B-69986, JANUARY 6, 1948, 27 COMP. GEN. 365

B-69986: Jan 6, 1948

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AS IT WAS CONSTITUTED PRIOR TO THE ACQUISITION OF CONTROL OF THE RAILROADS. IS PRESERVED. AS ITS SERVICES ARE BEING UTILIZED BY ALL RAILROADS IN THE SAME MANNER AS BEFORE. ARE NOT FOR APPLICATION SO AS TO REQUIRE THE RECOUPMENT OF CHARGES COLLECTED BY THE PULLMAN COMPANY FOR SLEEPING CAR ACCOMMODATIONS FURNISHED BY IT TO POSTAL SERVICE EMPLOYEES TRAVELING ON OFFICIAL BUSINESS. WHICH ARE REQUIRED BY THE ACT OF JULY 28. ARE NOT ENTITLED TO PAYMENT FOR SLEEPING CAR OR OTHER SUPERIOR SPACE ACCOMMODATIONS FURNISHED IN RAILROAD- OPERATED EQUIPMENT. 1948: REFERENCE IS MADE TO YOUR LETTER OF SEPTEMBER 12. IN SAID LETTER IT IS STATED THERE HAS COME TO ATTENTION THAT "IN YOUR AUDIT OF CLAIMS FOR TRAVEL EXPENSE SUBMITTED BY OFFICIALS OF THE POST OFFICE DEPARTMENT YOUR OFFICE HAS RECENTLY BEEN LYING.

B-69986, JANUARY 6, 1948, 27 COMP. GEN. 365

TRANSPORTATION CHARGES - POSTAL SERVICE EMPLOYEES - PULLMAN ACCOMMODATIONS INASMUCH AS THE CORPORATE STRUCTURE OF THE PULLMAN COMPANY, AS IT WAS CONSTITUTED PRIOR TO THE ACQUISITION OF CONTROL OF THE RAILROADS, IS PRESERVED, AND AS ITS SERVICES ARE BEING UTILIZED BY ALL RAILROADS IN THE SAME MANNER AS BEFORE, THE PROVISIONS OF THE ACT OF JULY 28, 1916, REQUIRING RAILROADS ENGAGED IN CARRYING THE MAILS TO TRANSPORT WITHOUT CHARGE CERTAIN POSTAL SERVICE EMPLOYEES TRAVELING ON OFFICIAL BUSINESS, ARE NOT FOR APPLICATION SO AS TO REQUIRE THE RECOUPMENT OF CHARGES COLLECTED BY THE PULLMAN COMPANY FOR SLEEPING CAR ACCOMMODATIONS FURNISHED BY IT TO POSTAL SERVICE EMPLOYEES TRAVELING ON OFFICIAL BUSINESS. RAILROADS ENGAGED IN CARRYING THE MAILS, WHICH ARE REQUIRED BY THE ACT OF JULY 28, 1916, TO TRANSPORT WITHOUT CHARGE CERTAIN POSTAL SERVICE EMPLOYEES TRAVELING ON OFFICIAL BUSINESS, ARE NOT ENTITLED TO PAYMENT FOR SLEEPING CAR OR OTHER SUPERIOR SPACE ACCOMMODATIONS FURNISHED IN RAILROAD- OPERATED EQUIPMENT--- AS DISTINGUISHED FROM EQUIPMENT OPERATED BY THE PULLMAN COMPANY--- TO DULY ACCREDITED POSTAL SERVICE EMPLOYEES TRAVELING ON OFFICIAL DUTY.

ASSISTANT COMPTROLLER GENERAL YATES TO THE POSTMASTER GENERAL, JANUARY 6, 1948:

REFERENCE IS MADE TO YOUR LETTER OF SEPTEMBER 12, 1947, FROM YOUR PREDECESSOR, FORMER POSTMASTER GENERAL ROBERT E. HANNEGAN, ADDRESSED TO THE CHIEF, POSTAL ACCOUNTS DIVISION, GENERAL ACCOUNTING OFFICE, PERTAINING TO THE QUESTION OF THE AUTHORITY TO RECOVER CHARGES COLLECTED FOR SLEEPING CAR ACCOMMODATIONS FURNISHED BY THE PULLMAN COMPANY, FOR POST OFFICE DEPARTMENT OFFICERS AND EMPLOYEES, TRAVELING ON OFFICIAL BUSINESS OVER RAILROADS CARRYING THE MAILS.

IN SAID LETTER IT IS STATED THERE HAS COME TO ATTENTION THAT "IN YOUR AUDIT OF CLAIMS FOR TRAVEL EXPENSE SUBMITTED BY OFFICIALS OF THE POST OFFICE DEPARTMENT YOUR OFFICE HAS RECENTLY BEEN LYING," WHERE SLEEPING CAR EXPENSES ARE INVOLVED, THE PRINCIPLE OF THE DECISIONS IN 7 COMP. GEN. 759 AND 8 COMP. GEN. 93,"PRESUMABLY ON THE GROUNDS THAT THE PULLMAN COMPANY HAS TRANSFERRED EQUIPMENT OWNERSHIP TO THE RAILROADS AND THAT THERE IS, THEREFORE, NO AUTHORITY FOR THE PAYMENT OF AN EXTRA CHARGE" FOR SUCH ACCOMMODATIONS. THE LETTER EXPRESSES THE VIEW THAT, UNDER THE RECENTLY PERMITTED ACQUISITION OF THE PULLMAN COMPANY BY THE RAILROADS, THE STOCK- OWNERSHIP OF THE PULLMAN COMPANY HAS PASSED, OR WILL PASS, TO THE RAILROADS, BUT THAT THE OPERATING SYSTEM, UNDER WHICH THE PULLMAN COMPANY FURNISHED THE PUBLIC WITH SLEEPING CAR ACCOMMODATIONS, REMAINS PRACTICALLY UNCHANGED. THE FORMER POSTMASTER GENERAL REQUESTED, THEREFORE, CONSIDERATION OF THE QUESTION ,WHETHER THE POOLING AGENCY, WHICH PRESENTLY IS THE PULLMAN COMPANY, OR SIMILAR POOLING AGENCY WHICH MAY SUCCEED THE PULLMAN COMPANY, MAY NOT CONTINUE TO BE REGARDED AS A SEPARATE SERVICE AGENCY WITH RESPECT TO THE PAYMENT OF SLEEPING CAR FEES.' IT WAS REQUESTED, ALSO, THAT THERE BE CONSIDERED, NOTWITHSTANDING THE CITED DECISIONS OF A FORMER COMPTROLLER GENERAL, WHETHER THE FURNISHING, WITHOUT CHARGE, OF SLEEPING CAR ACCOMMODATIONS, AS DISTINGUISHED FROM TRANSPORTATION, CAN BE REQUIRED UNDER THE PROVISIONS OF THE ACT OF JULY 28, 1916, 39 STAT. 412, 419, RELATING TO THE CARRIAGE, WITHOUT EXTRA CHARGE--- ON ANY TRAIN OPERATED BY ANY RAILROAD COMPANY CARRYING THE MAILS --- OF THE AGENTS AND OFFICERS OF THE POST OFFICE DEPARTMENT, TRAVELING ON OFFICIAL BUSINESS.

INVESTIGATION OF THE MATTERS SO MENTIONED INDICATES THAT THERE HAS NOT BEEN APPLIED, IN FACT, TO THE CHARGES OF THE PULLMAN COMPANY THE PRINCIPLE OF THE CITED COMPTROLLER GENERAL DECISIONS. IT IS REPORTED THAT ALL CLAIMS BY POST OFFICE INSPECTORS FOR PARLOR CAR AND SLEEPING CAR ACCOMMODATIONS DURING JULY 1947 CONTAINED A STATEMENT TO THE EFFECT THAT RAILROAD-OWNED EQUIPMENT WAS USED AND THAT THE FREE USE THEREOF WAS REQUESTED AND REFUSED, THIS STATEMENT BEING DUE, APPARENTLY, TO THE ASSUMPTION THAT, INSOFAR AS TRAVEL IN PULLMAN COMPANY EQUIPMENT WAS CONCERNED, THE OWNERSHIP AND OPERATION OF SUCH EQUIPMENT WAS TRANSFERRED TO THE RAILROADS, EFFECTIVE JULY 1, 1947. IT IS STATED THAT IN A PERSONAL VISIT OF MR. PAUL R. ANDREWS, AN OFFICIAL OF THE OFFICE OF CHIEF POST OFFICE INSPECTOR, TO THE POSTAL ACCOUNTS DIVISION OF THIS OFFICE ON JULY 31, 1947, THE DATE OF JULY 1, 1947, WAS REPORTED AS THE EFFECTIVE DATE OF SUCH TRANSFER, AND IT IS NOTED THAT IN THE LETTER OF AUGUST 13, 1947, FROM THE ASSISTANT CHIEF OF THE POSTAL ACCOUNTS DIVISION OF THIS OFFICE TO THE CHIEF POSTAL INSPECTOR, TO WHICH THE LETTER OF SEPTEMBER 12, 1947, FROM THE FORMER POSTMASTER GENERAL MAKES REFERENCE, THE OPENING PARAGRAPH STATES:

REFERENCE IS MADE TO VERBAL REQUEST OF YOUR OFFICE (BY MR. ANDREWS) (SIC) THAT ALL CLAIMS FOR PULLMAN ACCOMMODATIONS IN VOUCHERS OF POST OFFICE INSPECTORS FOR JULY 1947, BE ALLOWED BY THIS OFFICE AND REPORTED TO SECOND ASSISTANT POSTMASTER GENERAL FOR DEDUCTION OF THE AMOUNTS THEREOF FROM COMPENSATION DUE THE RAILROADS INVOLVED FOR CARRYING THE MAILS.

THE DETAILED INFORMATION REQUESTED, IN THE LETTER OF AUGUST 13, 1947, TO BE SHOWN BY INSPECTORS IN CONNECTION WITH THEIR CLAIMS FOR TRANSPORTATION CHARGES,"WHERE SUCH CHARGES REPRESENT TRANSPORTATION WHICH SHOULD HAVE BEEN FURNISHED FREE BY CARRIERS," WAS SPECIFIED IN ORDER THAT A SATISFACTORY RECORD MIGHT BE OBTAINED TO SUSTAIN A DEDUCTION FROM THE APPROPRIATE RAILROAD'S ACCOUNT WHERE THE FACTS OTHERWISE MIGHT JUSTIFY SUCH DEDUCTION. IT THUS APPEARS THAT THE QUESTION NOW PRESENTED HAD ITS INCEPTION IN THE POST OFFICE DEPARTMENT AND IT IS REPORTED THAT THERE WAS NO INTENTION ON THE PART OF THE POSTAL ACCOUNTS DIVISION OF THIS OFFICE TO APPLY THE PRINCIPLE OF THE CITED COMPTROLLER GENERAL DECISIONS IN THIS MATTER UNTIL OPPORTUNITY HAD BEEN AFFORDED FOR A PROPER DETERMINATION OF THE AUTHORITY THEREFOR.

THE CIRCUMSTANCES WHICH GIVE RISE TO THE QUESTION PRESENTED AT THIS TIME ARE RELATED TO THE LITIGATION UNDER THE SHERMAN ANTI-TRUST ACT AND THE CLAYTON ACT INVOLVING THE PULLMAN COMPANY AND RESULTING IN THE APPROVAL, BY THE DISTRICT COURT OF THE UNITED STATES FOR THE EASTERN DISTRICT OF PENNSYLVANIA, OF THE SALE OF THE PULLMAN COMPANY STOCK TO A BUYING GROUP OF RAILROADS. SEE UNITED STATES V. PULLMAN COMPANY, ET AL., 64 FED. SUPP. 108. IN THIS CONNECTION YOU STATE:

THE PRESENT RELATIONSHIP OF THE PULLMAN COMPANY TO THE RAILROADS, ACCORDING TO INFORMATION BEFORE ME, IS AS FOLLOWS:

"AS THE OUTGROWTH OF A SUIT BROUGHT BY THE DEPARTMENT OF JUSTICE IN THE DISTRICT COURT OF THE UNITED STATES FOR THE EASTERN DISTRICT OF PENNSYLVANIA AGAINST THE PULLMAN COMPANY (OPERATING AGENCY), PULLMAN STANDARD CAR MANUFACTURING COMPANY (BUILDER), AND PULLMAN INCORPORATED (HOLDING COMPANY), THE DISTRICT COURT FOUND THAT THE DEFENDANTS HAD VIOLATED THE ANTI-TRUST ACT AND ORDERED THEM TO SEPARATE COMPLETELY THE OWNERSHIP AND OPERATION OF SLEEPING CARS FROM THE MANUFACTURE OF SUCH CARS. UNDER THE DATE OF MARCH 31, 1947, THE SUPREME COURT UPHELD THE DECISION OF THE DISTRICT COURT BY AN EQUALLY DIVIDED COURT.

"A PLAN FOR COMPLYING WITH THE COURT'S ORDER HAS BEEN APPROVED BY THE INTERSTATE COMMERCE COMMISSION UNDER DATE OF MAY 6, 1947,( NO. 29592) WHEREBY THE PULLMAN COMPANY, UNDER RAILROAD OWNERSHIP, WILL CONTINUE THE OPERATION OF THE SLEEPING-CAR BUSINESS UNDER A POOLING ARRANGEMENT ESSENTIALLY SIMILAR TO THE FAMILIAR PLAN HERETOFORE OBTAINING. AN INTERIM PERIOD ENDING DECEMBER 31, 1948, HAS BEEN APPROVED BY THE COMMISSION DURING WHICH SALE OF THE PULLMAN COMPANY STOCK TO THE PARTICIPATING RAILROADS WILL BE CONSUMMATED AND DURING WHICH FURTHER CHANGES MAY BE ADOPTED FOR COMPLETE OPERATION OF THEIR SLEEPING-CAR EQUIPMENT BY INDIVIDUAL RAILROADS OR ADHERENCE TO THE POOLING PLAN OF THE PULLMAN COMPANY OR OTHER OPERATING AGENCY WHICH MAY BE CREATED.'

IN DECISIONS A-22916, JUNE 1, 1928, 7 COMP. GEN. 759, AND A-24159, AUGUST 25, 1928, 8 COMP. GEN. 93, IT WAS HELD THAT THE CARRIERS THERE CONCERNED, WHICH WERE ENGAGED IN CARRYING THE MAIL, WERE NOT, UNDER THE PROVISIONS OF THE ACT OF JULY 28, 1916, 39 STAT. 419, ENTITLED TO COLLECT FROM THE UNITED STATES CHAIR CAR AND SLEEPING CAR CHARGES FOR THE TRANSPORTATION OF POST OFFICE INSPECTORS IN EQUIPMENT OWNED AND OPERATED BY THE RAILROADS, AS DISTINGUISHED FROM PULLMAN-CAR EQUIPMENT. THE PRINCIPLE THUS ESTABLISHED HAS BEEN FOLLOWED CONSISTENTLY IN THE ADJUSTMENT OF ACCOUNTS COVERING COMPENSATION DUE THE RAILROADS FOR MAIL CARRIAGE.

THE PULLMAN COMPANY APPARENTLY IS NOW OWNED BY CERTAIN RAILROADS AND IS OPERATED AS A JOINT FACILITY FOR THE RAILROADS IN THE CONDUCT OF PARLOR CAR AND SLEEPING CAR BUSINESS OVER THE LINES OF SAID RAILROADS AND OTHERS. THE PURCHASE PLAN GOVERNING THE PURCHASE OF THE PULLMAN COMPANY STOCK AND THE FINANCIAL AND OPERATING ARRANGEMENTS BETWEEN THE PULLMAN COMPANY AND THE RAILROADS ARE SET FORTH IN THE DECISION OF THE INTERSTATE COMMERCE COMMISSION, DATED MAY 6, 1947 ( DOCKET NO. 29592, 268 I.C.C. 473), WHEREIN THE COMMISSION FOUND THAT THE PROPOSED POOLING OF SERVICE AND EARNINGS INVOLVED IN THE CONDUCT OF THE SLEEPING CAR BUSINESS UNDER RAILROAD CONTROL WOULD BE IN THE INTEREST OF BETTER SERVICE AND ECONOMY OF OPERATION. NAMED IN THE CITED DECISIONS ARE SEVERAL RAILROADS WHICH, THE DECISION STATES,"DID NOT SEE FIT TO PARTICIPATE IN APPLICANTS' (THE BUYING GROUP OF RAILROADS) PLAN.' THE RAILROADS DECLINING TO PARTICIPATE IN THE PLAN WERE---

THE CENTRAL RAILROAD COMPANY OF NEW JERSEY (TRUSTEES); CHICAGO AND EASTERN ILLINOIS RAILROAD COMPANY; CHICAGO, INDIANAPOLIS AND LOUISVILLE RAILWAY COMPANY; ST. LOUIS SOUTHWESTERN RAILWAY COMPANY (TRUSTEE), TENNESSEE CENTRAL RAILWAY COMPANY; AND DETROIT AND MACKINAC RAILROAD COMPANY.

THE COMMISSION STATES ALSO THAT---

IT IS APPLICANTS' INTENTION TO REDUCE PULLMAN INTO, OR SELL ITS PROPERTIES TO, A SLEEPING-CAR SERVICE CORPORATION WITHIN A PERIOD CALLED THE INTERIM PERIOD, WHICH WOULD END NOT LATER THAN DECEMBER 31, 1948. THE POOLING ARRANGEMENT HERE PROPOSED MAY, THEREFORE, PROVE TO BE OF LIMITED DURATION. AND THAT:

THE PLAN CONTEMPLATES THAT TO AN IMPORTANT EXTENT THE SLEEPING CARS WOULD HENCEFORTH BE OWNED BY THE INDIVIDUAL RAILROADS, BUT THEY WOULD BE MANNED AND SERVICED BY THE COLLECTIVE AGENCY * * *.

HOWEVER, IT IS NOTED THAT THE CORPORATE STRUCTURE OF THE PULLMAN COMPANY, APPARENTLY AS IT WAS CONSTITUTED PRIOR TO THE ACQUISITION OF CONTROL BY THE RAILROADS, IS TO BE PRESERVED AND ITS SERVICES ARE TO BE UTILIZED IN PRACTICALLY THE SAME MANNER AS HERETOFORE BY ALL RAILROADS DESIRING THEM, IN WHOLE OR IN PART. THE PULLMAN COMPANY, FOR THE MOST PART, IS TO RETAIN POSSESSION OF AND TITLE TO THE SO-CALLED "HEAVY WEIGHT" SLEEPING CARS AND SAID COMPANY IN ORDER TO CONDUCT ITS BUSINESS IS TO BE PERMITTED TO PROCURE A LEASE OF ANY SO-CALLED "HEAVYWEIGHT" OR "LIGHTWEIGHT" SLEEPING CARS WHICH ANY RAILROAD MIGHT ACQUIRE THROUGH OWNERSHIP OF BY LEASE. THE NET EARNINGS OF THE PULLMAN COMPANY UNDER THE UNIFORM OPERATING CONTRACT-- - WHICH WOULD GOVERN THE RELATIONS BETWEEN PULLMAN AND THE INDIVIDUAL RESPECTIVE CARRIER FOR WHICH IT WOULD BE PERFORMING THE SERVICE DURING THE INTERIM PERIOD--- WOULD BE DIVIDED EQUALLY WITH THE RESPECTIVE RAILROADS ENTERING INTO SUCH CONTRACT, AND PULLMAN'S HALF OF THE NET EARNINGS WOULD BE AVAILABLE FOR DISTRIBUTION TO THE STOCKHOLDER RAILROADS AS DIVIDENDS. IN OTHER WORDS, IT APPEARS THAT FOR THE "INTERIM PERIOD" PULLMAN'S DIRECTORS WOULD HAVE FULL CONTROL IN CONDUCTING ITS CORPORATE BUSINESS, AND, ALSO, DISCRETION IN THE DISTRIBUTION OF DIVIDENDS. THUS, WHILE THE STOCKHOLDER RAILROADS OWN ALL THE STOCK OF THE PULLMAN COMPANY, THE CORPORATE STATUS OF THE COMPANY AS APPARENTLY NOW CONSTITUTED AND THE RELATION OF THE COMPANY TO THE RAILROADS IN THE MATTER OF THE DISTRIBUTION OF NET EARNINGS ARE NOT SUCH AS TO REQUIRE, BECAUSE OF THE PROVISIONS OF THE ACT OF JULY 28, 1916, SUPRA, A RECOUPMENT OF CHARGES COLLECTED BY THE PULLMAN COMPANY FOR PARLOR CAR AND SLEEPING CAR ACCOMMODATIONS FURNISHED BY IT TO POST OFFICE DEPARTMENT PERSONNEL TRAVELING ON OFFICIAL BUSINESS.

CONCERNING YOUR REQUEST THAT "APPROPRIATE CONSIDERATION BE GIVEN TO THE DEPARTMENT'S VIEW" THAT , SLEEPING-CAR ACCOMMODATIONS HAVE BEEN REGARDED AS AN EXTRA SERVICE OVER AND BEYOND THAT WHICH COULD BE FAIRLY REQUIRED OF RAILROAD COMPANIES IN CONNECTION WITH TRANSPORTATION OF THE MAIL," AND EXAMINATION OF THE DECISIONS ON THIS QUESTION SHOWS THAT THE VIEWS SO INDICATED HAVE RECEIVED CONSIDERATION HERETOFORE IN CONNECTION WITH VARIOUS SUBMISSIONS FROM THE POST OFFICE DEPARTMENT, AND IT DOES NOT APPEAR THAT THERE ARE ANY SUFFICIENT ADDITIONAL FACTS OR DATA NOW SUBMITTED TO REQUIRE A DIFFERENT CONCLUSION AT THIS TIME. ACCORDINGLY, IN INSTANCES WHERE SLEEPING-CAR OR OTHER SUPERIOR SPACE ACCOMMODATIONS ARE FURNISHED IN RAILROAD-OPERATED EQUIPMENT--- AS DISTINGUISHED FROM EQUIPMENT OPERATED BY THE PULLMAN COMPANY--- TO DULY ACCREDITED OFFICERS AND AGENTS OF THE POST OFFICE DEPARTMENT AND THE RAILWAY MAIL SERVICE TRAVELING ON OFFICIAL DUTY UNDER COMPETENT AUTHORITY, THE PRINCIPLE OF THOSE DECISIONS WILL BE FOLLOWED.

IT IS NOTED THAT THE PROCEEDINGS BEFORE THE COMMISSION, AS WELL AS THE MATTER OF YOUR LETTER, RELATE TO SLEEPING CAR ACCOMMODATIONS. NO DOUBT THERE WILL BE CONSIDERABLE TRAVEL IN PARLOR CARS BY POST OFFICE PERSONNEL AND IN THIS EVENT THE PRINCIPLES STATES HEREIN WILL BE EQUALLY CONTROLLING.

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