in the Court
of Claims to recover the amount. 53 Ct.Cls. 473. Its petition was
dismissed, and the case comes here on appeal. Whether the company
is entitled to relief depends upon the legal effect of the
following facts.
Page 252 U. S. 118
By Act of June 2, 1856, c. 44, 11 Stat. 21, Congress granted to
Michigan public land to aid in the construction of certain lines of
railroad a part extending easterly of Flint to Port Huron --
another part, westerly of Flint to Grand Haven. The act contained
in Section 5 the usual mail provision. [
Footnote 2] In 1857, the Legislature of Michigan granted
these lands to two companies on condition that they accept the
obligations of the grant within sixty days. Each company filed
within the specified time a partial acceptance, refusing to accede
to the taxation features of the grant. Thereupon the rights of each
to any part of the public lands was declared forfeited by the state
authorities for failure to comply with the state legislation.
Subsequently, the companies filed maps of definite location in the
General Land Office of the Interior Department, which were approved
by that office, and on June 3, 1863, the Secretary of the Interior
certified to the Governor of Michigan 30,998.76 acres of land lying
west of Flint for the company which was to build the line from
Grand Haven to Flint, the Detroit and Milwaukee Railway Company. On
November 1, 1864, he certified 6,428.68 acres, all but 97 40/100
acres of which lay east of Flint, for the company which was to
build the line from Flint to Port Huron, the Port Huron &
Milwaukee Railway Company. Neither company constructed its line nor
received any patent for land. The rights of way and other property
of the Port Huron & Milwaukee Railway Company passed through a
foreclosure sale to the Port Huron & Lake Michigan Railroad
Company, and this corporation built the road in question during the
years 1869, 1870 and 1871.
Page 252 U. S. 119
But it made no application for any part of these lands until
three weeks before the completion of the road. Then, on November
18, 1871, it petitioned the State Board of Control, which was
charged with the disposition of the public lands, to confer upon it
both the 30,998.76 acres west of Flint and the 6,428.68 acres east
of Flint which the Secretary of the Interior had certified, and, in
so applying, it asked for the land "for the purpose of aiding in
the construction" of its contemplated railroad which was described
as extending from Grand Haven to Flint and thence to Port Huron.
The board approved of making the grant "for the purpose of aiding
in the construction of the road," but no further action was taken
until May 1, 1873, when, upon a new petition of the company which
recited the former proceedings and the completion of "sixty miles
of the unfinished portion of said line," the board directed the
transfer of all the land to it. The resolution of the board was
followed on May 30, 1873, by a patent for all the land from the
Governor of the state, its formal acceptance by the company subject
to the provisions of the Act of Congress of June 3, 1856, and
action by it to take possession of the land and to dispose of it
for the benefit of the company. In 1877, the Supreme Court of
Michigan held in
Bowes v. Haywood, 35 Mich. 241, that the
patent, so far as it purported to transfer the 30,988.76 acres west
of Flint, was void under the Michigan legislation because there had
not, in fact been any claim or pretense that the company ever
contemplated building the line west of Flint, and in
Fenn v.
Kinsey, 45 Mich. 446 (1881), that court held that an act of
the Michigan Legislature passed May 14, 1877, which purported to
ratify the patent, was inoperative so far as it concerned the lands
west of Flint because it impaired rights reserved to the United
States by the Act of June 3, 1856. Meanwhile, Congress had
relinquished to Michigan, by joint resolution of March 3, 1879, No.
15, 20 Stat. 490, its reversionary
Page 252 U. S. 120
interest in the lands; [
Footnote
3] and thereafter, the Legislature of Michigan (Act of June 9,
1881, Laws Mich. 1881, p. 362) ratified, as to the six thousand
acres east of Flint, the action theretofore taken by the state
authorities, declaring also that
"all deeds and conveyances heretofore executed by the Port Huron
& Lake Michigan Railroad Company . . . shall be deemed to be of
full force and effect,"
and that "the rest and residue of said lands is vested in said
company, its successors or assigns." Whether there remained then
any land which had not been disposed of by that company or one of
its successors does not appear, but it does not appear that when,
in 1875, proceedings were taken to foreclose the mortgage under
which the appellant claims title to the road, the trustee to whom
the lands had been transferred for the company's benefit was joined
for the purpose of including all such interest in the property to
be sold.
The Act of June 3, 1856, had contemplated a grant of six
sections (3,840 acres) per mile of road to be constructed. That
would have been 230,400 acres for the sixty miles. The company
which built them and those claiming under it received, at most,
6,428 acres. The case is one of apparent hardship. Was the judgment
of the Court of Claims denying relief required by the applicable
rules of law?
First. If the railroad was land-aided, payment of more
than eighty percent of the full rates otherwise provided by law was
unauthorized, and it was the duty of the Postmaster General to seek
to recover the overpayment. Revised
Page 252 U. S. 121
Statutes, § 4057. He was under no obligation to establish the
illegality by suit. Having satisfied himself of the fact, he was at
liberty to deduct the amount of the overpayment from the moneys
otherwise payable to the company to which the overpayment had been
made.
Wisconsin Central Railroad Co. v. United States,
164 U. S. 19.
There was no attempt to include in the deduction any alleged
overpayment to any of appellant's predecessors in title. Balances
due for carrying the mails, although arising under successive
quadrennial contracts, are regarded as running accounts, and moneys
paid in violation of law upon balances certified by the accounting
officers may be recovered by means of a later debit in these
accounts. It matters not how long a time elapsed before the error
in making the overpayment was discovered, or how long the attempt
to recover it was deferred. The statute of limitations does not
ordinarily run against the United States, and would not present a
bar to a suit for the amount.
See United States v.
Thompson, 98 U. S. 486. It is
true that, when a department charged with the execution of a
statute gives it a construction and acts upon that construction
uniformly for a series of years, the court will look with disfavor
upon a change whereby parties who have contracted with the
government upon the faith of that construction would be injured.
United States v. Alabama Great Southern Railroad Co.,
142 U. S. 615. But
here, the practice long continued of paying the full rate instead
of eighty percent thereof was not due to any construction of a
statute which the department later sought to abandon, but to what
is alleged to be a mistake of fact -- due perhaps to an oversight.
To such a case the rule of long continued construction has no
application. The appellant must be held to have taken the road with
notice of the burdens legally imposed upon it.
Second. If the road was land-aided, it is immaterial
that the company which later carried the mail over it received
Page 252 U. S. 122
none of the land and obtained no benefit from the grant. The
obligation to carry mails at eighty percent of rates otherwise
payable attached to the road like an easement or charge, and it
affects every carrier who may thereafter use the railroad, whatever
the nature of the tenure.
Chicago, Saint Paul, etc., Ry. Co. v.
United States, 217 U. S. 180. The
appellant expressly disclaims any contention that the mail clause
should not apply because the quantity of land covered by the grant
was small as compared with that contemplated by the Act of June 3,
1856, and with the cost of the road.
Third. It is contended that this railroad was not
land-aided, because it had in fact been completed without the aid
either of funds or of credit derived from these public lands.
Whether the Port Huron & Lake Michigan Company which built the
railroad was in fact aided by the land grant in so doing is
immaterial. Before the road had been fully completed, it asked that
the land be granted to it in aid of the construction, and for this
purpose only could the grant be made under the act of Congress. It
accepted from the state a patent for the land which recited that
such was the purpose of the conveyance, and it expressly assented
to the terms and conditions of the grant imposed by the Act of June
3, 1856. Thereafter it proceeded to dispose of the land. Throughout
this period, the Port Huron & Lake Michigan Company remained
the owner of the railroad. It had been authorized by its charter to
receive the land grant and necessarily to assent to the conditions
upon which alone the grant could be made to it. It is true that the
mortgage upon its property under which appellant claims title was
executed before the company had applied for the grant, and it does
not appear that the mortgage purported specifically to cover public
lands, but the trustee under the mortgage claimed these lands as
after-acquired property, and the company's interest in them was, by
special proceeding, made subject
Page 252 U. S. 123
to the foreclosure proceedings. The appellant is therefore in no
better position than the Port Huron & Lake Michigan Company to
question the charge upon the railroad imposed by acceptance of the
grant.
Fourth. Appellant points to the fact that the patent to
the lands lying west of Flint was later held to be void by the
supreme court of the state, and insists that thereby the charge or
condition concerning the carriage of the mail must be held to have
been relinquished. But the patent to the lands east of Flint never
was declared void; the company's title to them never was
questioned, and the objection to the patent to the western lands
did not apply to them. That objection was that the Port Huron &
Lake Michigan Railway Company was not a "competent party" to
receive the western lands within the meaning of the eleventh
section of the Michigan Act of 1857, because it did not propose to
construct a line from Grand Haven to Owosso.
Bowes v. Haywood,
supra, 246. And the attempt by the legislature to make it a
"competent party" through the Act of 1877 violated the obligations
of the federal government's grant.
Fenn v. Kinsey, supra.
The only flaw in the title to the lands east of Flint lay in the
fact that the railway had not been completed within ten years of
the Act of June 3, 1856, as required by that act. This requirement,
however, was a condition subsequently annexed to an estate in fee,
and the title remained valid until the federal government should
take action by legislation or judicial proceedings to enforce a
forfeiture of the estate.
Schulenberg v.
Harriman, 21 Wall. 44,
88 U. S. 63-64;
Railroad Land Co. v.
Courtright, 21 Wall. 310,
88 U. S. 316.
So far from doing so, Congress relinquished by joint resolution its
reversionary interest in the land, and thereby removed all
possibility of objection on its part to the validity of the patent,
and the State of Michigan later ratified the patent by legislation
admitted to be valid.
Fifth. The appellant urges that the illegality of the
patent
Page 252 U. S. 124
to the western lands constituted a failure of consideration
which voided the contract with the government. The burden of the
mail clause, it says, could be imposed only by contract between the
government and Port Huron & Lake Michigan Company. The contract
was for land west as well as east of Flint, and the land west could
legally be granted only if the company contemplated building the
road westward to Grand Haven. As there was not even a pretense that
it contemplated such construction, the contract was illegal. The
government's claim under the mail clause must fail, because no
rights can be acquired under an illegal contract. So the appellant
contends. Such a view is the result of regarding the transaction as
a promise by the railway to the government to carry the mail at a
price fixed by Congress, on consideration of 36,000 acres of public
land. A contract of this sort would create a purely personal
obligation attaching "to the company, and not to the property" --
clearly not to a mere licensee. However, it is settled that the
obligation in question is not of this nature, but does attach to
the property, even when used by a licensee.
Chicago, St. Paul,
etc., Ry. Co. v. United States, 217 U.
S. 180. The obligation of a land-aided railway to carry
the mail at a price fixed by Congress is a charge upon the
property. The public lands were granted to Michigan to aid the
construction of certain railways upon certain conditions. The
Legislature of Michigan could not dispose of the lands except in
accordance with the terms of the grant. By the Act of February 14,
1857, it accepted the grant and enacted legislation to give legal
effect to the conditions of it. Section 4 of the act is as
follows:
"Said railroads shall be and forever remain public highways for
the use of the government of the United States, free from toll or
other charge upon the transportation of any property or troops of
the United States, and the United States mail shall be transported
over said railroads,
Page 252 U. S. 125
under the direction of the Post Office Department, at such price
as Congress may by law direct. . . ."
The order of the Board of Control of May 1, 1873, directing the
transfer of the land to the Port Huron & Lake Michigan Company,
and the patent issued by the Governor were founded upon the
authority of section eleven of this act, and under date of May 30,
1873, the company accepted the lands with the burdens they imposed.
The railroad, whose owners and constructors accepted aid derived
from these lands, became charged by operation of law with the
burden of transporting the mails. The question whether that company
would have accepted the land with its burdens if it had foreseen
the invalidity of the title to the western lands is wholly
immaterial. The burden attached upon the acceptance of any aid
whatsoever, no matter how disproportionate to the cost of
constructing the portion so aided.
The transaction called illegal was one between the company and
the state authorities. The United States was no party to it. It had
merely supplied property which the parties to it used. The
government never objected to the disposition made of it, and
evidenced its approval by passage of the joint resolution of March
3, 1879. No reason exists why rights by way of charge upon the
railroad which were acquired by the government through the
acceptance of six thousand acres of public land should be
invalidated by the alleged illegality of the state authorities'
action in issuing a patent to a wholly different tract.
Affirmed.
[
Footnote 1]
"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 percentum of the compensation authorized by this act."
[
Footnote 2]
"Sec. 5. And be it further enacted that the United States mail
shall be transported over said roads under the direction of the
Post Office Department at such price as Congress may by law direct:
Provided, that, until such price is fixed by law, the
Postmaster General shall have the power to determine the same."
[
Footnote 3]
Resolution of March 3, 1879,
"That the United States hereby releases to the State of Michigan
any and all reversionary interest which may remain in the United
States in such of the lands granted to, and acquired by the said
State of Michigan by act of Congress of June third, eighteen
hundred and fifty-six, and certified to the said state in
accordance with said act, as were granted to aid the construction
of the road from Grand Haven to Flint, and then to Port Huron. This
release shall not in any manner affect any legal or equitable
rights in said lands, which have been acquired, but all such rights
shall be and remain unimpaired."