Butte Ry Co v. United States

Decision Date20 November 1933
Docket NumberNo. 8,8
CourtU.S. Supreme Court

Mr. Daniel M. Kelly, of Butte, Mont., for petitioner.

[Argument of Counsel from pages 128-130 intentionally omitted] The Attorney General and Mr. Harold M. Stephens, Asst. Atty. Gen., for the United States.

[Argument of Counsel from pages 130-132 intentionally omitted] Mr. Justice BRANDEIS delivered the opinion of the Court.

This action was brought by the United States, on August 23, 1929, in the federal court for Montana to recover the sum of $487,116.31 paid to Butte, Anaconda & Pacific Railway Company, on March 26, 1925. The payment was made pursuant to a certificate of the Interstate Commerce Commission for that amount, issued March 20, 1925, and addressed to the Secretary of the Treasury. Deficit Settlement with Butte, Anaconda & Pacific Ry., 94 I.C.C. 617. The Secretary, after receiving from the Comptroller General his certificate approving the payment, issued a warrant for that sum and transmitted it to the Treasurer of the United States. The Treasurer paid the railway.

The proceeding before the Commission originated in a claim for $600,527.35 filed with it by the railway under section 204 of Transportation Act 1920, 41 Stat. 460 (49 USCA § 73) entitled 'Reimbursement of deficits during Federal control.'1 Upon due hearing, the Commission concluded that the railway was entitled to $487,116.31; and it offered to issue a certificate for that amount on condition that the railway sign a release accepting the amount 'in settlement of all claims against the Government under said section 204.' This condition was agreed to. About two years after the money received had been disbursed by the railway, partly in dividends to stockholders, partly in the expenses of operation, the Commission issued an order purporting to reopen the proceeding; and set a hearing 'for the purpose of affording the Railway opportunity to show cause why the certificate issued on March 20, 1925, should not be revoked and its claim dismissed.' The railway, appearing specially, protested against the action of the Commission in attempting to reopen the proceeding; and challenged its power to do so. On March 7, 1927, the Commission entered an order purporting to cancel the certificate of March 20, 1925, and to dismiss the railway's claim. Deficit Settlement with Butte, Anaconda & Pacific Railway, 117 I.C.C. 780. On June 8, 1928, the Under-Secretary of the Treasury demanded of the railway repayment of the $487,116.31 received by it. Repayment was refused. Fourteen months later, this action was begun to recover the money.

The case was first heard upon defendant's demurrer to the complaint. That demurrer was overruled. The defendant set up by answer the terms on which the payment had been made and the disposition of the money received. Then the case was heard upon the plaintiff's demurrer to the answer; that demurrer was sustained; and judgment for the government was entered in the sum of $487,116.31, with interest at 8 per cent. from the date of the demand and costs. The Circuit Court of Appeals affirmed the judgment. 61 F.(2d) 587. This Court granted certiorari, 289 U.S. 717, 53 S.Ct. 656, 77 L.Ed. 1470.

The action is brought to recover money paid by mistake. The charge is that the money was paid, because, in 1925, the officials misconstrued the word 'deficit,' so as improperly to extend the scope of section 204. That is a charge, not of mistake, but of error of judgment—a judgment necessarily exercised in the performance of the duties of office. Neither the Commission in issuing the certificate, nor the Secretary of the Treasury, the Comptroller General, or the Treasurer, when co-operating to make the payment, labored under any mistake of fact; or overlooked any applicable rule of law; or was guilty of any irregularity in proceeding. Moreover, if the word 'deficit' was misconstrued, the error was not due to inadvertence. Ever since the enactment of Transportation Act 1920, it had been recognized that the construction to be given the word 'deficit' presented a difficult and important question. In 1920, before hearing those interested, the Commission attributed to the word the meaning now contended for by the government. Protests against its then interpretation led the Commission to set, in 1921, a public hearing for the consideration solely of that question.2 Counsel for many railroads participated and submitted briefs. On February 7, 1922, the Commission stated its conclusion in an elaborate report. In the matter of the construction of the word 'deficit' as used in Paragraph (a) of section 204 of the Transportation Act, 1920, 66 I.C.C. 765. The rule there announced was consistently acted upon for over two years and a half. Under it, the Commission issued certificates to 71 carriers, including that here attacked. 3 Then there was a change in the membership of the Commission. On October 17, 1925, it overruled, in Deficit Status of Bingham & Garfield Railway Co., 99 I.C.C. 724, its earlier decision; and in March, 1927, instituted against Butte, Anaconda & Pacific Railway Company the proceeding to revoke the certificate on which payment had already been made.4 Obviously, 'mistake * * * there was none, but merely a revision of judgment in respect of matters of opinion.' United States v. Great Northern Railway, 287 U.S. 144, 151, 53 S.Ct. 28, 30, 77 L.Ed. 223.

The United States claims that the money can be recovered because it was a disbursement made without the authority of Congress. The argument is that the Commission had no authority to issue a certificate, and the financial officers of the government had no authority to pay money, except to a carrier which had suffered a 'deficit' in operations during the period of federal control; that, properly construing that word, the railway had not suffered a 'deficit'; and that, having received the money which the officials were not authorized to pay, the railway must restore it, since in dealings with the government one is bound, at his peril, to know the limits of the authority of its agents. We have no occasion to determine which of the Commission's interpretations of the word 'deficit' is the correct one. For we are of opinion that the government cannot recover the money paid in 1925, even if the Commission erred in attributing to the word 'deficit' the meaning then acted on.

The decision was on the merits. The case is no different than it would have been, if the Commission had erred in any other ruling on a matter of law; or in a finding strictly of fact; or in some finding as to maintenance, depreciation, or value determinations called findings of fact but which rest largely in opinion. In making those decisions the Commission would necessarily act in a quasi judicial capacity. If it misconstrued the term 'deficit,' it committed an error; but it did not transcend its jurisdiction. Since Congress has not provided a method of review, neither the Commission nor a court has power to correct the alleged error after payment made pursuant to a certificate. The government cannot recover, because, when Congress, by section 204, imposed the duty to certify to the Treasury the amounts severally due to carriers, it required the Commission—and hence authorized it—to determine whether the claimant was entitled to relief.

In making its determinations the Commission was required to decide many things besides the meaning of the term 'deficit' or the amount thereof, if any. To appreciate the broad scope of the Commission's duty, we must consider the occasion and the character of the legislation and the precise question of construction here involved. On December 28, 1917, the President took possession and assumed control of all the railroads in the United States. By the Federal Control Act, March 21, 1918, 40 Stat. 451, Congress provided for compensation equal to the 'average annual railway operating income for the three years ended' June 30, 1917, called the 'test period.'5 Later the Director General surrendered the possession and control of many short lines. Their owners operated them thereafter privately during some part of the period of federal control. These owners claimed that such private operation had resulted in heavy losses attributable to the continued federal control of the main transportation systems of the country. They urged upon Congress that the surrendered short lines ought to be put into as good a position financially as they would have been in, if the Director General had retained possession of them throughout the period of federal control. Recognizing that they had suffered, Congress included in Transportation Act 1920 the provision for compensation contained in section 204. Paragraph (a) describes the carriers entitled to compensation:

'The term 'carrier' means a carrier by railroad which, during any part of the period of Federal control, engaged as a common carrier in general transportation, and competed for traffic, or connected, with a railroad under Federal control, and which sustained a deficit in its railway operating income for that portion (as a whole) of the period of Federal control during which it operated its own railroad or system of transportation; but does not include any street or interurban electric railway which has as its principal source of operating revenue urban, suburban, or interurban passenger traffic or sale of power, heat, and light, or both.'

Paragraphs (c), (d), and (e) direct the Commission to ascertain the data from which the amount of deficits or losses are to be calculated; paragraph (f) fixes the amounts payable; and paragraph (g) provides:

'The commission shall promptly certify to the Secretary of the Treasury the several amounts payable to car- riers under paragraph (f). The Secretary of the Treasury is authorized and directed thereupon to draw warrants in favor of each such carrier upon the Treasury of...

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