United States v. Great Northern Ry. Co.

• Citation: 57 F.2d 385
• Decision Date: 15 March 1932
• Docket Number: No. 9334.,9334.
• Parties: UNITED STATES v. GREAT NORTHERN RY. CO.
• Court: United States Courts of Appeals. United States Court of Appeals (8th Circuit)

57 F.2d 385 (1932)

UNITED STATES v. GREAT NORTHERN RY. CO.

No. 9334.

Circuit Court of Appeals, Eighth Circuit.

March 15, 1932.

Elmer B. Collins, Sp. Asst. to Atty. Gen. (Lewis L. Drill, U. S. Atty., of St. Paul, Minn., and John Lord O'Brian, Asst. to Atty. Gen., on the brief), for the United States.

F. G. Dorety, of St. Paul, Minn. (R. E. L. Smith, of Washington, D. C., and R. J. Hagman, of St. Paul, Minn., on the brief), for appellee.

Before KENYON, VAN VALKENBURGH, and GARDNER, Circuit Judges.

VAN VALKENBURGH, Circuit Judge.

The Great Northern Railway Company, a corporation of the state of Minnesota, is a carrier as defined in section 209 of the Transportation Act of 1920 (49 USCA § 77), in that it is a carrier whose railroad, or system of transportation, was under federal control at the time such control terminated at 12:01 a. m. on March 1, 1920. Said section 209 fixed the six months' period, beginning March 1, 1920, as a so-called guaranty period during which the railway operating income of a common carrier, with which the Director General of Railroads had made a contract fixing the amount of just compensation to such carrier under the Federal Control Act (40 Stat. 451) should not be less than one-half the amount named in such contract as the annual compensation of such carrier for the period of federal control. Under this provision the guaranteed income of appellee for the six months' guaranty period was $14,306,522.65. Paragraphs (g) and (h) of said section 209 provide thus:

"(g) The Commission shall, as soon as practicable after the expiration of the guaranty period, ascertain and certify to the Secretary of the Treasury the several amounts necessary to make good the foregoing guaranty to each carrier. The Secretary of the Treasury is hereby authorized and directed thereupon to draw warrants in favor of each such carrier upon the Treasury of the United States, for the amount shown in such certificate as necessary to make good such guaranty. * * *

"(h) Upon application of any carrier to the Commission, asking that during the guaranty period there may be advanced to it from time to time such sums, not in excess of the estimated amount necessary to make good the guaranty, as are necessary to enable it to meet its fixed charges and operating expenses, the Commission may certify to the Secretary of the Treasury the amount of, and times at which, such advances, if any, shall be made. The Secretary of the Treasury, on receipt of such certificate, is authorized and directed to make the advances in the amounts and at the times specified in the certificate, upon the execution by the carrier of a contract, secured in such manner as the Secretary may determine, that upon final determination of the amount of the guaranty provided for by this section such carrier will repay to the United States any amounts which it has received from such advances in excess of the guaranty, with interest at the rate of 6 per centum per annum from the time such excess was paid." 41 Stat. 464, § 209 (h).

Under the permission granted by paragraph (h) appellee applied for and received advances aggregating $6,500,000. The certificates of the Commission authorizing these payments were issued "under section 209 (h) Transportation Act, 1920," on June 26, 1920; August 31, 1920; and November 4, 1920, respectively. Section 209 had been construed to authorize advances of this nature only upon applications filed before the guaranty period expired August 31, 1920. February 14, 1921, appellee, being in urgent need of financial assistance to meet its current obligations, made application for a further payment of $6,000,000. Realizing that, because its application was made out of time, it could not cash a certificate issued upon that application, it stated that it desired this certificate for credit purposes only, and as collateral for a loan. Accordingly the Commission, after examining an exhaustive return made by the carrier, filed February 14, 1921, issued, on February 23, 1921, the following certificate numbered A-328:

"Certificate of Interstate Commerce Commission Under Section 209 (g), Transportation Act, 1920.

"To the Secretary of the Treasury of the United States:

"1. The Interstate Commerce Commission, hereinafter called the Commission, hereby certifies that the Great Northern Railway Company, a corporation of the state of Minnesota, hereinafter called the carrier, is a carrier as defined in paragraph (a) of section 209 of the Transportation Act, 1920, in that it is a carrier by railroad whose railroad system of transportation was under Federal control at the time such Federal control terminated at 12:01 A. M. March 1, 1920; that the carrier filed with the Commission on or before March 15, 1920, a written statement that it accepted all of the provisions of the said section 209.

"2. The Commission has ascertained and hereby certifies to the Secretary of the Treasury that the amount of six million dollars ($6,000,000) in addition to any other sum or sums heretofore certified in favor of the carrier under section 209 of the Transportation Act, 1920, is necessary to make good to said carrier the guaranty provided by the said section.

"3. The Commission hereby certifies that such amount of six million dollars ($6,000,000) cannot be reduced by further accounting or otherwise, and there may be, upon further investigation, additional amounts found due to said Great Northern Railway Company to make good to said carrier the guaranty of section 209 of the Transportation Act, 1920, and which if, and when, ascertained by the Commission will be certified to the Secretary of the Treasury."

The return made by appellee, February 14, 1921, as aforesaid, was a very elaborate one, and was made in response to an order of the Commission of October 18, 1920, requiring the carriers to file with the Commission "true and correct returns to the questionnaire or form of statement which accompanies this order and is made a part hereof." This form of statement was thus described: "Outline of Form for Use by Carriers in Presenting Claim or Statement as a Basis for Settlement Under section 209 of the Transportation Act, 1920."

The outline covers twenty-two printed pages of the record and calls for an exhaustive return, under oath, of every conceivable railway operative element essential to a basis for final settlement between government and carrier under the provisions of the Transportation Act. The purpose in mind when the order of October 18, 1920, was issued is thus expressed in its opening clause: "Whereas, Under the provisions of section 209 (g) of the transportation act, 1920, this Commission is charged with the duty of ascertaining and certifying to the Secretary of the Treasury as soon as practicable after the expiration of the guaranty period the several amounts necessary to make good the guaranty to each carrier to which said section is applicable."

The return was demanded on or before January 1, 1921; but that of appellee was not completed until February 14th. It contained one hundred and nineteen pages of tables and statistical matter. Meantime it was realized that a considerable period of time must elapse before computations for final settlements could be made with the many carriers whose systems of transportation had been placed under federal control, and that, turning back the railroads with an increase of expenditures much greater, in proportion, than the increase of revenues, might, and probably would, lead to failures and receiverships, unless the provision of section 209 for advancements pending final settlement should be extended beyond the guaranty period fixed by that section. Accordingly a bill, known as the Winslow Bill, was before Congress in an advanced state when the certificate of February 23, 1921, was issued to appellee. Three days later (February 26, 1921) it became a law as section 212 of the Transportation Act (41 Stat. 1145 49 USCA § 79). It contains the following provisions most pertinent to this inquiry:

"(a) In making certifications under section 204 or section 209, the Commission, if not at the time able finally to determine the whole amount due under such section to a carrier or the American Railway Express Company, may make its certificate for any amount definitely ascertained by it to be due, and may thereafter in the same manner make further certificates, until the whole amount due has been certified. The authority of and direction to the Secretary of the Treasury under such sections to draw warrants is hereby made applicable to each such certificate. * * *

"(b) In ascertaining the several amounts payable under either of such sections, the Commission is authorized, in the case of deferred debits and credits which can not at the time be definitely determined, to make, whenever in its judgment practicable, a reasonable estimate of the net effect of any such items, and, when agreed to by the carrier or express company, to use such estimate as a definitely ascertained amount in certifying amounts payable under either of such sections, and such estimates so agreed to shall be prima facie but not conclusive evidence of their correctness in amount in final settlement."

Thereupon appellee made application for a new certificate of indebtedness under the provisions of section 209 as thus amended. February 28, 1921, the Bureau of Finance of the Interstate Commerce Commission made its report upon this application. It said: "The applicant has filed its claim for final settlement under section 209 of the Transportation Act, 1920, and at the same time is making an urgent appeal for a partial payment of $6,000,000, to be substituted for certificate No. A-328 issued for credit purposes only, to provide for the payment of taxes and to meet other pressing obligations. We have examined the data submitted by the applicant and find that the Government would have to pay not less than $15,705,688 to make good the guaranty, of...