UNITED STATES SHIP. BOARD EF CORP. v. Western Union Tel. Co.

• Decision Date: 01 June 1926
• Docket Number: No. 4322.,4322.
• Parties: UNITED STATES SHIPPING BOARD EMERGENCY FLEET CORPORATION v. WESTERN UNION TELEGRAPH CO.
• Court: U.S. Court of Appeals — District of Columbia Circuit

13 F.2d 308 (1926)

UNITED STATES SHIPPING BOARD EMERGENCY FLEET CORPORATION v. WESTERN UNION TELEGRAPH CO.

No. 4322.

Court of Appeals of District of Columbia.

Submitted February 9, 1926.

Decided June 1, 1926.

E. M. Allison, Jr., and Geoffrey Goldsmith, both of Washington, D. C., for appellant.

P. E. Lesh, of Washington, D. C., for appellee.

Before MARTIN, Chief Justice, and ROBB and VAN ORSDEL, Associate Justices.

VAN ORSDEL, Associate Justice.

The Western Union Telegraph Company, plaintiff below, sued the United States Shipping Board Emergency Fleet Corporation for the sum of $1,407.59, with interest, being the unpaid difference between the government rate and the commercial rate on messages transmitted by the telegraph company for the Fleet Corporation during the months of June and July, 1922. From a judgment in favor of the plaintiff, the defendant Shipping Board has appealed.

The case turns upon the construction of section 5266, Rev. Stat. U. S. (Comp. St. § 10075), as follows: "Telegrams between the several departments of the government and their officers and agents, in their transmission over the lines of any telegraph company to which has been given the right of way, timber, or station lands from the public domain shall have priority over all other business, at such rates as the Postmaster General shall annually fix. And no part of any appropriation for the several departments of the government shall be paid to any company which neglects or refuses to transmit such telegrams in accordance with the provisions of this section."

There is no controversy as to the service having been rendered and paid for by the Shipping Board at the government rate. This suit is to recover the difference between the government rate and the commercial rate; hence the issue narrows itself to whether or not the Shipping Board is such an agency of a department of the government as will bring it within the provisions of the above statute. From an agreement entered into between the Shipping Board and the telegraph company, the present case seems to be a test one. It was stipulated, among other things, "that both parties will expedite to a final determination by the Supreme Court of the United States a proposed suit (the present suit) by the telegraph company, to be brought in the Supreme Court of the District of Columbia against the Fleet Corporation, claiming compensation at the commercial rate for transmitting certain messages from and to the Fleet Corporation, billed at Washington during the months of June and July, 1922."

It was also stipulated that, pending the present suit, the telegraph company should render its bills showing the amount charged at the commercial rate and also the amount charged at the prevailing government rate; that the Fleet Corporation should promptly audit the bills, both at commercial and government rates, and when found correct pay the same at the government rate; that, pending the final determination of this suit, the payment of the bills at the government rate and the receipt thereof by the telegraph company shall be without prejudice to the claim of the telegraph company for the balances which would be due it at the commercial rate.

The Fleet Corporation was incorporated by the United States Shipping Board under the provisions of the Act of Congress of September 7, 1916, 39 Stat. 728 (Comp. St. § 8146a et seq.), with a capital stock of $50,000,000, of which the board, on behalf of the United States, might subscribe to and vote not less than a majority of the stock. All of the stock was thus subscribed by the Shipping Board. The act further provided that "the board, with the approval of the President, may sell any or all of the stock of the United States in such corporation, but at no time shall it be a minority stockholder therein." Section 11 (Comp. St. § 8146f).

The object of the corporation, as stated in its certificate, is "the purchase, construction, equipment, lease, charter, maintenance, and operation of merchant vessels in the commerce of the United States, and in general to do and to perform every lawful act and thing necessary or expedient to be done or performed for the efficient and profitable conducting of said business as authorized by the laws of Congress, and to have and to exercise all the powers conferred by the laws of the District of Columbia upon corporations under said subchapter four (4), of the incorporation laws of the District of Columbia."

Following the declaration of war, Congress passed the Act of June 15, 1917, 40 Stat. 182, granting the President sweeping control over the expenditure of the "emergency shipping fund." Among other things, the act provided: "That all money turned over to the United States Shipping Board Emergency Fleet Corporation may be expended as other moneys of said corporation are now expended. All ships constructed, purchased, or requisitioned under authority herein, or heretofore or hereafter acquired by the United States, shall be managed, operated, and disposed of as the President may direct." Section 1 (Comp. St. 1918, Comp. St. Ann. Supp. 1919, § 31151/16d).

The fact that, following the passage of this act, the Fleet Corporation was used by the President to assist him in carrying out certain of the war powers imposed upon him by Congress, in no way changed it from the status of a private corporation, or relieved it from its obligations as such. In United States v. Strang, 254 U. S. 491, 41 S. Ct. 165, 65 L. Ed. 368, the court, answering the contention that the Fleet Corporation is a mere agency or instrumentality of the United States for executing certain limited governmental powers delegated to it by the President, and therefore not liable to suit, said: "The corporation was controlled and managed by its own officers, and appointed its own servants and agents, who became directly...