1. A railroad company in a contract with the Director General of
Railroads expressly accepted the covenants and obligations of the
latter and the rights arising thereunder
"in full adjustment, settlement, satisfaction, and discharge of
any and all claims and rights
Page 267 U. S. 347
at law or in equity, which it now has or hereafter can have
against the United States, the President, the Director General or
any agent or agency thereof by virtue of anything done or omitted,
pursuant to the acts of Congress herein referred to,"
viz., the Federal Control Act, the Act of Aug. 29,
1916, c. 418, 39 Stat. 645, and the Joint Resolutions of April 6
and December 7, 1917, 40 Stat. 1, 429.
Held, that a claim
of the railroad under § 3 of the Federal Control Act for a deficit
in operating income, etc., previously incurred under federal
control, was settled and released by the contract, and that
allegations in the company's petition denying this effect and
intention were mere conclusions of law, not admitted by demurrer.
P.
267 U. S.
348.
2. Ordinarily, the defense of release, or accord and
satisfaction, must be pleaded in bar, but where the fact appears
either in the body of the petition or from an exhibit annexed, the
defense may be availed of on demurrer. P.
267 U. S. 350.
3. The agreement was within the authority of the Director
General.
Id.
58 Ct.Clms. 339 affirmed.
Appeal from a judgment of the Court of Claims dismissing the
petition on demurrer.
MR. JUSTICE BRANDEIS delivered the opinion of the Court.
This is an appeal from a judgment of the Court of Claims which
dismissed the petition on demurrer. The plaintiff owns a shortline
railroad which it operated, but which is alleged to have been under
federal control from January 1 to July 1, 1918. The suit was
brought to recover, for that period, amounts representing the
deficit in operating income, under maintenance of way and equipment
charges, and the rental value of the property,
Page 267 U. S. 348
which are claimed under § 3 of the Federal Control Act, March
21, 1918, c. 25, 40 Stat. 451, 454. There was annexed to the
petition as an exhibit the copy of a contract between the plaintiff
and the Director General of Railroads, dated February 26, 1919. It
deals, in the main, with the mutual relations of the parties for
the period after July 1, 1918, but § 3 of the contract provides as
follows:
"The company . . . expressly accepts the covenants and
obligations of the Director General in this agreement set out and
the rights arising thereunder in full adjustment, settlement,
satisfaction, and discharge of any and all claims and rights at law
or in equity which it now has or hereafter can have against the
United States, the President, the Director General or any agent or
agency thereof by virtue of anything done or omitted, pursuant to
the acts of Congress herein referred to."
"This is not intended to affect any claim said company may have
against the United States for carrying the mails or for other
services rendered not pertaining to or based upon the Federal
Control Act."
The acts of Congress referred to in the contract were the
Federal Control Act, the Act of August 29, 1916, c. 418, 39 Stat.
619, 645, and the Joint Resolutions of April 6, 1917, and December
7, 1917, 40 Stat. 1, 429. The government assigned as a ground of
demurrer that the copy of the contract annexed to the petition
showed that the claims sued on had been settled, and that the
United States had been released from any liability to the
plaintiff.
The petition alleges, among other things,
"that section 3 thereof does not contain and was not intended to
contain any receipt or acknowledgement of any consideration by or
in favor of the plaintiff for the use of said railroad property
during said six months from January 1 to July 1, 1918;"
that the section refers only to other provisions;
Page 267 U. S. 349
and that the "plaintiff gained nothing by the execution of this
contract, and by it no rights were lost." The contention is that
these allegations are admitted by the demurrer, and that, for this
and other reasons § 3 cannot properly be construed to apply to
claims of the character of those sought to be recovered, because
these "did not arise out of the contract or because of anything
contained in it." The allegations in the petition as to the
meaning, application and effect of § 3, being conclusions of law,
are not admitted by the demurrer.
United States v. Ames,
99 U. S. 35,
99 U. S. 45;
Chicot County v. Sherwood, 148 U.
S. 529,
148 U. S. 536;
Equitable Life Assurance Society v. Brown, 213 U. S.
25,
213 U. S. 43.
The legal effect of the instrument remains that which its language
imports.
Interstate Land Co. v. Maxwell Land Grant Co.,
139 U. S. 569,
139 U. S. 578.
The contract here in question appears to have been carefully drawn.
It is the standard form short-line or cooperative contract said to
have been executed by more than a hundred railroads.
* The language
employed in § 3 to embody the agreement for settlement and release
of claims is so clear and comprehensive as to leave on its face no
room for construction.
United States v. Wm. Cramp & Sons
Co., 206 U. S. 118,
206 U. S. 128.
And we do not find in any other part of the contract any provision
which prevents the application of the release clause to the claims
here in suit.
There is no contention that the contract as written does not
express the actual agreement, nor a prayer that, because of mutual
mistake, it should be reformed. The petition contains allegations
which indicate that originally it was intended to challenge the
validity of the contract because of duress, lack of consideration,
and want of power in the Director General to enter into the
same.
Page 267 U. S. 350
But the plaintiff's brief declares that the sole question before
the court is whether § 3 of the contract is a settlement or waiver
of the claim in suit. And, more specifically:
"It is not alleged nor now claimed that the contract was wholly
and absolutely void because of total lack of consideration, or
because the same was executed under forceable and legal
duress."
Any claim based on a lack of authority in the Director General
is clearly unfounded.
There is in the brief a suggestion that the lower court erred in
giving effect to § 3 because
"the contract was set out as an exhibit to the petition not as a
part thereof, but merely for the purpose of showing to the court
that the cause of action set out in the petition . . . [was]
entirely independent of and arose outside of the contract
itself."
The suggestion is unsubstantial. Ordinarily, the defense of
release or accord and satisfaction must be pleaded in bar. But
where the fact appears either in the body of the petition or from
an exhibit annexed, the defense may be availed of on demurrer.
Compare 67 U. S.
Howard, 2 Black 585,
67 U. S. 589;
McClure v. Township of Oxford, 94 U. S.
429,
94 U. S. 433;
Speidel v. Henrici, 120 U. S. 377,
120 U. S.
387.
Affirmed.
* For the form of the cooperative contract,
see United
States Railroad Administration, Director General of Railroads,
Bulletin No. 4 (revised), 1919, p. 80; Report of the Director
General, 1924, pp. 36-38.