B-149704, OCT. 31, 1962

TO THE POSTMASTER GENERAL:

REFERENCE IS MADE TO YOUR LETTER OF AUGUST 13, 1962, FILE 800, REQUESTING ADVICE AS TO WHETHER, IN THE CIRCUMSTANCES SET FORTH CLAIMS TOTALING APPROXIMATELY $87,000 SUBMITTED BY THE CENTRAL STATES MAIL.

THE CENTRAL VERMONT RAILWAY'S CLAIM FOR THE TRANSPORTATION OF MAIL AND RELATED SERVICES PERFORMED BY IT AND/OR PERFORMED OVER TRACKAGE OWNED BY IT COVERING THE PERIOD OCTOBER 1, 1953, THROUGH SEPTEMBER 30, 1958, WAS SUBMITTED BY A LETTER DATED DECEMBER 22, 1958, TO THE BOSTON REGIONAL OFFICE OF YOUR DEPARTMENT SUPPORTING DOCUMENTS, COPIES OF WHICH WERE FORWARDED WITH YOUR LETTER. YOUR LETTER EXPLAINS THAT YOU WILL DENY THE MAJOR PORTION OF THE AMOUNT CLAIMED BUT, WITH OUR APPROVAL, THAT YOU PROPOSE TO THE CENTRAL VERMONT WILL RELEASE THE DEPARTMENT FROM ANY AND ALL CLAIMS FOR ADDITIONAL COMPENSATION FOR THE TRANSPORTATION OF MAIL IN QUESTION. YOU REQUEST OUR VIEWS BECAUSE OF THE POSSIBILITY THE PROVISIONS OF 39 U.S.C., SUPP. III, 6206 (CITED AS 6205 IN YOUR RAILROAD PERFORMING IT REGARDLESS OF THE OWNERSHIP OF THE PROPERTY USED BY RAILROAD" MAY OPERATE TO BAR THE SETTLEMENT CONTEMPLATED.

THE CLAIM WHICH IS EXPLAINED IN DETAIL IN YOUR LETTER, STEMS FROM THE FACT THAT THE MAIL WAS CARRIED OVER A ROUTE LARGELY OPERATED BY THE BOSTON AND MAINE RAILROAD, BUT WHICH INCLUDED TERMINAL HANDLING OF STORAGE MAIL INTERCHANGED BETWEEN THE BOSTON AND MAINE RAILROAD AND THE CENTRAL VERMONT RAILWAY AT WHITE RIVER JUNCTION, VERMONT, AND TRANSPORTATION AND HANDLING OF MAIL BY THE CENTRAL VERMONT AND ITS OWN LINE FROM WHITE RIVER JUNCTION TO WINDSOR, VERMONT (14.8 MILES), UNDER POST OFFICE AUTHORIZATIONS ISSUED TO THE BOSTON AND MAINE AT RATES LESS THAN THOSE AUTHORIZED BY THE RAILROADS DURING THE PERIOD INVOLVED GENERALLY, WAS PRESCRIBED BY AND IN ACCORDANCE WITH THE ACT OF JULY 28, 1916, 39 STAT. 412, 429. SEE PROVIDED:

"THE INTERSTATE COMMERCE COMMISSION IS EMPOWERED AND DIRECTED TO FIX AND DETERMINE FROM TIME TO TIME THE FAIR AND MAIL MATTER BY RAILWAY COMMON CARRIERS AND THE SERVICE CONNECTED OR SPACE, OR BOTH, OR OTHERWISE, FOR ASCERTAINING SUCH RATE OR PUBLISHED SHALL CONTINUE IN FORCE UNTIL CHANGED BY THE COMMISSION OF THE MAILS WHERE IN HIS JUDGMENT CONDITIONS WARRANT THE APPLICATION OF HIGHER RATES THAN THOSE SPECIFIED BY LAW OR FIXED BY THE INTERSTATE COMMERCE COMMISSION. HOWEVER, THE FIRST PROVISO OF 49 U.S.C. 65 (A) PERMITS ANY CARRIER BY RAILROAD AND THE UNITED STATES TO ENTER LESS THAN THE RATES FIXED BY THE INTERSTATE COMMERCE COMMISSION. THE GENERAL AND PERMANENT LAWS RELATING TO THE POST OFFICE DEPARTMENT WERE REVISED, CODIFIED AND ENACTED INTO LAW BY THE ACT OF SEPTEMBER 2, 1960, 74 STAT. 578, AND THE AUTHORITY FORMERLY CONTAINED IN 39 U.S.C. 565 AND 49 U.S.C. 65 (A) IS INCLUDED, BUT REPHRASED IN THE RECODIFICATION IN 39 U.S.C., SUPP. III, 6215.

ORDINARILY, WHEN RAIL TRANSPORTATION SERVICES ARE RENDERED BY A CARRIER OVER A ROUTE WHICH INCLUDED A SECTION OF TRACK OWNED BY ANOTHER RAILROAD COMPANY, THE CARRIER PERFORMING THE SERVICE MERELY COMPENSATES THE OTHER COMPANY FOR THE USE OF ITS TRACK. HOWEVER, SECTION 16 OF THE JOINT SECTION AGREEMENT OF JANUARY 1, 1930, BETWEEN THE BOSTON AND MAINE AND CENTRAL VERMONT PROVIDES THAT, WHILE TRAINS OPERATE OVER THE WHITE RIVER JUNCTION TO AND OTHER PERSONS AND THE OTHER TRAFFIC THEREON, AND THE CREWS OPERATING IT, SHALL BE DEEMED THE TRAIN, THE EQUIPMENT, THE PASSENGERS, THE PASSENGER TRAFFIC, AND THE SOLE EMPLOYEES OF THE CENTRAL VERMONT UNTIL THE TRAIN MAKES THE STATION STOP AND FINISHES DISCHARGING PASSENGERS AND OTHER TRAFFIC AT WINDSOR.' THUS, IT APPEARS THAT THE MAIL SERVICE OVER ROUTES NOS. 012171 AND 012172 INVOLVING THE SEGMENT IN QUESTION WAS RENDERED BY TWO RAILROADS.

THE CENTRAL VERMONT TAKES THE POSITION THAT IT WAS ENTITLED TO THE INTERSTATE COMMERCE COMMISSION LEVEL OF COMPENSATION DURING THE PERIOD INVOLVED; AND THAT ITS RIGHT TO THAT LEVEL COULD NOT BE AFFECTED BY CONTRACTS BETWEEN THE BOSTON AND MAINE AND YOUR DEPARTMENT TO WHICH IT WAS NOT A PARTY, AS THE RESULT OF WHICH THE BOSTON AND MAINE PAID THE CENTRAL VERMONT FOR THE LATTER'S SERVICE AT A LOWER LEVEL OF COMPENSATION THAN THE PRESCRIBED INTERSTATE COMMERCE COMMISSION LEVEL.

THAT PORTION OF THE CENTRAL VERMONT'S CLAIM WHICH COVERS THE PERIOD FROM OCTOBER 1, 1953, THROUGH MARCH 31, 1954, IS BASED UPON ORDERS OF THE INTERSTATE COMMERCE COMMISSION REGARDING RATES OF PAY AND COMPENSATION FOR MAIL SERVICE WHICH WERE RETROACTIVE AS TO THE CENTRAL VERMONT BUT NOT THE BOSTON AND MAINE. SEE RAILWAY MAIL PAY, 291 I.C.C. 170 AND RAILWAY MAIL PAY, 304 I.C.C. 135. YOU TAKE THE POSITION WITH RESPECT TO THIS PERIOD AND THE PERIOD FROM APRIL 1, 1954, TO MARCH 31, 1958, THAT THE CENTRAL VERMONT HAS ACQUIESCED IN THE ARRANGEMENTS UNDER WHICH YOUR DEPARTMENT WAS TO AUTHORIZE OR REQUEST SERVICE IN THE NAME OF AND MAKE PAYMENTS TO THE BOSTON AND MAINE, WITH APPROPRIATE ADJUSTMENTS TO BE MADE BETWEEN THE TWO RAILROADS, FOR THEIR RESPECTIVE INTERESTS. THEREFORE, YOUR CENTRAL VERMONT'S CLAIM THROUGH MARCH 31, 1958, AND YOU STATE THAT YOUR DEPARTMENT'S POSITION IS BOLSTERED BY THE FACT THAT AS LATE AS COMPENSATION REFLECTING THE LEVEL OF PAYMENT FIXED BY THE INTERSTATE COMMERCE COMMISSION FOR THAT PART OF THE MAIL TRANSPORTATION SERVICE PERFORMED OVER THE CENTRAL VERMONT'S LINES. INCREASED THE COMPENSATION TO BE PAID THAT CARRIER FOR THE PERIODS APRIL 1 THROUGH JUNE 30, 1958, AND JULY 1 THROUGH SEPTEMBER 30, 1958. YOU STATE THAT BY A JOINT LETTER DATED MARCH 12, 1958, THE TWO RAIL CARRIERS COMMUNICATED A CLEAR DEMAND THAT THE CENTRAL VERMONT BE COMPENSATED FOR ITS SERVICE AT THE APPLICABLE INTERSTATE COMMERCE COMMISSION LEVEL AND THAT THIS INCLUDED THE RESERVATION THAT ANY NEW CONTRACT WITH THE BOSTON AND MAINE WOULD NOT PREJUDICE THE CENTRAL VERMONT'S INTEREST IN THE EASTERN RAILWAY MAIL PAY PROCEEDINGS THEN PENDING. RAILWAY MAIL PAY, 304 I.C.C. 135. THAT PROCEEDING HAD BEEN INITIATED BY EASTERN APPLICANTS, INCLUDING BOTH OF THESE CARRIERS; HOWEVER, THE BOSTON AND MAINE LATER WITHDREW AS AN APPLICANT AS A RESULT OF ARRANGEMENTS REACHED WITH YOUR DEPARTMENT WHICH INCREASED ITS 1951 INTERSTATE COMMERCE COMMISSION LEVEL BY 7 1/2 PERCENT EFFECTIVE NOVEMBER 1, 1957. YOU EXPLAIN THAT IN THE COURSE OF THE NEGOTIATIONS BETWEEN REPRESENTATIVES OF YOUR DEPARTMENT AND THE TWO RAILROADS THERE WAS A SPECIFIC UNDERSTANDING THAT THE MAINE WOULD INCLUDE AN ADDITIONAL AMOUNT TO PAY AN INCREMENT FOR THE CENTRAL VERMONT'S SERVICE REPRESENTING THE DIFFERENCE BETWEEN CURRENT INTERSTATE COMMERCE COMMISSION RATES APPLICABLE TO THE MAINE FOR SUCH SERVICE. HOWEVER, YOU HAVE NOW DETERMINED THAT, WHEN THE SPECIAL CONTRACT WAS FINALIZED ON MARCH 23, 1959, IT FELL $4,263.07 SHORT OF ITS INTENDED PURPOSE TO AUTHORIZE CURRENT INTERSTATE COMMERCE COMMISSION RATES FOR THE CENTRAL VERMONT. SINCE THE TWO RAILROADS ACTUALLY PERFORMED THE SERVICE COVERED BY THE CONTRACT AND SINCE THE CENTRAL VERMONT WAS A PARTY TO THE NEGOTIATIONS LEADING UP TO THE FORMALIZATION OF THE AGREEMENT, WE WOULD INTERPOSE NO OBJECTION TO A SETTLEMENT BY YOUR DEPARTMENT WITH THE CENTRAL VERMONT WHICH WOULD CARRY OUT THE INTENTION OF THE PARTIES NEGOTIATING THE CONTRACT. IT SEEMS CLEAR THAT THE RETROACTIVE PROVISIONS OF THE FORMAL CONTRACT APPLY TO SERVICE THE RAILROADS WERE REQUIRED BY LAW TO RENDER AT YOUR REQUEST. SEE 39 U.S.C., 1952 ED., 563, WHICH PROVIDED:

"IT SHALL BE UNLAWFUL FOR ANY RAILROAD COMPANY TO REFUSE TO PERFORM MAIL SERVICE AT THE RATES OR METHODS OF COMPENSATION PROVIDED BY LAW WHEN REQUIRED BY THE POSTMASTER GENERAL SO TO DO, AND FOR SUCH OFFENSE SHALL BE FINED $1,000. EACH DAY OF REFUSAL SHALL CONSTITUTE A SEPARATE OFFENSE.'

ALSO, SEE 39 U.S.C. SUPP. III 6207. SINCE THE SPECIAL CONTRACT WITH THE BOSTON AND MAINE EXECUTED ON MARCH 29, 1959, DID NOT EXIST DURING THE PERIOD APRIL 1 TO SEPTEMBER 30, 1958, WHEN SERVICES WERE RENDERED BY THE CENTRAL VERMONT THE ONLY RATE OF COMPENSATION RATE CLEARLY CONTEMPLATED THROUGHOUT THE NEGOTIATIONS WITH THE CARRIERS--- AND THE SPECIAL CONTRACT WITH THE BOSTON AND MAINE SUBSEQUENTLY EXECUTED, CONSEQUENTLY, FIXED AN ERRONEOUS RATE INSOFAR AS THE CENTRAL VERMONT'S SERVICES WERE CONCERNED. ACCORDINGLY, WE FIND NO OBJECTION TO YOUR DEPARTMENT'S PROPOSAL TO PAY THE CENTRAL VERMONT AN AMOUNT SUFFICIENT TO COMPENSATE IT AT THE INTERSTATE COMMERCE COMMISSION LEVEL OF RATES FOR SERVICES RENDERED DURING THE PERIOD APRIL 1 TO SEPTEMBER 30, 1958, AS CONTEMPLATED BY ALL PARTIES DURING THE NEGOTIATIONS, WHICH WAS NOT COVERED BY THE SPECIAL PARTY TO THE NEGOTIATIONS AND THE SERVICES WERE PERFORMED BY IT, WE PERCEIVE NOTHING IN 39 U.S.C. SUPP. III 6206 WHICH WOULD OPERATE AS A BAR TO SUCH A PAYMENT. PROPOSED SETTLEMENT WITH THE CENTRAL VERMONT IS TO OBTAIN A RELEASE FROM THAT CARRIER FOR ITS POTENTIAL CLAIM AGAINST THE GOVERNMENT IN THE AMOUNT OF APPROXIMATELY $87,000, AND HAVE IT SEEK ANY REMAINING OR ADDITIONAL RELIEF OR DAMAGES FROM THE BOSTON AND MAINE, IT IS SUGGESTED THAT YOUR PAYMENT BE MADE IN EXCHANGE FOR ITS COVENANT NOT TO SUE THE GOVERNMENT FOR THE TRANSPORTATION AND HANDLING OF THE UNITED STATES MAIL IN QUESTION FOR THE PERIOD OCTOBER 1, 1953, THROUGH SEPTEMBER 30, 1958. SEE 45 .JUR., RELEASE, SEC. 4; 76 C.J.S. RELEASE SEC. 3; 2 WILLISTON ON CONTRACTS SEC. 338.