A-91637, FEBRUARY 23, 1938, 17 COMP. GEN. 676

A-91637, FEBRUARY 23, 1938, 17 COMP. GEN. 676

TRANSPORTATION - POST OFFICE INSPECTORS - TRAVEL IN CANADA AND IN SLEEPING CARS OWNED BY PARENT OF SUBSIDIARY RAILROAD CARRYING MAIL THE ACT OF JULY 28, 1916, 39 STAT. 419, REQUIRES RAILROADS ENGAGED IN CARRYING THE MAILS TO TRANSPORT WITHOUT CHARGE ANY POST-OFFICE INSPECTOR TRAVELING ON OFFICIAL BUSINESS, AND WHERE SLEEPING CARS OWNED BY A PARENT RAILROAD COMPANY ARE OPERATED BY ITS SUBSIDIARY ENGAGED IN CARRYING THE MAILS, THERE IS NO AUTHORITY FOR PAYMENT TO EITHER COMPANY FOR SLEEPING ACCOMMODATIONS FURNISHED INSPECTORS TRAVELING ON OFFICIAL BUSINESS OR FOR PASSENGER FARE FOR A PORTION OF A JOURNEY WITHIN CANADA.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE CANADIAN NATIONAL RAILWAYS, FEBRUARY 23, 1938:

YOUR LETTER OF DECEMBER 7, 1937, IS AS FOLLOWS:

THE FOLLOWING CLAIM IS MADE ON BEHALF OF THE CANADIAN NATIONAL RAILWAYS, OR ITS SUBSIDIARY, THE DULUTH, WINNIPEG AND PACIFIC RAILWAY COMPANY, WHICHEVER MAY BE FOUND ENTITLED TO RECEIVE THE FUNDS HEREIN CLAIMED.

RECITATION OF FACTS.--- THERE IS ATTACHED TO THIS COMMUNICATION A BLUEPRINT COPY OF THE JOINT ROUTE OF THE DULUTH, WINNIPEG AND PACIFIC CANADIAN NATIONAL, FROM DULUTH TO WINNIPEG, MAN., CANADA. THE FIRST NAMED CARRIER, AND IN ITS OWN CORPORATE RIGHT, OPERATES WITHIN THE UNITED STATES FROM DULUTH, MINN., TO A POINT .2 MILES NORTH OF RANIER RAILWAY STATION, A POINT ON THE INTERNATIONAL BOUNDARY BETWEEN THE UNITED STATES AND CANADA-- - THE UNITED STATES MAIL PAY DISTANCE BEING 170.22 MILES (MAIL PAY ROUTE NO. 110726). THE CANADIAN NATIONAL RAILWAY COMPANY OPERATES WITHIN THE DOMINION OF CANADA, FROM THE POINT ON THE INTERNATIONAL BOUNDARY ).2 MILES NORTH OF RANIER RAILWAY STATION) TO A POINT ON THE INTERNATIONAL BOUNDARY A SHORT DISTANCE WEST OF RAINY RIVER, ONT. RAILWAY STATION (BETWEEN BAUDETTE, MINN., AND RAINY RIVER, ONT., RAILWAY STATIONS), THE CANADIAN MAIL PAY DISTANCE BEING 59.00 MILES. THE MINNESOTA AND MANITOBA RAILROAD COMPANY (CANADIAN NATIONAL RAILWAY COMPANY'S MAIL PAY ROUTE NO. 110721), OPERATES WITHIN THE UNITED STATES FROM THE POINT ON INTERNATIONAL BOUNDARY (BETWEEN BAUDETTE, MINN., AND RAINY RIVER, ONT., RAILWAY STATIONS) TO A POINT ON THE INTERNATIONAL BOUNDARY BETWEEN THE UNITED STATES AND CANADA, 6.93 MILES NORTHWEST OF WAR ROAD RAILWAY STATION--- THE UNITED STATES MAIL PAY DISTANCE BEING 43.78 MILES, VIZ.:

CHART

MILES

RAINY RIVER BOUNDARY TO WAR ROAD ------------------------------ 36.85

WAR ROAD TO INTERNATIONAL BOUNDARY ---------------------------- 6.93

43.78

IN CONNECTION WITH THE OPERATIONS FROM DULUTH TO RANIER BOUNDARY POINT, BY THE DULUTH, WINNIPEG AND PACIFIC RAILWAY COMPANY (OR IN THE OPPOSITE DIRECTION) MAIL PAY MILES 170.22 AND OPERATIONS BY MINNESOTA AND MANITOBA RAILROAD COMPANY FROM RAINY RIVER BOUNDARY TO BAUDETTE OR WAR ROAD, AS THE CASE MAY BE, THE POSTMASTER GENERAL HAS HERETOFORE DIRECTED THE CARRIAGE OF MAILS BY THE DULUTH, WINNIPEG AND PACIFIC RAILWAY COMPANY, MAIL ROUTE NO. 110726, AND MINNESOTA AND MANITOBA RAILROAD COMPANY (CANADIAN NATIONAL RAILWAY COMPANY'S MAIL ROUTE NO. 110721) UNDER THE PROVISIONS OF LAW OF THE UNITED STATES THERETO OBTAINING. CERTAIN OF THE TRAINS CARRYING THE MAILS BETWEEN THESE UNITED STATES POINTS VIA CANADA BETWEEN RANIER BOUNDARY AND RAINY RIVER BOUNDARY CONSIST NOT ONLY OF MAIL CARS, BUT IN PART OF CARS FOR PASSENGER ACCOMMODATIONS, INCLUDING SLEEPING CARS. THE SLEEPING CARS ARE NOT OWNED AND OPERATED BY THE DULUTH, WINNIPEG AND PACIFIC RAILWAY COMPANY, NOR MINNESOTA AND MANITOBA RAILROAD COMPANY, BUT IN FACT ARE OWNED OR CONTROLLED BY THE CANADIAN NATIONAL RAILWAYS. LIKEWISE, THE CANADIAN NATIONAL RAILWAYS OWNS AND CONTROLS THE DULUTH, WINNIPEG AND PACIFIC RAILWAY COMPANY, AND MINNESOTA AND MANITOBA RAILROAD COMPANY, BUT THE OPERATIONS OF THE SUBSIDIARIES ARE ENTIRELY INDEPENDENT AND THE SLEEPING CAR ARRANGEMENTS BETWEEN PARENT AND SUBSIDIARIES ARE UNDER CONTRACTUAL ARRANGEMENTS WHICH DO NOT CONTEMPLATE THE CONTROL OF THE SLEEPING CARS BY THE DULUTH, WINNIPEG AND PACIFIC RAILWAY COMPANY OR MINNESOTA AND MANITOBA RAILROAD COMPANY. THAT OPERATION IS NO DIFFERENT THAN IS THE USUAL ARRANGEMENT WITH THE PULLMAN COMPANY.

HERETOFORE, AS SHOWN BY THE ATTACHED STATEMENT (INCLOSURE NO. 2), BEGINNING IN DECEMBER 1932, AND IN SIX INSTANCES, THE DULUTH, WINNIPEG AND PACIFIC RAILWAY COMPANY HAS RECEIVED NOTICE OF DEDUCTIONS THROUGH THE OFFICE OF THE SECOND ASSISTANT POSTMASTER GENERAL, AND IN ONE INSTANCE THE MINNESOTA AND MANITOBA RAILROAD (CANADIAN NATIONAL RAILWAY COMPANY) RECEIVED NOTICE OF DEDUCTION (ALTHOUGH EACH OF THE SEVEN DEDUCTIONS INVOLVES THE THREE CORPORATE PROPERTIES) FROM THE MAIL PAY EARNED BY SAID COMPANY, THE DEDUCTIONS ALL BEING GENERALLY THE SAME AS SHOWN ON ENCLOSURE NO. 3, WHICH IS A COPY OF THE DEDUCTION MADE IN DECEMBER 1932, FROM MAIL PAY EARNED ON MINNESOTA AND MANITOBA RAILROAD COMPANY MAIL ROUTE NO. 110721, REQUIRING, IN THAT CASE, MR. HUGH W. FLEMING, POST OFFICE INSPECTOR, TO PAY $3.00 FOR ACCOMMODATIONS IN A SLEEPING CAR OWNED AND OPERATED BY THAT COMPANY FROM BAUDETTE TO DULUTH, MINN., THE DEDUCTION IN RAILWAY MAIL PAY BEING $3.00.

BASIS OF CLAIM--- RESTORATION OF DEDUCTIONS HERETOFORE MADE.--- IT IS THE CONTENTION OF MY CLIENTS THAT SINCE THE SLEEPING CARS IN QUESTION ARE NOT OWNED BY THE DULUTH, WINNIPEG AND PACIFIC RAILWAY COMPANY, NOR THE MINNESOTA AND MANITOBA RAILROAD COMPANY, BUT RATHER BY THE CANADIAN NATIONAL RAILWAYS, THE DECISIONS OF THE COMPTROLLER GENERAL, DATED JUNE 1 AND AUGUST 25, 1928, REQUIRING CARRIERS WHO OWN AND OPERATE SLEEPING CARS TO FURNISH SLEEPING CAR FACILITIES FOR POST OFFICE INSPECTORS ARE NOT APPLICABLE IN THESE CASES, AND THE FULL SLEEPING CAR CHARGE DEDUCTIONS TOTAL $17.00 BAUDETTE-DULUTH OR WAR ROAD DULUTH, AS THE CASE MAY BE, AND SHOULD BE RESTORED TO THE DULUTH, WINNIPEG AND PACIFIC RAILWAY COMPANY, MAIL ROUTE NO. 110726, OR MINNESOTA AND MANITOBA MAIL ROUTE NO. 110721, WHICHEVER ROUTE SUFFERED THE DEDUCTION.

THE MINIMUM SLEEPING CAR FARE BETWEEN RANIER AND BAUDETTE IS THE SAME IN EACH INSTANCE AS THE AMOUNT DEDUCTED. ASIDE FROM THE RIGHT TO HAVE THE DEDUCTIONS CANCELLED, BECAUSE OF LACK OF OWNERSHIP OR CONTROL OF CORPORATE PROPERTIES INVOLVED IN THE SLEEPING CARS, THESE CARRIERS CANNOT BE BY UNITED STATES LAW COMPELLED TO PERFORM ANY SERVICES IN CONNECTION WITH THE HANDLING OF MAIL WHILE MOVING THROUGH CANADA, INDEED, THAT PORTION OF THE PARTICULAR HAUL BETWEEN INTERNATIONAL BOUNDARY BETWEEN UNITED STATES AND CANADA ).2 MILES NORTH OF RANIER) AND INTERNATIONAL BOUNDARY, A SHORT DISTANCE WEST OF RAINY RIVER RAILWAY STATION, THE MAIL PAY DISTANCE BEING 59 MILES, IS ACCOMPLISHED, AS STATED BY THE CANADIAN NATIONAL RAILWAY COMPANY, AND THE MAIL CARRIAGE IS UNDER THE DIRECTION OF THE GOVERNMENT OFFICIALS OF CANADA.

IN ADDITION, THERE IS ASSERTED THE CLAIM OF THE DULUTH, WINNIPEG AND PACIFIC RAILWAY COMPANY AND THE MINNESOTA AND MANITOBA RAILROAD COMPANY, TO HAVE PAID THE NORMAL PASSENGER FARE CHARGE BETWEEN RANIER AND BAUDETTE, ALL OF WHICH IS OVER THE CANADIAN NATIONAL RAILS, AND ALL WITHIN CANADA, WHICH THE TWO SUBSIDIARY COMPANIES INVOLVED ARE OBLIGATED TO COLLECT, AND FOR WHICH THEY ARE OBLIGATED TO ACCOUNT TO THE CONNECTING LINE, THE CANADIAN NATIONAL RAILWAYS. THE SEVEN ITEMS IN QUESTION ARE ALSO SHOWN ON THE ATTACHED SCHEDULE, COLUMN 6, TOTALING $14.15.

THE ACT OF JULY 28, 1916, 39 STAT. 419, PROVIDES:

* * * EVERY RAILROAD COMPANY CARRYING THE MAILS SHALL CARRY ON ANY TRAIN IT OPERATES AND WITHOUT EXTRA CHARGE THEREFOR THE PERSONS IN CHARGE OF THE MAILS AND WHEN ON DUTY AND TRAVELING TO AND FROM DUTY, AND ALL DULY ACCREDITED AGENTS AND OFFICERS OF THE POST OFFICE DEPARTMENT AND THE RAILWAY MAIL SERVICE AND POST-OFFICE INSPECTORS WHILE TRAVELING ON OFFICIAL BUSINESS, UPON THE EXHIBITION OF THEIR CREDENTIALS, * * *

IN 8 COMP. GEN. 93, IT WAS HELD, QUOTING FROM THE SYLLABUS:

UNDER THE ACT OF JULY 28, 1916, 39 STAT. 419, RAILROADS ENGAGED IN CARRYING THE MAILS ARE REQUIRED TO TRANSPORT WITHOUT CHARGE ANY POST OFFICE INSPECTOR TRAVELING ON OFFICIAL BUSINESS, AND WHERE A CARRIER OWNS AND OPERATES SLEEPING-CAR ACCOMMODATIONS, AS DISTINGUISHED FROM PULLMAN- CAR EQUIPMENT, IT IS NOT ENTITLED TO PAYMENT FOR SUCH SLEEPING CAR ACCOMMODATIONS FURNISHED AN INSPECTOR TRAVELING ON OFFICIAL BUSINESS.

YOUR LETTER ACKNOWLEDGES THAT THE CANADIAN NATIONAL RAILWAYS OWNS AND CONTROLS THE DULUTH, WINNIPEG AND PACIFIC RAILWAY CO., THE MINNESOTA AND MANITOBA RAILROAD CO., AND LIKEWISE OWNS THE SLEEPING CARS USED ON SAID ROADS. IT IS A WELL ESTABLISHED LEGAL PRINCIPLE THAT WHERE A CORPORATION IS SO ORGANIZED AND CONTROLLED AND ITS AFFAIRS ARE SO CONDUCTED AS TO MAKE IT MERELY AN INSTRUMENTALITY OR ADJUNCT OF ANOTHER CORPORATION, THE TWO MAY BE TREATED AS ONE IN DISREGARD OF FICTIONAL LEGAL DISTINCTIONS. SEE WATERTOWN PAPER COMPANY, 169 FED. 252; HUNTER V. BAKER MOTOR VEHICLE COMPANY, 225 FED. 1006; 5 COMP. GEN. 448; 8 ID. 484; 13 ID. 453; 34 OP.ATTY.GEN. 353. ACCORDINGLY, IT MUST BE HELD THAT THE DEDUCTIONS MADE FROM THE MAIL PAY ACCRUING EITHER TO YOUR COMPANY OR TO THE TWO SUBSIDIARY COMPANIES ABOVE NAMED FOR SLEEPING CAR OR OTHER ACCOMMODATIONS FURNISHED POSTAL EMPLOYEES ON OFFICIAL DUTY AND FOR WHICH THE EMPLOYEES WERE REQUIRED TO MAKE PAYMENT, WAS PROPER. LIKEWISE, CLAIMS OF THE TWO SUBSIDIARY COMPANIES, ASSERTED BY YOU, FOR THE NORMAL PASSENGER FARE FOR SUCH EMPLOYEES COVERING THE PORTION OF THE JOURNEY WITHIN CANADA ARE DISALLOWED.