Union Pac. R. v. United States

CARLAND, Circuit Judge (after stating the facts as above). [1] The legal relation existing between the United States and the railroad company was contractual. The company agreed, in consideration of the payment of a stipulated sum for the service, that it would “accept and perform the service upon the conditions prescribed by law and the regulations of the department.” This language in express terms made all applicable provisions of law and regulations a part of the contract. We think this relation of the parties renders inapplicable the contention that the railroad company, in performing the service in question, was engaged in the performance of a governmental function, and therefore, not liable for the negligence of its employes, providing it used ordinary care in their selection. Whatever may be the rule as to the liability of the company to the owners of mail being transported, it must be admitted, we think, that under its contract it owed the United States the duty to use ordinary care in transporting the mail over the route in question. This would certainly be so as to the mail equipment which was the property of the United States. The railroad company was not, it is true, a common carrier of the mail (A., T. & S. F. Railway Co. v. United States, 225 U. S. 640, 32 Sup. Ct. 702, 56 L. Ed. 1236), and is not liable to the United States as such,- but it had possession of the property of the United States, speaking now of the equipment, and was being paid a consideration agreed upon for transporting the mail contained therein, and no good reason can be found for denying a liability for the negligent destruction of this equipment. When we come to determine the liability of the railroad company for the registered mail not owned by the government, a very different question is presented, and one .in the solution of which many difficulties suggest themselves. The United States is seeking to recover the value of the registered mail which they did hot own and for the loss of which they are not liable exceeding the sum of $25 in any one case, so that it is difficult to see how they could be subrogated to the rights of the owners, whatever they may be. In the case of National Surety Co. v. United States, 129 Fed. 70, 63 C. C. A. 512, which was an action by the United States for the breach of a bond given by a letter carrier upon which the surety company was surety, the mail carrier received, for delivery, letters containing money and stole their contents. It was held by this court that the act of the carrier was a breach of the condition of the bond for which the United States could maintain an action, and that they were entitled to recover the money taken from the letters. Assuming that the condition of the bond was sufficient to cover the default of the carrier, the serious question was then presented as to the amount of damage which the government was entitled to recover. Judge Sanborn, delivering the opinion of this court, placed the right to recover the full amount of the money taken from the letters, upon the theory that the government was the bailee of the owner and entitled to recover against a wrongdoer the full value of the property taken by the carrier, and that this right was not dependent upon the liability of the government to [435] answer over to the owner. The opinion of Judge Sanborn was followed by the Circuit Court of Appeals for the Fourth Circuit in the case of U. S. v. American Surety Co., 163 Fed. 288, 89 C. C. A. 658. In United States v. Atlantic Coast Line R. R. Co., 215 Fed. 56, 131 C. C. A. 364, the United States Court of Appeals for the Fourth Circuit, in a case as to one of its branches parallel to the case at bar, used the following language: “(2) It is well settled that the United States has a property right in the mails. Searight v. Stokes, 3 How. 151, 11 L. Ed. 537; In re Debs, 158 U. S. 564, 15 Sup. Ct. 900, 39 L. Ed. 1092. This being so, it may recover, from any person to whom it intrusted its mails, damages for their loss or delay due to the bailee’s negligence. The direct damages for loss of mail would be the labor and time necessary in the effort to recover the various parcels and the disarrangement of the post office business. The government could also recover the value of the mall lost for the benefit of the owners of the mail, provided the contract did not negative the idea of the Viability extending that far. It does not matter what we call the relation between the government and the railroad; the essential thing is that the railroad company assumed the obligation to use due care to have a safe track for the mall car to run on; and when it was negligent in that respect it became responsible for any damage to the government due either to its own negligence or that of its servants. The distinction urged between the negligence of the company itself and its servants on an issue of this sort is artificial and unsupported by any substantial reason. It may be true that, as between the owner of the mail matter seeking io fix the liability on the railroad for his lost property and the railroad itself, the railroad is a public agency; but as between the government and the railroad contracting to carry its mail, the railroad company is liable as a party to a private contract.” (The italics are those of the court delivering the opinion.) [2] We do not find it necessary, however, in the present case to determine just what the rights of the government are in respect to the registered mail in question, for we are clearly of the opinion that under the agreed facts presented in the record it exhausted the remedy provided by law for whatever damages may have resulted from the railroad wreck in question prior to the commencement of this suit. As we have before stated, the railroad company agreed to accept and perform the service upon the conditions prescribed by law and the regulations of the department. Section 3962, R. S. U. S. (Comp. St. 1913, § 7450), reads as follows-: “The "Postmaster General may make deductions from the pay of contractors, for failures to perform service according to contract, and impose fines upon them for other delinquencies. He- may deduct the price of the trip in all cases where the trip is not performed; and not exceeding three times the price if the failure be occasioned by the fault of the contractor or carrier.” Postal Regulations, § 1335, provides that fines will be imposed under authority vested in the Postmaster General by section 3962, for each of the following delinquencies: “Suffering the mail, or any part of it, to become wet, lost, injured, or destroyed, or conveying or keeping it in a place or manner that exposes it to depredation, loss, or injury.” The agreed statement of facts shows that on April 5, 1906, through the office of the Second Assistant Postmaster General of the United. States, notice was sent to the railroad company stating that the sum of [436] $115.52 had been deducted from the pay of the railroad company for the quarter ending March 21, 1906, for the carriage of mail on route No. 157,001, for “failure to perform service, Train 2, Wilkins, Wyoming, to Council Bluffs, 817.64 miles, December 6,1905.” In the notice of this deduction, it was stated that it was made in pursuance of authority conferred by section 3962, R. S. U. S., above quoted. The facts also show that under date of July 1, 1910, a notice was received by the railroad company from the office of the Second Assistant Postmaster General, stating that there had been deducted from the pay of the railroad company for the month of June, 1910, for the carriage of mail on route No. 157,001, the sum of $3,000, “because of the loss of and damage to mail and equipment in the wreck of Cheyenne and Pocatello R. P. O. train No. 2 near Green River, Wyoming, December 7, 1905.” The deduction of $3,000 was made for loss and damage to mail and equipment. There would be no reason for thinking otherwise, as the amount deducted was nearly ten times the value of the equipment, as stated in the agreed statement of facts. The wreck occurred December 7, 1905. Correspondence commenced in regard to this loss and damage September 4, 1907, and ended June 10, 1910. So that, at the time the deductions were made, it must be presumed the Post Office Department had full knowledge of the amount of the loss and acted with such knowledge in making the deductions. Whether the deductions were too large or too small, it was a matter entirely in the hands of the United States, and the conclusion reached ought to be binding upon them. The United States Court of Claims has frequently construed section 3962, supra, and in Otis v. United States, 24 Ct. Cl. 72, it said “Tie service to be performed (in tbe carriage of the mails) is of such a character that a provision (such as that made by this section) is essential to tbe successful performance of tbe most important function incident to tbe •executive branch of tbe government. If tbe Post Office Department were subjected to tbe ordinary remedy for a violated contract, tbe measure of protection would be incommensurate to tbe wrong inflicted, and tbe mail service might thereby be impaired in that efficiency required by public policy. * * * If this court were to so construe tbe law that these defendants could only recover for a violation of contracts according to tbe usual mode of assessing damages, the postal service might be stripped of that efficiency required by public necessity.” In Parker v. United States, 26 Ct. Cl. 357, the same court said: “No man is obliged to be a mail contractor against his will; and tbe statute is operative against no man until by voluntarily entering into a contract •or performing a mail transportation service be expressly or impliedly agrees to submit tbe differences which may arise to tbe arbitrament of tbe Postmaster General. The only effect of tbe statute is that it requires tbe Post •Office Department to exact this agreement from all mail carriers, and that it tabes such contracts to this extent out of tbe ordinary rules of law which regulate penalties and liquidated damages. * * * Tbe vast area of tbe post office system, its complexity of routes, tbe remoteness and distance of its operations from the seat of tbe government, require that a summary method of dealing with its innumerable contractors and subcontractors shall •exist, though its administration may often involve instances of individual injustice.” In United States v. Atlantic Coast Line R. R. Co., supra, the Court of Appeals of the Fourth Circuit said: [437] “The main difficulty is as to the measure of liability, for the railroad’s negligent loss of mail; that is, whether it extends to the value of the property lost. The government is not responsible to the owner of mail lost in transportation. The postal regulations of the government under which its mail is carried, and which the railroad assumes as part of its contract, set out numerous duties and obligations imposed on railroads. There is a very strong presumption that, if the intention had been to impose upon railroad companies the very onerous obligation of being responsible for the value of all mail lost through its negligence, this obligation of such vast consequence to both parties would have been clearly and directly expressed in the regulations. The absence of such expression creates a strong implication that it was not the intention to impose such liability. The implication against liabilitv in such case is strongly indicated in German, etc., Co. v. Home, etc., Co., 226 U. S. 220, 33 Sup. Ct. 32, 57 L. Ed. 195, 42 L. R. A. (N. S.) 1000; Atchison, T. & S. F. Ry. v. United States, 225 U. S. 610, 32 Sup. Ct. 702, 56 L. Ed. 1236. This view is further supported by the fact that where the government intends to impose such liability it is usually expressed in the written undertaking exacted from the party who undertook to carry the mail. National Surety Co. v. U. S., 129 Fed. 70, 63 C. C. A. 512; United States v. American Surety Co. (C. C.) 155 Fed. 941; United States v. American Surety Co. (C. C.) 161 Fed. 119; Id., 163 Fed. 288, 89 C. C. A. 658.” We are therefore of the opinion that, taking into consideration the facts as they appear in the record, the matters in difference between the United States and the railroad company, arising out of the wreck in question, have been settled and settled in the way provided by law. This view of the case ought not to be objected to by the United States, as it leaves with them a full and complete remedy at all times by the imposition of such penalties and deductions against mail contractors, as will fully reimburse the government for whatever loss it may have sustained. The fact that no law has ever been passed by Congress and no regulation made by the Post Office Department, making those who carry the mail responsible for its loss, except as herein specified, and the fact that Congress by section 3962, supra, has authorized the Postmaster General to make deductions from the pay of mail contractors for failures to perform service according to contract and to impose fines upon them for other delinquencies, and the fact that, the Postmaster Generally regulation No. 1335, above quoted, has specified the acts for which penalties may be imposed and deductions made and the loss of the mail in question being within the terms of said regulation, and the fact that heretofore, during the existence of the government, no case like the one at bar has been instituted, except United States v. Atlantic Coast Line R. R. Co., supra, leads irresistibly to the conclusion that the remedy of the United States for the loss of mail through the default of contractors is through the imposition of fines and the making of deductions, as provided for in said section above quoted. 13] It results that the judgment of the trial court must be reversed, and a new trial ordered. We feel that we have no authority to direct the proper judgment below, in view of the decision of the Supreme Court in Slocum v. New York Life Insurance Co., 228 U. S. 364, 33 Sup. Ct. 523, 57 L. Ed. 879, Ann. Cas. 1914D, 1029.