Butte, Anaconda & Pacific Ry. Co. v. United States

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 § 204 of Transportation Act, 1920, 41 Stat. 460 , 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 t<x 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 ah 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 Ry., 117 I.C.C. 780 . On June 8, 1928, the Undersecretary of the Treasury demanded of the Railway repayment of the $487,116.3i received by it. Repayment was refused. Fourteen months later, this action was begun to recover the money.

The ease 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) 687 . This Court granted certiorari, 289 U.S. 717 .

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 § 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 Ry. 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 Ry. Co., 287 U.S. 144 , 151.

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 § 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 thé 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 “ aver-. age annual railway operating income for the three years ended ” June 30, 1917, called the “ test period.”^[5] Later,

riers under paragraph (f). 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 payable thereto. An amount sufficient to pay süch warrants is hereby appropriated out of any money in the Treasury not otherwise appropriated.”

Claims under § 204 were filed by 461 carriers.^[6] Each claimant insisted that it had suffered a “ deficit.” The controverted question of construction discussed in this case is whether, by the use of the word “ deficit,” Congress intended that compensation should be paid to those carriers only which had suffered an actual [red-ink] loss in operation, or intended to put all the short-lines into as good a position as they would have been in if the Director General had retained possession throughout Federal control.' If “ deficit ” be held to mean actual loss in operation, many of .these carriers would receive nothing, as they had earned net income, although at a. rate less than during the “ test period.” But it might prove upon investigation of the accounts that some carriers who had vainly claimed compensation on the basis of lessened income as compared with the “ test period ” were entitled to compensation because they had actually suffered a [red-ink] loss in operation. Compare Deficit Status of Fairport, Painesville & Eastern R. Co., 124 I.C.C. 323 , 145 I.C.C. 684 This is true, because, while on the face of the accounts there appeared to have been net income, it might prove that there was, during the period, an operating loss, by reason of the fact that the carrier had failed to make the proper maintenance and depreciation charges. Where the right to compensaron depends upon the propriety of the maintenance and depreciation

charges, it may be impossible to determine, until the completion of the investigation into the accounts, whether the carrier is entitled to relief. Compare Great Northern Ry. Co. v. United States, 277 U.S. 172 ; Continental Tie & Lumber Co. v. United States, 286 U.S. 290 ; Great Northern Ry. Co. v. United States, 287 U.S. 144 .

On the other hand, many a carrier may be denied compensation although the fact is unquestioned that a [red-ink] operating loss had been suffered. Such denial has been based sometimes on failure to prove other essential facts; sometimes because of a ruling on matter of law. The Commission has been required, in passing upon claims under § 204, to decide, in addition to the meaning of the word “ deficit,” many controlling questions of statutory construction which in a sense are preliminary. Among them are: What did Congress mean by the phrase “in general transportation ” ?^[7] What did Congress mean by the phrase “ compete for traffic . . . with a railroad under Federal control ” ?^[8] What did Congress mean by the phrase “ connected with a railroad under Federal con

trol ”?^[9] What did Congress mean by the phrase “ com•mon carrier ” ?^[10] What did Congress mean by “ a system of transportation ” ?^[11] Did Congress intend to grant compensation to a carrier part of whose line is in a foreign country?^[12] Did Congress intend that compensation should be granted to carriers which had failed either during the period of Federal control or during the “ test period ” to render reports to the Commission and to keep their accounts in conformity with its rules?^[13] Did Con

gress intend.-that a certificate should issue where the operating loss was due to expenditures arising from occurrences unusual in the conduct of the carrier’s business?^[14] Did Congress intend that a certificate should issue where the operating loss was due to causes other than the War or the Federal control of the main, lines of transportation?^[15] Did Congress intend that a railroad technically under Federal control, but which actually was operated by its owners, should receive compensation under § 204?^[16]

While § 204 granted a bounty, it conferred a right, and constituted the Commission a quasi-judicial tribunal to adjudicate claims thereunder. Thus it was called upon to pronounce a formal judgment on rights asserted. A decision adverse, to the carrier on any one of-the suggested questions of construction might compel dismissal of the claim;^[17] thus relieving the Commission of the necessity of enquiring whether a deficit had been suffered. But it does not follow that such a decision would determine an issue of jurisdiction. Under this legislation, whether a