A-41366, APRIL 5, 1932, 11 COMP. GEN. 374

A-41366: Apr 5, 1932

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THERE IS NO AUTHORITY FOR THE PAYMENT OF ANY INTEREST OR ACCRETION DERIVED FROM THE INVESTMENT OF FUNDS IN SUCH CONTINGENT FUNDS WHEN AN EXCESS COLLECTION HAS BEEN MADE FROM A RAILROAD AND SUCH EXCESS HAS BEEN REFUNDED TO THE RAILROAD COMPANY. 1932: THERE IS FOR CONSIDERATION BY THIS OFFICE A CLAIM SUBMITTED ON BEHALF OF THE TUCKERTON RAILROAD CO. IN EXCESS OF THE AMOUNT WHICH SHOULD HAVE BEEN COLLECTED AS EXCESS NET RAILWAY OPERATING PROFIT AND CREDITED TO THE RAILROAD CONTINGENT FUND. WAS REQUIRED UNDER THE LAW TO BE PAID THE INTERSTATE COMMERCE COMMISSION FOR THE CREDIT OF THE GENERAL RAILROAD CONTINGENT FUND. 164.28 WAS AUTHORIZED. THE AMOUNT IN QUESTION WAS CERTIFIED FOR PAYMENT TO THE CARRIER BY THIS OFFICE UNDER CERTIFICATE OF SETTLEMENT NO. 0264434.

A-41366, APRIL 5, 1932, 11 COMP. GEN. 374

INTERSTATE COMMERCE ACT - RECAPTURE CLAUSE - INTEREST ON REFUNDS OF EXCESS COLLECTION UNDER THE PROVISIONS OF SECTION 15 (A) OF THE INTERSTATE COMMERCE ACT, AS AMENDED, PROVIDING THAT THE INTERSTATE COMMERCE COMMISSION SHALL COLLECT FROM RAILROAD COMPANIES ONE-HALF OF THE EXCESS NET RAILWAY OPERATING PROFIT AND CREDIT THE SAME TO THE RAILROAD CONTINGENT FUND, THERE IS NO AUTHORITY FOR THE PAYMENT OF ANY INTEREST OR ACCRETION DERIVED FROM THE INVESTMENT OF FUNDS IN SUCH CONTINGENT FUNDS WHEN AN EXCESS COLLECTION HAS BEEN MADE FROM A RAILROAD AND SUCH EXCESS HAS BEEN REFUNDED TO THE RAILROAD COMPANY.

DECISION BY COMPTROLLER GENERAL MCCARL, APRIL 5, 1932:

THERE IS FOR CONSIDERATION BY THIS OFFICE A CLAIM SUBMITTED ON BEHALF OF THE TUCKERTON RAILROAD CO. FOR INTEREST EARNED ON MONEY COLLECTED BY THE INTERSTATE COMMERCE COMMISSION UNDER SECTION 15 (A) OF THE INTERSTATE COMMERCE ACT, AS AMENDED, IN EXCESS OF THE AMOUNT WHICH SHOULD HAVE BEEN COLLECTED AS EXCESS NET RAILWAY OPERATING PROFIT AND CREDITED TO THE RAILROAD CONTINGENT FUND.

THE RECORD SHOWS THAT FOR THE YEARS 1921 AND 1925 THE TUCKERTON RAILROAD CO. RECEIVED EXCESS NET RAILWAY OPERATING INCOME UNDER SECTION 15 (A), INTERSTATE COMMERCE ACT, AGGREGATING $3,899.34, ONE HALF OF WHICH, OR $1,949.67, WAS REQUIRED UNDER THE LAW TO BE PAID THE INTERSTATE COMMERCE COMMISSION FOR THE CREDIT OF THE GENERAL RAILROAD CONTINGENT FUND. APPEARING THAT THE CARRIER HAD ALREADY PAID THE SUM OF $4,113.96, BY ORDER OF THE INTERSTATE COMMERCE COMMISSION DATED AUGUST 4, 1931, A REFUND OF $2,164.28 WAS AUTHORIZED. THE AMOUNT IN QUESTION WAS CERTIFIED FOR PAYMENT TO THE CARRIER BY THIS OFFICE UNDER CERTIFICATE OF SETTLEMENT NO. 0264434, DATED OCTOBER 30, 1931, PAYABLE UNDER THE APPROPRIATION ACCOUNT "GENERAL RAILROAD CONTINGENT FUND, SECTION 15 (A), INTERSTATE COMMERCE ACT (SPECIAL FUND).'

THE PRESENT CLAIM OF THE CARRIER IS FOR INTEREST OR THE INCREMENT EARNED BY THE SUM OF $2,164.28 WHILE HELD BY THE INTERSTATE COMMERCE COMMISSION IN THE GENERAL RAILROAD FUND. IT IS ADMITTED ON BEHALF OF THE CARRIER THAT IT IS NOT ENTITLED TO INTEREST UPON THE AMOUNT REFUNDED BUT IT IS CONTENDED THAT THE CARRIER SHOULD BE PAID THE AMOUNT EARNED BY INVESTMENT OF THE MONEY WHILE HELD BY THE GOVERNMENT, AND IN SUPPORT OF THE CONTENTION THERE IS CITED THE CASE OF HENKELS V. SUTHERLAND, ALIEN PROPERTY CUSTODIAN, 271 U.S. 298, IN WHICH IT WAS HELD IN SUBSTANCE, QUOTING FROM THE SYLLABUS:

IN A SUIT BY AN AMERICAN CITIZEN UNDER THE TRADING WITH THE ENEMY ACT TO RECOVER THE PROCEEDS OF PROPERTY MISTAKENLY SEIZED AND SOLD AS ENEMY PROPERTY, WHICH WERE DEPOSITED WITH THE TREASURER OF THE UNITED STATES AND BY HIM INVESTED IN INTEREST-BEARING SECURITIES OF THE UNITED STATES, THE PLAINTIFF IS ENTITLED TO AN ACCOUNTING FOR THE INTEREST DERIVED FROM SUCH INVESTMENT, AS WELL AS THE PRINCIPAL.

THE HOLDING IN THE DECISION CITED CAN HAVE NO APPLICATION IN A CASE SUCH AS PRESENTED BY THE INSTANT MATTER. THE ACT OF OCTOBER 6, 1917, 40 STAT. 411, ENTITLED "AN ACT TO DEFINE, REGULATE, AND PUNISH TRADING WITH THE ENEMY, AND FOR OTHER PURPOSES," UNDER WHICH THE DECISION OF THE SUPREME COURT OF THE UNITED STATES IN THE HENKELS CASE WAS RENDERED, PROVIDED, AMONG OTHER THINGS, FOR THE ALIEN PROPERTY CUSTODIAN TO TAKE POSSESSION AND ADMINISTER PROPERTY, FUNDS, ETC., OF ALIEN ENEMIES, AND OTHERS, BUT IT IS PROVIDED IN SECTION 12 OF THE ACT THAT SUCH FUNDS AND PROPERTY SHOULD BE HELD IN TRUST FOR SUCH DISPOSITION AS MIGHT BE DIRECTED BY THE CONGRESS AT THE CLOSE OF THE WAR. THE FUNDS AND PROPERTY COMING INTO THE POSSESSION OF THE ALIEN PROPERTY CUSTODIAN UNDER THIS ACT BEING SO IMPRESSED WITH A TRUST, ANY ACCRETION THERETO BY INVESTMENT OF SUCH TRUST FUNDS OR PROPERTY WOULD BECOME A PART OF THE TRUST, AND SINCE IN THE CASE OF HENKELS HE WAS NOT AN ALIEN TRADING WITH THE ENEMY AND IT WAS FOUND BY THE COURT THAT THE ACTION OF THE ALIEN PROPERTY CUSTODIAN IN TAKING POSSESSION OF HIS PROPERTY AND FUNDS WAS ERRONEOUS, THE COURT HELD THAT THE CLAIMANT SHOULD RECOVER NOT ONLY THE PRINCIPAL BUT ALSO THE RETURN, OR INTEREST, EARNED BY SUCH PRINCIPAL UPON THE THEORY THAT THE BENEFICIARY OF A TRUST IS ENTITLED NOT ONLY TO THE CAPITAL OF THE TRUST BUT ALSO TO THE EARNINGS THEREOF.

FOR FUNDS COLLECTED BY THE INTERSTATE COMMERCE COMMISSION UNDER SECTION 15 (A) OF THE INTERSTATE COMMERCE ACT, THERE APPEARS TO BE NOTHING IN THE LAW WHICH WOULD MAKE THEM SUBJECT TO A STATUTORY TRUST SUCH AS IS THE CASE OF FUNDS COLLECTED UNDER TRADING WITH THE ENEMY ACT.

SECTION 15 (A) OF THE INTERSTATE COMMERCE ACT AS CONTAINED IN THE TRANSPORTATION ACT OF 1920, 41 STAT. 491, DIRECTS THE INTERSTATE COMMERCE COMMISSION, (1) TO ESTABLISH RATES WHICH WILL ENABLE THE CARRIERS TO RECEIVE A FAIR NET OPERATING RETURN UPON THE PROPERTY THEY HOLD IN THE AGGREGATE FOR USE IN TRANSPORTATION, (2) TO ESTABLISH RATES FROM TIME TO TIME AND MAKE PUBLIC THE PERCENTAGE OF THE VALUE OF THE AGGREGATE PROPERTY IT REGARDS AS A FAIR OPERATING RETURN, AND(3) TO FIX THE AGGREGATE VALUE OF THE PROPERTY FROM TIME TO TIME, USING, IN DOING SO, THE RESULTS OF ITS VALUATION OF THE RAILWAYS AS PROVIDED IN SECTION 19 (A) OF THE INTERSTATE COMMERCE ACT. THE LAW DECLARES THAT BECAUSE IT IS IMPOSSIBLE TO ESTABLISH UNIFORM RATES UPON COMPETITIVE TRAFFIC WHICH WOULD ADEQUATELY SUSTAIN ALL THE CARRIERS NEEDED TO DO THE BUSINESS WITHOUT GIVING SOME OF THEM A NET INCOME IN EXCESS OF A FAIR RATE, ANY CARRIER RECEIVING SUCH EXCESS SHALL HOLD IT AS TRUSTEE FOR THE UNITED STATES FOR DISTRIBUTION, ONE-HALF TO A RESERVE FUND TO BE MAINTAINED BY THE CARRIER AND THE OTHER ONE-HALF TO THE GENERAL RAILROAD REVOLVING FUND TO BE MAINTAINED BY THE COMMISSION. AS TO THE ONE-HALF TO BE RETAINED BY THE CARRIER, IT IS PROVIDED THAT IT SHALL BE USED ONLY FOR CERTAIN PURPOSES AND WITH RESPECT TO THE ONE-HALF TO BE TURNED OVER TO THE INTERSTATE COMMERCE COMMISSION, IT IS PROVIDED IN SUBSECTION (1) THAT:

(10) THE GENERAL RAILROAD CONTINGENT FUND SO TO BE RECOVERABLE BY AND PAID TO THE COMMISSION AND ALL ACCRETIONS THEREOF SHALL BE A REVOLVING FUND AND SHALL BE ADMINISTERED BY THE COMMISSION. IT SHALL BE USED BY THE COMMISSION IN FURTHERANCE OF THE PUBLIC INTEREST IN RAILWAY TRANSPORTATION EITHER BY MAKING LOANS TO CARRIERS TO MEET EXPENDITURES FOR CAPITAL ACCOUNT OR TO REFUND MATURING SECURITIES ORIGINALLY ISSUED FOR CAPITAL ACCOUNT, OR BY PURCHASING TRANSPORTATION EQUIPMENT AND FACILITIES AND LEASING THE SAME TO CARRIERS, AS HEREINAFTER PROVIDED. ANY MONEYS IN THE FUND NOT SO EMPLOYED SHALL BE INVESTED IN OBLIGATIONS OF THE UNITED STATES OR DEPOSITED IN AUTHORIZED DEPOSITARIES OF THE UNITED STATES SUBJECT TO THE RULES PROMULGATED FROM TIME TO TIME BY THE SECRETARY OF THE TREASURY RELATING TO GOVERNMENT DEPOSITS.

IN THE CONSTRUCTION OF THESE PROVISIONS OF LAW BY THE SUPREME COURT OF THE UNITED STATES, PARTICULARLY AS TO THEIR CONSTITUTIONALITY, IT HAS BEEN HELD THAT THE UNITED STATES TAKES THE FUNDS AS A CREDITOR AND THAT THE FUNDS THUS COLLECTED PROPERLY MAY BE APPROPRIATED BY THE GOVERNMENT FOR PUBLIC USES. DAYTON-GOOSE CREEK RAILWAY V. UNITED STATES, 263 U.S. 456. IT SHOULD BE NOTED THAT THERE IS NOTHING INSECTION 15 (A) DECLARING THAT THE UNITED STATES SHALL HOLD THE FUNDS AS TRUSTEE, BUT ONLY THAT THE INTERSTATE COMMERCE COMMISSION SHALL ADMINISTER THE FUND FOR CERTAIN PURPOSES SET FORTH IN THE LAW, AND IT IS MANIFESTLY APPARENT THAT ALL THE ELEMENTS OF A TRUST AS TO SUCH FUNDS ARE LACKING IN THAT THERE IS CLEARLY NO CESTUI QUE TRUST UNDER THE LAW AND NO BENEFICIARY WHO COULD MAKE CLAIM FOR THE FUNDS, THE DISPOSITION OF THE FUNDS UNDER THE LAW BEING AT THE DISCRETION OF THE COMMISSION UNDER THE GENERAL RESTRICTIONS THEREIN PROVIDED. IT MAY BE TRUE, AS CONTENDED, THAT THERE IS AN ACCRETION OF THE FUND, OR A PROFIT THEREON BY INVESTMENTS IN LOANS TO CARRIERS AND PURCHASE OF FACILITIES, ETC., OR HOLDING GOVERNMENT SECURITIES, BUT THERE IS NOTHING IN THE LAW WHICH WOULD INDICATE AN INTENT ON THE PART OF THE CONGRESS TO PROVIDE FOR THE PAYMENT OF ANY SUCH EARNINGS IN CASES OF REFUNDS SUCH AS INVOLVED IN THE PRESENT CASE. THE ONLY BASIS UPON WHICH SUCH RETURN OR INTEREST COULD BE PAID WOULD BE UPON THE THEORY THAT THERE WAS A TRUST IN FAVOR OF THE CARRIER IN THE PRESENT CASE, AS WAS INVOLVED IN THE HENKELS CASE, SUPRA, OR IF THE PAYMENT OF INTEREST OR INCREMENT HAD BEEN SPECIFICALLY AUTHORIZED BY LAW.

THAT THE CARRIER IN THE INSTANT CASE WAS ENTITLED TO A REFUND OF $2,164.28 IS BASED PRIMARILY UPON THE THEORY THAT THE INTERSTATE COMMERCE COMMISSION IS TO COLLECT ONLY ONE-HALF OF THE EXCESS NET RAILWAY OPERATING PROFIT AND IT APPEARING FROM THE RECORD THAT AN AMOUNT IN EXCESS OF SUCH ONE-HALF HAD BEEN COLLECTED, A REFUND OF THE DIFFERENCE WAS PROPER. THE CLAIM FOR REFUND, HOWEVER, IS ONE AGAINST THE GOVERNMENT FOR AN AMOUNT PAID TO IT IN EXCESS OF THAT REQUIRED BY LAW AND NO PROVISION HAS BEEN MADE BY STATUTE FOR THE PAYMENT OF INTEREST OR EARNED RETURN, IF ANY, IN SUCH CASES. IT APPEARING FROM THE RECORD THAT THE CARRIER HAS BEEN REFUNDED THE AMOUNT OF THE EXCESS COLLECTED, IT IS NOT ENTITLED TO ANY ADDITIONAL PAYMENT.

ACCORDINGLY, THE CLAIM NOT SUBMITTED ON BEHALF OF THE TUCKERTON RAILROAD CO. MUST BE, AND IS, DISALLOWED.