United States v. Winchester & Potomac Railroad Company (163 U.S. 244)

This appeal brings up for review a judgment in favor of the Winchester & Potomac Railroad Company, for the sum of $30,340, the value of certain iron rails removed in 1862 from the track of that railroad by the military authorities of the United States.

It seems necessary to a clear understanding of the questions presented that the history of this claim and the circumstances attending its prosecution against the United States should be fully stated.

In 1862, and for many years prior thereto, the appellee, a corporation of Virginia, owned and operated the railroad extending from Harper's Ferry to Winchester, in the state of Virginia. Its capital stock was largely owned by citizens of loyal states.

In March of that year the military authorities of the United States took possession of the road, which at the time was operated by the company for the use and benefit of the Confederate States, in the transportation of troops, munitions o war, and other subjects, under a contract made September 11, 1861, between an officer of the Confederate States army and the president of the railroad company.

The possession of the United States covered substantially the whole time from March, 1862, to the 20th day of January, 1866; and during that period the government had the exclusive use of the road for military purposes, receiving all tolls and revenues, and applying the same to its benefit.

The United States, while in possession, repaired the road, and removed from it a quantity of strap rails, and substituted T rails, taken by it from the Manassas Gap Railroad Company. These T rails were upon the Winchester & Potomac Railroad up to the time possession was surrendered by the United States, in 1866. The strap rails or iron so removed from the Winchester & Potoman Railroad were stored at Alexandria, Va.

The United States has never paid or accounted to the claimant for the revenues of its road which it collected and appropriated, nor for the rails so removed.

Immediately upon the restoration of the roads of the above companies to their respective owners, the Manassas Gap Railroad Company brought suit against the Winchester & Potomac Railroad Company for the iron taken from its own road, and put upon the latter road, or its value, and obtained judgment, which was compromised in 1873 or 1874 by the payment by the Winchester & Potomac Railroad Company of $25,000.

The circumstances under which the appellee's road was surrendered by the United States are fully disclosed in the findings below, and, so far as pertinent to the present inquiry, may be thus summarized:

On the 19th day of May, 1865, the quartermaster general submitted to the secretary of war a scheme for the disposition of the railroads in the states then lately in rebellion. That scheme was as follows:

'(1) The United States will, as soon as it can dispense with the military occupation and control of any road of which the quartermaster's department is now in charge, turn it over to the parties asking to receive it who may appear to have the best claim, and be able to operate it in such manner as to secure the speedy movement of all military stores and troops; the quartermaster general, upon the advice of the military commander of the department, to determine when this can be done, subject to the approval of the secretary of war. (2) No charge to be made against the railroad for expense of material or expense of operation. (3) All materials for permanent way used in the repair and construction of the road, and all damaged material of this class which may be left along its route, having been thrown there during the operation of destruction or repair, to be considered as part of the road, and given up with it. (4) No payment or credit to be given to the railroad for its occupation or use by the United States during the continuance of the military necessity which compelled the United States to take possession of it by capture from the public enemy. The recovery of the road from the public enemy, and its return to loyal owners, and the vast expenditure of defense and repair, are full equivalent, and more than an equivalent, for its use. (5) All movable property, including rolling stock of all kinds, the property of the United States, to be sold at auction, after full public notice, to the highest bidder. (6) All rolling stock and material, the property before the war of railroads, and captured by the forces of the United States, to be placed at the disposal of the roads which originally owned it, and to be given up to these roads as soon as it can be spared, and they appear by proper agents authorized to receive it. (7) When a state has a board of public works able and willing to take charge of its railroads, the railroads in the possession of the quartermaster's department to be given up to this board of public works, leaving it to the state authorities and the judicial tribunals to regulate all questions of property betwe n said boards, agents, or stockholders. (8) Roads not being operated by the United States quartermaster's department not to be interfered with unless under military necessity; such roads to be left in possession of such persons as may now have possession, subject only to the removal of every agent, director, president, superintendent, or operator who has not taken the oath of allegiance to the United States, which rule should be rigidly enforced. (9) When the superintendents in actual possession decline to take such oath, some competent person to be appointed as receiver of the railroad, who shall administer the affairs of the road, and account for its receipts to the board of directors, who may be formally recognized as the legal and loyal board of managers; this receiver to be appointed, as in the case of other abandoned property, by the treasury department. * * *'

The secretary of war approved that scheme, and the quartermaster general was directed to turn over the roads.

Certain regulations were established by the war department, and promulgated August 8, 1865, and October 14, 1865, for the guidance of the military authorities in relinquishing the control of railroads in the occupancy of the United States.

In reply to an oral application made November 16, 1865, by the Winchester & Potomac Railroad Company to have its road restored upon the terms accorded to other companies, the matter was referred by the secretary of war to the quartermaster-general for such arrangement and recommendation as he deemed proper. The quartermaster general recommended that the application be granted, and the officer in charge of military roads was directed to surrender possession; 'all rolling stock and railroad materials upon that road, which the company may not elect to purchase, to be sold, as soon as preparation can be made, at public auction.'

This order not having been immediately executed, the president of the Winchester & Potomac Railroad Company, December 5, 1865, made a request in writing that his company's road be delivered up to its board of directors. Thereupon, on the 15th of December, 1865, an order for the surrender of the road was issued. That order was executed by the delivering the road, on the 16th day of January, 1866, to the Baltimore & Ohio Railroad Company, as lessees of the Winchester & Potomac Railroad Company.

The facts in relation to the disposition of the iron removed by the military authorities of the United States from the Winchester & Potomac Railroad, and stored at Alexandria, are as follows:

On the same day on which the president of the Winchester& Potomac Railroad Company made verbal application for the restoration of the road to his company, he addressed to the director and general manager of military railroads a communication in which he said: 'We are informed that a quantity of the iron from our road-flat or strap bar-is now in possession of your department at Alexandria, Va., which we are anxious to recover, as we hope the road is about to be returned to the company. We respectfully request that the fact may be inquired into, and, if proper, an order made to return the said iron to my order, as president of the company.'

No answer was returned to this application, nor were any affidavits or other proof of the ownership or value of the iron mentioned, nor of any of the other facts therein alleged, offered to or filed in any executive department, prior to May 11, 1885, on which day the Baltimore & Ohio Railroad Company made a written application, to which reference will be presently made. But at or about the date of the above communication, of November 16, 1865, the president of the Winchester & Potomac Railroad Company made an application to the quartermaster general for this iron.

A large quantity of iron, stored at Alexandria, and in the possession of the United States, and aggregating more than $2,000,000 in value, was sold at public auction on December 13, 1865. The iron taken in 1862 from the appellee's road was part of the ron so disposed of. It sold for $30,340, and was paid for January 9, 1866, the proceeds being used, through the war department, for the benefit of the United States.

On the 2d day of December, 1875, the president of the Baltimore & Ohio Railroad Company addressed to the quartermaster general a communication, saying: 'Subsequent to the termination of the late war, the United States military railroad authorities sold a quantity of old rails in Alexandria, Va., which had been taken from the line of the Winchester and Potomac Railroad. I have the honor to request that you will furnish me with the dates the said rails were sold, the quantity sold, the price per ton, the amount realized from the sale of the rails taken from the line of the Winchester and Potomac Railroad, and the disposition made by the U.S. M. R. R'd managers of the proceeds. You will further oblige me by stating the date on which the Winchester and Potomac Railroad was surrendered by the war department to its owners.'

The quartermaster general replied, under date of December 11, 1875, giving him exact information touching all the matters about which inquiry was made.

Nothing seems to have been done by the claimant, or by any one in its name, until May 11, 1885, when the Baltimore & Ohio Railroad Company, by its president, made to the quartermaster general a written application or claim for the proceeds of the sale of said iron, as follows:

'The United States to the Baltimore and Ohio Railroad Company, Lessee of the Winchester and Potomac Railroad Company, Dr.

'For 507 tons 1,940 pounds (2,240 pounds to the ton) of iron rails appertaining to the Winchester and Potomac Railroad Company, and the property of that company, which once formed a part of the superstructure of that road by the United States authorities, and was subsequently sent to Alexandria, Va., and sold at auction by the United States Military Railroad Department in December, 1865, for the sum of $30,340.'

This application was forwarded to the secretary of war, and was by him returned to the quartermaster general. The latter officer made an elaborate report, under date of December 7, 1885, in which, among other things, he said: 'The only reason which can be given for the failure of the company to secure possession of its old iron is the fact that the company was not in condition to receive it before its sale. If the transfer of the road to the Winchester and Potomac Railroad Company had been authorized and effected before the sale of the iron, it is believed that the company would have been permitted to take possession of it. A denial of this privilege or right would have involved an unjust discrimination by the government between the treatment of this company and that of all other companies whose roads were used for military purposes during the war, and would have been a marked departure from the policy and practice of the government towards such companies upon the restoration of their roads. * * * But it is not believed to be in the power of the executive department to afford relief at this time without the intervention of congress. * * * It is therefore respectfully recommended, if this report be approved, that this claim, with the papers accompanying it, be referred to the third auditor for adjudication by the accounting officers of the treasury, with recommendation for such action as the law and facts of the case require.'

The secretary of war approved this report, and 'the accompanying papers in the claim of the Baltimore and Ohio Railroad Company for the proceeds of railroad iron, stated by the company at $30,340,' were 'referred (through the office of the quartermaster general) to the third auditor of the treasury, for settlement from the appropriation 'transportation of the army and its supplies,' the amount found due to be reported to congress for appropriation.'

On the 4th day of March, 1887, the third auditor reported against the claim, but without expressing an opinion on its merits if such claim should ever be presented by the Winchester & Potomac Railroad Company.

Thereupon the Winchester & Potomac Railroad Company was substituted as claimant in interest in place of the Baltimore & Ohio Railroad Company, its lessee, claiming on its behalf.

On the 18th day of April, 1887, the third auditor again recommended the disallowance of the claim, and certified the matter to the second comptroller of the treasury.

The second comptroller, March 9, 1889, sent the claim, with accompanying papers, to the secretary of the treasury, as one involving disputed facts and controverted questions of law, with a recommendation that the case, vouchers, etc., be transmitted to the court of claims for trial and adjudication. The secretary, March 12, 1889, sent the claim, with the papers, to the court of claims, under section 1063 of the Revised Statutes, for trial and adjudication, expressing, however, doubt whether the department had jurisdiction of it, but submitting that question to that court for its determination.

Mr. Justice Shiras dissenting.

Asst. Atty. Gen. Dickinson, for the United States.

Frank P. Clark, for appellee.

Mr. Justice HARLAN, after stating the case as above, delivered the opinion of the court.