A-43355, JULY 22, 1932, 12 COMP. GEN. 103

A-43355: Jul 22, 1932

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THERE IS NO AUTHORITY TO PAY UPON SUCH JUDGMENTS OR ORDERS OF REPARATION INTEREST AT A RATE IN EXCESS OF 4 PERCENT AS PROVIDED BY THAT SECTION. IT WILL BE OBSERVED THAT IT IS PROVIDED IN SECTION 206 OF THE TRANSPORTATION ACT THAT THE ACTIONS ON WHICH THE REPARATION ORDERS OR JUDGMENTS ARE BASED MUST BE OF SUCH A CHARACTER AS PRIOR TO FEDERAL CONTROL COULD HAVE BEEN BROUGHT AGAINST SUCH CARRIER. UNDER SECTION 10 (FEDERAL CONTROL ACT) THE UNITED STATES STAND EXACTLY AS IF THEY WERE A RAILROAD CORPORATION OPERATING AS A COMMON CARRIER.'. IT APPEARS TO ME THAT UNDER THE TRANSPORTATION ACT (SECTION 206) AND THE FEDERAL CONTROL ACT (SECTION 10) THE LIABILITY OF THE DIRECTOR GENERAL WAS ESTABLISHED AND DECLARED TO BE THE SAME AS THAT OF THE CARRIER PRIOR TO GOVERNMENT OPERATION SO FAR AS LIABILITY TO SHIPPERS WAS CONCERNED.

A-43355, JULY 22, 1932, 12 COMP. GEN. 103

ECONOMY ACT - INTEREST ON JUDGMENTS THE PROVISIONS OF SECTION 319 OF THE ACT OF JUNE 30, 1932, 47 STAT. 412, PROVIDING FOR A RATE OF 4 PERCENT PER ANNUM "UPON ANY JUDGMENT OF WHATSOEVER CHARACTER AGAINST THE UNITED STATES" APPLY TO JUDGMENTS OF COMPETENT COURTS AND ORDERS OF REPARATION BY THE INTERSTATE COMMERCE COMMISSION AGAINST THE DIRECTOR GENERAL OF RAILROADS AND BEGINNING JULY 1, 1932, THERE IS NO AUTHORITY TO PAY UPON SUCH JUDGMENTS OR ORDERS OF REPARATION INTEREST AT A RATE IN EXCESS OF 4 PERCENT AS PROVIDED BY THAT SECTION.

COMPTROLLER GENERAL MCCARL TO THE DIRECTOR GENERAL OF RAILROADS, JULY 22, 1932:

THERE HAS BEEN RECEIVED YOUR LETTER OF JULY 11, 1932, AS FOLLOWS:

I WOULD GREATLY APPRECIATE IT IF AT YOUR EARLIEST CONVENIENCE YOU WOULD ADVISE WHETHER SECTION 319 OF THE ACT OF JUNE 30, 1932, PUBLIC NO. 212, RELATING TO THE RATE OF INTEREST ON JUDGMENTS AND OVERPAYMENTS, APPLIES TO ORDERS OF REPARATION BY THE INTERSTATE COMMERCE COMMISSION AND TO JUDGMENTS OF THE COURTS AGAINST THE AGENT APPOINTED BY THE PRESIDENT AS PROVIDED IN (A) OF SECTION 206 OF THE TRANSPORTATION ACT. SAID REPARATION ORDERS BEAR 6 PERCENT INTEREST FROM THE DATE OF THE ACCRUAL OF THE ACTION, AND JUDGMENTS OF THE COURTS CARRY THE RATE OF INTEREST PROVIDED BY STATE STATUTES.

IT WILL BE OBSERVED THAT IT IS PROVIDED IN SECTION 206 OF THE TRANSPORTATION ACT THAT THE ACTIONS ON WHICH THE REPARATION ORDERS OR JUDGMENTS ARE BASED MUST BE OF SUCH A CHARACTER AS PRIOR TO FEDERAL CONTROL COULD HAVE BEEN BROUGHT AGAINST SUCH CARRIER; ALSO THAT SUBSECTION (E) OF SECTION 206 PROVIDES THAT---

"FINAL JUDGMENTS, DECREES, AWARDS, ACTIONS, SUITS, PROCEEDINGS, OR REPARATION CLAIMS OF THE CHARACTER ABOVE DESCRIBED, RENDERED AGAINST THE AGENT DESIGNATED BY THE PRESIDENT UNDER SUBDIVISION (A), SHALL BE PROMPTLY PAID OUT OF THE REVOLVING FUND CREATED BY SECTION 210.'

SEE MELLON, DIRECTOR GENERAL AND AGENT, V. ARKANSAS LAND AND LUMBER CO., 275 U.S. 460.

BEG ALSO TO CALL YOUR ATTENTION TO MELLON, AGENT, V. MICHIGAN TRUST COMPANY, 271 U.S. 236, IN WHICH THE COURT, AMONG OTHER THINGS, SAID:

"IN SOME MATTERS AT LEAST, UNDER SECTION 10 (FEDERAL CONTROL ACT) THE UNITED STATES STAND EXACTLY AS IF THEY WERE A RAILROAD CORPORATION OPERATING AS A COMMON CARRIER.' CITING DIRECTOR GENERAL V. KASTENBAUN, 263 U.S. 25, 28.

IT APPEARS TO ME THAT UNDER THE TRANSPORTATION ACT (SECTION 206) AND THE FEDERAL CONTROL ACT (SECTION 10) THE LIABILITY OF THE DIRECTOR GENERAL WAS ESTABLISHED AND DECLARED TO BE THE SAME AS THAT OF THE CARRIER PRIOR TO GOVERNMENT OPERATION SO FAR AS LIABILITY TO SHIPPERS WAS CONCERNED. THINK, AS STATED BY THE COURT OF APPEALS IN WILSON AND CO. V. DIRECTOR GENERAL, 8 FED/2D) 484, A FAIR INTERPRETATION OF THESE STATUTES WARRANT A CONSTRUCTION, SO FAR AS POSSIBLE, WHICH CONTINUED ALL EXISTING RIGHTS, LIABILITIES, AND OBLIGATIONS OF SHIPPERS AND CARRIERS; ALSO, THAT INTEREST WAS PART OF THE DAMAGES.

I DO NOT THINK THE DIRECTOR GENERAL WAS EXERCISING, PROPERLY SPEAKING, A GOVERNMENTAL FUNCTION IN OPERATING THE RAILROADS. HE WAS OPERATING THE RAILROADS IN PLACE OF THE REGULAR OFFICERS OF THE CORPORATION, AND WAS LIABLE TO THE PUBLIC AS REPRESENTING THE CORPORATION. THE JUDGMENT AGAINST HIM, WHILE PRIMARILY PAID FROM GOVERNMENT FUNDS, WAS ULTIMATELY DEDUCTED FROM THE RECEIPTS DERIVED FROM THE OPERATION OF THE PARTICULAR RAILROAD. IN OTHER WORDS, IT WAS CONSIDERED AS AN OPERATING EXPENSE, AND I AM INFORMED THAT WHILE THE DIRECTOR GENERAL WAS ACTUALLY OPERATING THE RAILROADS THE PAYMENT OF SUCH AN ORDER OR JUDGMENT WAS CONSIDERED AS AN OPERATING EXPENSE.

YOU WILL FURTHER NOTICE THAT UNDER SUBSECTION (C) OF SECTION 206, IN PROCEEDINGS BEFORE THE COMMISSION FOR REPARATION, IT IS NECESSARY TO NAME IN THE PETITION THE RAILROAD AGAINST WHICH SUCH COMPLAINT WOULD HAVE BEEN BROUGHT IF SUCH RAILROAD HAD NOT BEEN UNDER FEDERAL CONTROL AT THE TIME THE MATTER COMPLAINED OF TOOK PLACE.

UNDER THE PROVISIONS OF SECTION 16 OF THE INTERSTATE COMMERCE ACT SHOULD AN ORDER FOR REPARATION NOT BE PAID, THE COMPLAINANT MAY BRING SUIT ON SAID ORDER, WHICH SHALL PROCEED IN ALL RESPECTS LIKE CIVIL SUITS FOR DAMAGES EXCEPT THAT THE FINDINGS AND ORDER OF THE COMMISSION SHALL BE PRIMA FACIE EVIDENCE OF THE FACTS THEREIN STATED, ETC.

I HAVE PENDING SEVERAL ORDERS OF THE COMMISSION FOR REPARATION ON WHICH I HAVE AGREED TO PAY 6 PERCENT INTEREST, WHICH AGREEMENTS WERE ENTERED INTO PRIOR TO THE PASSAGE OF THE ACT OF JUNE 30, 1932.

THERE HAS BEEN RECEIVED ALSO YOUR LETTER OF JULY 16, 1932, FORWARDING FOR CONSIDERATION IN THE MATTER LETTER OF JULY 13, 1932, FROM PAUL E. BLANCHARD, ATTORNEY FOR ARMOUR AND CO., SETTING FORTH HIS VIEWS AS TO THE APPLICATION OF SECTION 319 OF THE ACT OF JUNE 30, 1932, TO A REPARATION ORDER BY THE INTERSTATE COMMERCE COMMISSION.

SECTION 319 OF THE ACT OF JUNE 30, 1932, PUBLIC, NO. 212, 47 STAT. 412, PROVIDES AS FOLLOWS:

SEC. 319. HEREAFTER THE RATE OF INTEREST TO BE ALLOWED OR PAID SHALL BE 4 PERCENTUM PER ANNUM WHENEVER INTEREST IS ALLOWED BY LAW UPON ANY JUDGMENT OF WHATSOEVER CHARACTER AGAINST THE UNITED STATES AND/OR UPON ANY OVERPAYMENT IN RESPECT OF ANY INTERNAL-REVENUE TAX. ALL LAWS OR PARTS OF LAWS IN SO FAR AS INCONSISTENT HEREWITH ARE HEREBY REPEALED.

UNDER THE PLAIN TERMS OF THIS SECTION THE QUESTION AS TO WHETHER THE SECTION IS APPLICABLE TO ORDERS OF REPARATION BY THE INTERSTATE COMMERCE COMMISSION AND JUDGMENTS OF THE COURTS AGAINST THE DIRECTOR GENERAL OF RAILROADS WOULD APPEAR TO DEPEND SOLELY UPON WHETHER SUCH ORDERS AND JUDGMENTS ARE JUDGMENTS AGAINST THE UNITED STATES WITHIN THE MEANING OF SAID SECTION.

THE SECTION BY SPECIFIC TERMS IS MADE APPLICABLE TO "ANY JUDGMENT OF WHATSOEVER CHARACTER," THUS INCLUDING NOT ONLY JUDGMENTS OF UNITED STATES COURTS, BUT ALSO ORDERS, FINDINGS, OR RULINGS OF QUASI-JUDICIAL AGENCIES SUCH AS THE INTERSTATE COMMERCE COMMISSION AND, THEREFORE, THE SECTION MUST BE CONSTRUED AS APPLYING TO ORDERS OF REPARATION OF SAID COMMISSION AS REFERRED TO IN YOUR LETTER, AS WELL AS THE JUDGMENTS OF THE COURTS, IF THEY ARE "AGAINST THE UNITED STATES.'

AS TO WHETHER ORDERS AND JUDGMENTS AGAINST THE DIRECTOR GENERAL OF RAILROADS ARE "AGAINST THE UNITED STATES," IT HAS BEEN HELD THAT THE OPERATION OF RAILROADS BY THE DIRECTOR GENERAL AS AGENT FOR THE PRESIDENT WAS, IN EFFECT, OPERATION BY THE UNITED STATES, AND THAT SUITS AGAINST HIM ARE SUITS AGAINST THE UNITED STATES. DAHN V. MCADOO, 256 FED.REP. 549; SANDOVAL V. DAVIS, 278 FED.REP. 968. ALSO, IT HAS BEEN HELD THAT ACTIONS UNDER THE TRANSPORTATION ACT AGAINST THE PRESIDENT'S AGENT ARE IN LEGAL EFFECT AGAINST THE UNITED STATES. RAUCH V. DAVIS, 8 FED.REP./2D) 907. FLINT RIVER AND NORTHEASTERN RAILROAD CO. V. MELLON, 24 FED.REP./2D) 610.

IN VIEW OF THE FOREGOING IT WOULD APPEAR THAT THE ORDERS AND JUDGMENTS AGAINST THE DIRECTOR GENERAL UNDER THE PROVISIONS OF THE TRANSPORTATION ACT OF 1920 ARE JUDGMENTS AGAINST THE UNITED STATES WITHIN THE MEANING OF SECTION 319 OF THE ACT OF JUNE 30, 1932, AND, IN SPECIFIC ANSWER TO THE QUESTION SUBMITTED, I HAVE TO ADVISE THAT THE PAYMENT OUT OF PUBLIC MONEYS OF INTEREST ON SUCH ORDERS AND JUDGMENTS IN EXCESS OF 4 PERCENT IS PRECLUDED BY SAID SECTION, NOTWITHSTANDING THE AGREEMENTS OR ARRANGEMENTS MADE HERETOFORE WITH RESPECT TO THE PAYMENT OF INTEREST THEREON.